German chancellor Angela Merkel has entered the debate on the future of Europe's energy markets by backing the idea of continental champions in the industry.

Ms Merkel was speaking at a conference organized by a German broadcaster. She attacked both excessive red tape from Brussels and the protectionist leanings of some member states as major factors impeding the development of a truly pan-European energy market.

In particular, she was vocal in her criticism of Spain’s moves to block E.ON’s acquisition of Endesa. She argued that the Madrid government’s view (which is that Endesa should ally with compatriot Gas Natural to create a Spanish energy major) would maintain the country’s isolation from the rest of the continent’s power and gas markets, which in turn would impact upon the tariffs offered to consumers.

When you look at the price of electricity in Europe, you see that it is greatly influenced by the fact the number of electrons that go over borders is very limited, Ms Merkel said.

Spain is virtually disconnected from the EU [power grids]. And we cannot directly deliver electricity to Italy but have to go via France, which naturally has consequences for prices.

Ms Merkel went on to criticize what she sees as the ‘snail-paced’ speed of reform in the EU. This is reflected in the energy sector, where hopes of a fully liberalized, pan-European market have been stymied by significant resistance to the implementation of the EU’s second gas and power directive.

In an attempt to get round these hurdles, Europe’s energy regulators have come together to propose a plan for regional markets covering different parts of Europe in a bid to catalyze greater trading in power and gas.