The European Parliament rejected yesterday a watered-down version of a law designed to increase competition in continental gas and electricity markets.

At a vote in Strasbourg, the EU Parliament voted down a compromise deal that had been championed by Germany and France that would have allowed electricity and gas groups to retain their transmission networks. The European Commission had earlier proposed to completely "unbundle" the supply and distribution networks of major utilities in an effort to increase competition.

Politicians in France and Germany, home to the Continent's most formidable national energy champions, negotiated a less harsh framework, voted on yesterday, to allow companies to keep transmission networks that would be overseen by a regulator.

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