(Updates with European Commission response)
PARIS, July 10 (Reuters) - France has won EU backing for a decree allowing the government to block foreign takeovers of French companies in strategic industries, its economy minister said on Thursday, but the European Commission cautioned it would monitor the law closely.
In a surprise move, the government widened in May its control over mergers in industries deemed key to France's national interests as General Electric was seeking to buy the energy assets of French group Alstom.
"The European Commission in recent days notified the French government of its approval of the decree as perfectly in line with European treaties," Arnaud Montebourg said in a speech.
"It was used in the General Electric-Alstom case. It will be used again in certain sensitive sectors such as water, health, national defence, gaming, transport, energy and telecommunications," the economy minister said.
Chantal Hughes, spokeswoman for the bloc's financial services chief Michel Barnier said the Commission, the EU's executive body, was in contact with French authorities over the issue and had taken "note of the law".
"We recall restrictions on free movement of capital can be justified if the objective pursued is one of public policy and public security. Any action taken to restrict free movement needs to be proportionate and serve the public interest," she said in a statement.
"We will closely monitor any use of the law, i.e. systematically monitor any application of the investment screening legislation, and check in particular that it is not used to achieve purely economic objectives." (Reporting by Ingrid Melander and Foo Yun Chee in Brussels; writing by Leigh Thomas; Editing by Gareth Jones)