“EDF Nationalization Bill May Be Harmful”

AT After a stormy public session, a bill aimed at protecting the Electricité de France (EDF) group from a breakup, put forward by the Socialist Party, passed its first reading on February 9 by deputies of the new People’s Ecological and Social Union. (Nupes), National Action (RN) and Republicans (LR). If most of the debate was focused on the expansion of the tariff shield, the text primarily envisages the nationalization of EDF, which is already 84% owned by the state.

“Item 1^Eh. Electricité de France is nationalized. » The symbol is powerful. The formula echoes the nationalization of electricity and gas in 1946 and the major nationalizations of 1982, which remain significant moments in French political memory. With the process of nationalization and the initiative of the opposition, this is a real overhaul of the public energy service that will work.

Faced with the power of the symbol, we almost forget the essence: this nationalization law will probably be useless. At the same time, the government completed its takeover bid, which would allow it to own all of EDF’s capital. The operation should be completed no later than the beginning of May, and the judges will consider the shareholders’ appeal.

Nationalization results in the transfer of ownership of the company to the state by law. But the state can also choose to acquire shares in companies through common law procedures. This is what the government is currently doing with its takeover proposal.

The processes are different, but the result is the same: the state will hold 100% of EDF’s capital. However, unlike the government’s proposal, the text adopted by the Assembly opens up the possibility of up to a 2% stake in EDF’s capital for the benefit of its employees.

It is a constitutional problem

Be that as it may, there is a risk that the law will finally be passed when EDF will already be fully owned by the state after the takeover bid. Can the law provide for nationalization, which is logically impossible, since the company is already fully owned by the state?

This inconsistency raises a constitutional problem: the purpose of the law is to establish rules and therefore must have a normative scope, as the Constitutional Council reminds us. This is certainly not the case with a law that nationalizes in a vacuum. More fundamentally, without a nationalization law, there is a risk of overusing the instrument of nationalization, the par excellence expression of state sovereignty in the economy.