EU says Spain violated European competition rules on Enel bid for Endesa

The EU's executive arm is waging a long battle with Madrid over efforts to shield the country's power company from foreigners.

Brussels (AP): Spain violated European Union competition rules by imposing protectionist conditions on the takeover of Spain's largest utility, Endesa SA, by Acciona SA and Italian utility Enel SpA, the European Commission said on Wednesday.

The EU head office said an investigation into Spain's energy commission, CNE, found it violated the rights of Enel and Acciona to invest, to set up a business and to move goods anywhere in the 27-nation bloc.

It concluded that ``some of the conditions'' set by the CNE ``still violate'' EU competition rules ``and are incompatible'' with EU internal market rules. The Commission requested that Madrid scrap those conditions by Jan. 10.

Under EU treaty regulations, EU regulators are supposed to have exclusive authority to review merger and other antitrust cases that could affect competition across the EU.

Acciona and Enel gained acceptances in October for 85.3 percent of the shares targeted in their tender for Endesa, bringing their combined ownership in the Spanish electricity company to more than 92 percent.

Under terms the energy agency imposed on the deal in April and July, the CNE wanted the right to intervene in the company if it believed the new owners were not acting in the best interests of Spanish energy users.

It also wanted authority to block any Endesa shareholder decision if it thought it would damage the national interest. The agency also ordered Enel, partly owned by the Italian state, to tell the CNE every year if any part of its corporate strategy might affect Spanish assets, its interests or its national security.

The Commission said those demands were ``incompatible with EU law,'' notably Spanish demands to maintain Endesa as an independent company and a limitation in Endesa's debt service ratio and its dividends distribution policy.

The CNE was using powers granted to it under a 2006 energy law that the European Commission has also said may infringe EU law.

The EU's executive arm is waging a long battle with Madrid over efforts to shield the country's power company from foreigners. The Spanish government successfully deterred Germany's E.On AG from taking over Endesa, even though the EU had tried to weigh in and clear away the Spanish roadblocks.

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