EU regulators to pounce on Endesa ruling

The European Commission is expected to challenge the Spanish authorities' decision to impose wide-ranging conditions on the planned acquisition of Spanish energy giant Endesa by Germany's E.ON, according to lawyers familiar with the case.

A senior lawyer, who asked not be named, said that the Commission was unlikely to accept Spain's likely arguments that the conditions were justified by concerns about security of supply.

On 28 July the Spanish national energy commission CNE said E.ON could buy Endesa provided it met 19 conditions, mainly asset disposals. The Commission is examining these conditions to see if they are compatible with EU competition law. It approved the takeover without conditions in April. Governments can only block mergers which have been cleared by the Commission on grounds of public security, prudential reasons (protection of investors' interests) or media pluralism.

The lawyer said "no-one believes in the argument" about security of supply, adding that if any company was in a position to ensure supply it was E.ON.

CNE has said that Endesa should sell off 32% of its generating capacity in Spain including coal-fired plants linked to mines, generating capacity off the Spanish mainland in the Balearic islands and the ASCO 1 nuclear power station.

If the Commission does not accept that the conditions are justified it can decide to impose interim measures. This would allow companies to appeal against any move to block the takeover by the Spanish government in a national court.

E.ON has already announced it is planning to appeal against the conditions. Company spokeswoman Sabine Hower said that they were "not justified".

E.ON's appeal is expected to focus on the asset disposals Endesa is required to make.

When the Commission cleared the acquisition it said that there was little overlap between the two companies' activities.

But the takeover by E.ON has met political opposition from the Spanish government which would prefer Endesa to be taken over by Spanish energy firm Gas Natural.

Gas Natural has bid 22 billion euro for Endesa compared to the 27bn euro E.ON has offered.

The takeover would create the world's largest energy company with 75bn euro in annual sales.

The European Commission is expected to challenge the Spanish authorities' decision to impose wide-ranging conditions on the planned acquisition of Spanish energy giant Endesa by Germany's E.ON, according to lawyers familiar with the case.

• Primary Source