Spain in the dock over energy merger

Spain has failed to act quickly enough to remove “unlawful” conditions imposed on German energy group Eon in its bid for rival Endesa.

The European commission ruled on September 26 that the conditions imposed by the CNE, Spain’s national energy regulator, breached EU legislation.

Under EU merger rules, only the commission has the right to assess the competition implications of cross-border deals in order to ensure that ‘protectionist’ national governments cannot block potential takeovers.

The CNE gave the green light to the Eon/Endesa deal, but only on the condition that the German group sell most of Endesa’s Spanish generation business - a move it justified on the security of national supply. 

The commission’s Septmber ruling quashed the CNE’s claims, and obliged Madrid to lift the conditions - something it has not yet done.

If Spain now fails to satisfy the Brussels authorities that the conditions will be lifted, it could face a formal request to lift the conditions and the threat of further legal action.

Brussels has also argued that the hastily-approved new powers for the CNE, giving it the right to assess cross-border mergers, were designed to block gforeign investments in the energy sector.

Madrid has made little secret of its opposition to the Eon/Endesa link up, preferring a rival bid from another Spanish firm, Gas Natural, that would create a national energy ‘champion’.

The EU has pledged to take tough action against countries that fail to open up their electricity and gas markets to competition, and has also challenged French moves to create a national champion through the merger of Suez and Gas de France.

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