Brussels, 20/12/2006 (Agence Europe) - On 20 December the European Commission decided that Spanish measures in proposed E.ON/Endesa takeover are incompatible with EC law. New conditions imposed by Madrid in a decision of 3 November 2006 and in its response last week to the Commission's decision of 29 November (EUROPE 9317) have violated Article 21 of the EU Merger Regulation, and are therefore illegal. The illegal conditions should be got rid of by 19 January 2007. If they fail to do so, the Commission could open infringement proceedings under Article 226 of the EC Treaty.
If Madrid is hoping to avoid a reaction from the Commission before Christmas, it will be disappointed. DG Competition officials spent last weekend preparing a dossier in order for the college to be able to reach a decision which in effect demonstrates that the latest Spanish position (after the Commission's decision on the 29 November) has just worsened matters. According to the Commissioner for competition, Neelie Kroes' spokes person, not only the restrictions subject to the decision of 29 November have not been withdrawn but others that have been added are unacceptable too.
The Commission decision refers in particular to new conditions imposed in a decision of 3 November 2006, adopted in the framework of an administrative appeal against a previous decision of the Spanish Energy Regulator, CNE, on the proposed transaction. According to the Commission, the following conditions are incompatible with Community law: Endesa maintaining its brand for a five years period; the companies owning electricity assets outside mainland Spain are kept within the Endesa Group for a period of 5 years; Endesa's power plants using domestic coal continue to use such an energy source as foreseen in the national mining plans; E.ON not adopting strategic decisions, regarding Endesa and affecting security of supply, contrary to the Spanish legal order. The Commission considers that these modified conditions are incompatible the EC Treaty's rules on free movement of capital (Article 56) and on freedom of establishment (Article 43). The condition on the use of domestic coal is also incompatible with the EC Treaty's rules on free movement of goods (Articles 28).
Addressing the press, the Commission spokesperson underlined that “the Commission will not stand idly by while rules are violated”. He also added that Spain risked bringing “Community law into disrepute”, which explains the importance of the Commission taking action. (cd)