April 4 (Bloomberg) -- European Union regulators will today sue or warn France, Spain and other governments for hindering takeovers and competition in industries from energy to gambling.

The European Commission, the EU's executive agency, is challenging France's protection of vaccine makers such as Sanofi-Aventis SA and casino operators including Groupe Partouche SA. The agency, meeting in Strasbourg, France, also may sue Spain for keeping foreign power companies at bay and warn several countries for failing to open utility markets.

The commission is seeking to remove business barriers in the EU, 13 years after the campaign for a borderless internal market got under way. EU officials say the campaign created 2.5 million jobs and 877 billion euros ($1.1 trillion) of wealth in its first decade. Protectionism threatens those gains, Internal Market Commissioner Charlie McCreevy warned last week.

``If the commission wasn't defending the single market it would be making its own grave,'' Karel Lannoo, chief executive of the Centre for European Policy Studies, a policy research group in Brussels, said in a telephone interview. ``If they don't defend the core of the EU, then there's nothing left.''

The push to knock down business barriers faces one of its greatest tests so far in the EU's 250 billion-euro market for electricity and natural gas.

The commission today will issue formal warnings against several countries in the bloc of 25 for failing to implement fully market-opening legislation to which EU members agreed in 2003. By July 2007 governments are supposed to enable all homes and businesses to choose their energy suppliers.

National Governments

Energy is a battleground because it's one of the few industries still largely under control of national governments, Lannoo said. A spate of takeovers in the industry is pressing the issue even more.

Spain may face a lawsuit today for a 1999 law limiting the voting powers in Spanish utilities that can be wielded by foreign power companies seeking to expand into the country such as Electricite de France SA.

The EU agency also may bring Spain back to court to seek damages for failing to abide by a 2003 court order to give up merger-veto powers at former state monopolies including electric utility Endesa SA, telephone company Telefonica SA and oil company Repsol YPF SA.

The commission, which is made up of one representative from each EU member, later this month plans to open another legal case against Spain for introducing new regulations to defend Endesa, the country's largest power company, from a takeover bid by E.ON AG of Germany.

Suez Merger

The commissioners are also questioning France over its role in arranging a merger of Suez SA, owner of utilities in France and Belgium, with state-controlled Gaz de France SA. Italy has complained the move preempted a bid by Enel SpA, that country's largest utility.

In another takeover dispute with France, the commission may make its first formal step toward a lawsuit today over a Dec. 31 French government decree requiring any foreign buyer to get government approval before acquiring companies in 11 designated industries, including computer security, vaccines and casinos.

The French government has said the measure is tailored to apply to defense and security companies, which are exempt from EU market rules against takeover barriers. Casinos are included to ensure they aren't used as conduits for money laundering and funding of terrorism.

`Very Vigilant'

``We want to be very vigilant to ensure that a wave of protectionism doesn't start,'' McCreevy said in a March 31 interview after a speech in Galway, Ireland.

The commission has no police force to back up the EU's market-opening laws. The agency must instead bring countries to the Luxembourg-based European Court of Justice, which can order governments to bring their laws into compliance. Governments that ignore those decisions can face the sanction, rarely used, of a second lawsuit to seek monetary penalties.

The process typically takes years to get from warning to judgment. In response, the commission has sped up its work in bringing the cases, Lannoo said.

``The commission has become more apt in using the weapons which it has,'' Lannoo said. ``If they don't do it, it's the beginning of the end.''

To contact the reporter on this story: John Rega in Brussels at jrega@bloomberg.net.

Last Updated: April 4, 2006 07:37 EDT