Brussels, 25/08/2006 (Agence Europe) - After a preliminary assessment, the European Commission says that 'most of the conditions imposed on E.ON by the Spanish Energy Regulator CNE in a decision adopted on 27th July 2006 (concerning E.ON's bid for Endesa) raise serious doubts as to their compatibility with EC law' explained a competition spokesperson on Friday. At the end of April, the Commission endorsed under the EU Merger Regulation the acquisition by E.ON of sole control of Endesa in a deal worth EUR 26.9 bn (see EUROPE 9179), but in its investigation of measures imposed by CNE, it pointed out to Madrid that under Article 21 of the EC Merger Regulation, the Commission has exclusive powers to assess the competitive impact of mergers with an EU dimension. Member States cannot apply their national competition law to such deals and may not pass measures which could prohibit or prejudice such deals unless the measures protect interests other than competition and are necessary and proportionate to protect interests which are compatible with all aspects of EU law. In this case, the Commission believes CNE's conditions violate the EC Treaty's rules on the free movement of capital (Article 56) and the freedom of establishment (Article 43), explains the Commission in a press release. Spain has until 4 September to respond. If the Commission's doubts are confirmed, it may adopt a decision requiring Spain to withdraw CNE's conditions.