European Union officials gave Spain a January 10 deadline yesterday to scrap national conditions on the takeover of the nation's largest utility, Endesa, in order to comply with EU rules or face a possible lawsuit.
Brussels said an investigation found that Spain's energy commission, CNE, violated the rights of Italian utility Enel and Acciona of Spain to invest, to set up a business and to move goods within 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 Spanish authorities have until the 10th of January, 2008, to remove the conditions which we have deemed to be illegal," EU spokesman Jonathan Todd said.
"If, by some unfortunate circumstance, the Spanish authorities were not to remove those conditions, then the commission would have the possibility of opening an infringement case against Spain."
Under EU treaty regulations, 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 control over Endesa in October when they raised their combined stake in the company to more than 90%.
Under terms the CNE imposed on the deal in April and July, the agency 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 strategy might affect Spanish assets, its interests or its national security.
Those demands were "incompatible with EU law," the commission said, 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 commission has also said may infringe EU law. - AP
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