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European Commission raps Madrid over Endesa takeover conditions

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European Commission raps Madrid over Endesa takeover conditions

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Germany power firm E.ON’s takeover bid for Spain’s Endesa has been given a boost by European regulators. Spain’s National Energy Commission has ordered E.ON to sell about a third of Endesa’s electricity generation capacity before any deal can go ahead.

But now the European Commission has told Madrid that that order breaks EU merger rules. Spanish Prime Minister Jose Luis Rodriguez Zapatero’s government defiantly responded that the conditions are “all lawful.” Madrid has backed a rival bid to E.ON’s from the Spanish energy group Gas Natural, explaining that a foreign takeover might compromise the security of Spain’s energy supply.

The European Commission – which is trying to open up energy markets – said Spain’s conditions imposed on E.ON are “neither necessary nor proportionate for the protection of public security” and added that it is prepared to “act urgently” on the matter. If the Spanish government does not back down the Commission could sue Madrid in the European Court of Justice.