By Chris Jones - 31st July 2006
EU competition officials are to examine whether Spain’s conditional approval for Eon’s bid for Endesa is compatible with European law.
Spain’s national energy regulator announced last week that it had given the go-ahead to the proposed energy merger but imposed significant conditions, including the sale of a large number of Spanish assets.
A spokesman for the European commission confirmed on Monday that Spain had notified the conditional approval on Saturday, but said that it was not a formal notification and that there was therefore no specific deadline for the commission to act.
But he stressed that commission officials believed that Spain should have given formal notification of the regulator’s decision under EU merger rules.
The spokesman declined to comment on whether any action would be taken against Spain for this apparent breach of the rules, but said that commission officials would nonetheless begin assessing the 400-page document sent by Spain.
“The court of justice has confirmed that the commission does not require notification in order to act in respect of possible breaches of [EU merger rules],” the commission said in a statement.
Brussels is already examining whether the new powers granted to the energy regulator by Madrid – giving it greater control over takeovers by foreign companies – are compatible with EU rules.
The commission is concerned that the apparently unequal treatment of Spanish and other EU companies breaches internal market rules.
Madrid has made little secret of its opposition to the Eon bid for Endesa, and its support for a rival offer from another Spanish firm, Gas Natural.
Despite EU moves to liberalise the energy sector and promote the creation of pan-European players, many countries, including Spain and France, believe that energy should remain an area of strategic national interest.
Many of the conditions imposed by the regulator – the sale of around one third of Endesa’s domestic generating business to a Spanish buyer – appear designed to ensure the security of Spanish energy supply by keeping it in national hands.
Eon, which has already received permission from the EU competition authorities to go ahead with the merger, has complained that the conditions are excessive.
Meanwhile, the waters have been further muddied by an appeal by another Spanish energy group, Iberdrola, against the EU’s green light for the Eon deal.
The company claims that it had warned Brussels that the deal would have a serious impact on competition in the Spanish energy sector.
The company wants a more detailed analysis of the proposed acquisition, implying that the commission’s desire to promote cross-border energy deals has clouded its judgement.
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