The EU said the arrangement continued after gas markets were liberalised

Energy giants E.On and Gaz De France (GDF) Suez have been fined by European Commission competition regulators for carving up gas markets between them.

Both Germany's E.On and France's GDF Suez have been fined 553m euros ($770m; £477m) by the Commission.

The firms agreed in 1975 not to compete with each other in their national gas markets when they started to import gas through a pipeline from Russia.

"The Commission has no alternative but to impose high fines," it said.

"They maintained the market-sharing agreement after European gas markets were liberalised, and only abandoned it definitely in 2005."

EU Competition Commissioner Neelie Kroes said the secret carve-up had deprived customers of price competition and choice of supplier in two of the largest markets in the 27-nation EU.

"This decision sends a strong signal to energy incumbents that the commission will not tolerate any form of anti-competitive behaviour," she added.

Merger

The commission investigation - which was focused on the jointly-owed Megal pipeline from southern Germany to the French-German border - followed raids on the offices of the two firms.

The Megal pipeline is jointly owned and operated by E.On Ruhrgas and GDF Suez.

E.On had earlier said the alleged anti-competitive practices referred to agreements that had expired in 2004.

It also said that its business had been competitive for many years.

Gas supplier GDF merged with Suez last year to form GDF Suez, Europe's biggest utility by market capitalisation ahead of EDF and E.On.

Last week Gerard Mestrallet, the head of GDF Suez, said the group would appeal against any fine imposed by the Commission.