The Spanish government is preparing to defend the region's electricity sector against the threat that it fears the planned merger of French heavyweights Suez and Gaz de France may pose, the Financial Times has reported.

<p>According to the publication, the Spanish government, which has repeatedly tried to prevent foreign players from investing in its energy market, believes that the merged company would have its sights set on expansion in southern Europe. <br /><br />The financial daily has gained access to confidential papers, which it claims reveal that that the Spanish government plans to argue that the high electricity and gas tariffs set by the French state, as compared to the low tariffs set by the Spanish government, will allow Gaz de France (GDF) to gather huge profits, which could then be used to finance takeover bids. <br /><br />The Spanish government plans to put forth its objection by arguing that this is an indirect form of state subsidy, and is illegal under the EU&#0039;s competition rules. <br /><br />David Taguas, chief economic adviser to Jose Luis Rodriguez Zapatero, the Spanish prime minister, told the Financial Times: The state-sponsored French merger has clearly been designed so that a combined Suez-GDF can expand southward in Europe.</p>