Spain again broke EU law in Endesa case: EU
20 December 2006, Brussels (dpa) - The European Commission on Wednesday ruled that Spain again breached European Union merger law by imposing modified restrictions on a multi-billion euro bid by E.ON AG of Germany for Endesa SA, Spain's largest power company.
20 December 2006
Brussels (dpa) - The European Commission on Wednesday ruled that Spain again breached European Union merger law by imposing modified restrictions on a multi-billion euro bid by E.ON AG of Germany for Endesa SA, Spain's largest power company.
In the latest twist in a test case for European cross-border deals in the energy sector, which the commission wants to prise open to competition, the EU executive said Madrid illegally placed conditions on the deal.
The commission gave Spain until January 19, 2007 to withdraw the restrictions on the planned merger or otherwise face legal action.
E.ON last month said it expects EU regulators to approve its hostile EUR 37.1 billion bid for Spain's Endesa after Madrid officials agreed to step back from the strict conditions they had imposed on the takeover earlier.
However, the commission said that Spain's changed stance "has not - or has only slightly modified" Madrid's original restrictions on the planned merger.
The EU executive ruled as illegal Spanish demands that Endesa does not sell any assets from the Canaries and the Balearic Islands, keeps the Endesa brand, uses domestically produced coal and does not divert gas to markets outside Spain.
E.ON's problems in Spain began last summer when Spanish authorities imposed tough conditions on its bid for Endesa, although EU regulators had already approved the merger unconditionally.
The commission ruled in September that Spain violated EU competence and told the government to withdraw all conditions.
This decision was a setback for the Spanish government which had hoped to create a national champion in the energy sector to protect the industry from foreign takeover bids.
The commission is currently fighting to prise open European energy markets by dismantling cartels and eliminating barriers to cross-border takeovers.
A number of EU members have tried to block takeovers of key companies in recent months.
Spain had originally backed a merger between Endesa and the country's top gas supplier Gas Natural, which offered EUR 22.5 billion for the company.
But the commission approved E.ON's takeover of Endesa in April, arguing that the merger would not dominate European electricity markets.
Subject: German news