The European Commission yesterday warned it would take legal action against some continental energy companies for rigging the market unless they opened up fair competition.

The crackdown was immediately welcomed by British energy regulator Ofgem after British gas and electricity wholesale and retail prices have been blamed on European companies blocking competition and restricting energy supplies.

EU Competition Commissioner Neelie Kroes, unveiling the results of an energy sector inquiry launched eight months ago, said she was pursuing investigations under EU anti-trust rules into "specific cases" of closing off gas and electricity.

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She went on: "We will act decisively to remedy the serious malfunctions identified on the energy market in order to uphold the interests of European consumers and industry and to help Europe become more competitive."

Ofgem chairman Sir John Mogg, also president of the Council of European Energy Regulators, commented: "Today Commissioner Kroes outlined for the first time the barriers preventing a truly competitive European energy market emerging and spelt out how much this harmed European customers and competitiveness.

"The Commission's detailed report provides hard-hitting analysis that will justify clearly the urgent action needed to deliver a competitive European energy market."

He predicted strong resistance from major European energy companies, but promised Ofgem's "full support".

Sir John said Ofgem was particularly concerned because British customers were paying a high price for the lack of effective competition in the European Energy market.

"British customers paid nearly £1 billion more for their gas this winter notably because of the failure of the Belgium-UK Interconnector pipeline to import at its full rate. If this happens again next winter, British wholesale prices could be up to £3 billion higher.

"Where the report has found evidence of market abuse, we welcome the Commission's commitment to pursue such cases urgently and vigorously. This will send a clear signal to all European energy companies that such behaviour will not be tolerated."

Sir John said it still remained unclear whether European companies could have exported more gas to Britain this winter.

"So far no one has provided a satisfactory answer."