* State Council to rule on regulated gas tariffs soon
* Small vendors say tariffs are anti-competitive
* ANODE lobby hopes for end to power tariffs too
By Benjamin Mallet
PARIS, May 23 (Reuters) - Smaller competitors of power utility EDF and gas utility Engie hope that France's top court will soon abolish regulated gas tariffs as a first step towards ending them altogether.
Nearly a decade after French gas and power markets were opened to competition, ex-monopolists EDF and Engie retain retail market shares of 86 and 77 percent respectively, with 27.5 million clients for EDF and 8.2 million for Engie.
The big two are the only power vendors that offer government-regulated tariffs, while smaller or foreign players such as Direct Energie and Italy's Eni try to win customers by offering more market-based rates.
They complain that the regulated tariffs make it more difficult for them to win market share. Britain, Germany and most other European Union countries have long scrapped regulated energy tariffs.
The ANODE association of alternative power and gas vendors filed a legal challenge against regulated gas tariffs with France's Conseil d'Etat in 2013. The council then sought the advice of the European Court of Justice, which in September 2016 ruled that regulated tariffs are by nature an obstacle to a competitive market in natural gas.
But the EU court also said that EU member states can assess whether, in the general economic interest, regulated tariffs can be imposed to ensure security of supply and territorial cohesion. The State Council, France's highest administrative court, is expected to issue a ruling in coming weeks or months.
A Conseil d'Etat spokesman declined to comment on the case and would not say when the court will pronounce itself.
"The end of regulated tariffs would boost competition in the retail sector, as it has done for the industrial and municipal sectors," Direct Energie CEO Fabien Chone told Reuters.
Chone, also head of ANODE, said scrapping regulated tariffs would bring lower prices and more innovation and said he hoped new President Emmanuel Macron would see that as a way to boost France's productivity and competitiveness.
Regulated tariffs still accounted for 88 percent of power consumption and 53 percent of gas consumption in France last year. Engie also has clients on market prices, although it has come under fire from competitors for using its customer database of regulated tariff clients to offer market-based packages.
ANODE hopes that a ruling against gas tariffs will encourage the new French government to also consider scrapping regulated power tariffs.
That could meet more resistance, as Engie imports all its gas and is less than one third state-owned, while EDF is 83 percent state-owned and produces three quarters of its power in nuclear plants seen as key to France's energy independence.
"We do not expect a brutal end to regulated tariffs," said Engie retail chief Pierre Mongin, adding that an overhaul of power tariffs should be discussed in parliament.
"But if regulated gas tariffs are scrapped, electricity tariffs should be too, as there can be no distortion between the two energy," he said.
EDF declined to comment. Its CEO, Jean-Bernard Levy, told the French daily Les Echos in March that "our central scenario is that nothing will change". (Reporting by Benjamin Mallet; writing by Geert De Clercq; editing by Mark Heinrich)