By Chris Jones - 20th December 2006
Spain has failed to remove all the obstacles to the takeover of energy group Endesa by Germany’s Eon, the European commission said on Wednesday.
“The Spanish decision of 3 November placing additional restrictions on the Eon bid for Endesa is illegal under merger regulations that give the commission exclusive competence,” a spokesman for competition commissioner Neelie Kroes told journalists.
He said the commission had given Madrid until January 19 at the latest to withdraw all the new conditions imposed on Eon and allow the merger, already approved by Brussels, to go ahead.
“The commission deeply regrets that it has proved necessary to take this move, but the measures taken by the Spanish authorities at the beginning of November did not remove all of the restrictions imposed in July and indeed placed additional obligations on company.”
In September this year Kroes told the Spanish authorities that the decision taken in July by the national energy regulator CNE, allowing the deal to go ahead with significant conditions, was illegal.
She has pledged to take tough action against any member state trying to protect its national energy suppliers from takeover or competition by foreign companies.
But Madrid, which opposes the deal on the grounds that it could pose a threat to the security of Spain’s energy supplies, agreed to drop only some of the conditions, choosing instead to add several more.
These new conditions include keeping the Endesa brand for at least five years, obliging Eon to keep Endesa’s non-Spanish assets for at least five years and the obligation to continue using domestic coal in Endesa plants.
The commission spokesman said that the decision to take action against Spain showed that “we will not tolerate any member state acting illegally”.
“It is important to show member states that the commission will not stand idly by while competition rules are violated,” he said.
And he denied suggestions that legal action against Spain would be pointless, since the acquisition would be completed – subject to the conditions – long before any court ruling.
“If Spain brings community law into disrepute in this way, it will send a message that it cannot expect protection for Spanish companies in other member states,” he said.
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