New Spanish Anti-Takeover Moves Scrutinised

by Ulrika Lomas, for LawAndTax-News.com, Brussels

09 March 2006

According to reports in the national and European media this week, the European Commission has taken issue with a move by the Spanish authorities to block the takeover of the country's largest power company by a German rival.

After an offer for Endesa lodged by Germany's E.ON topped a bid by Barcelona-based Gas Natural, the government of Spain put in place new rules to ensure that the German bid would need to be approved by the Energy Commission (CNE), which has been afforded new powers to prevent the cross-border merger from taking place.

Speaking to AFX News, Oliver Drewes, spokesman for Internal Market Commissioner, Charlie McCreevy stated that:

"We can confirm we sent a letter to Spain on Friday evening in relation to the recent events concerning E.ON's bid for Endesa and especially the response of the Spanish authorities to this approach which has given the Commission cause for concern."

However, in an interview with Bloomberg, Spain's Industry Minister, Jose Montilla hit back, observing that:

"Every nation tries to protect industries it considers strategic. No government should neglect any resource. It has to protect interests it considers legitimate and within law."

This is not the only recent example of protectionism in the European energy market. Earlier this month, it emerged that it was unlikely that action will be taken by the European Commission over the planned merger of French energy firms, Suez and Gaz de France.

The proposed alliance has greatly angered the Italian government, which views it as an attempt to prevent Italian energy provider Enel from gaining a stronger foothold in France by absorbing Suez.

Italy's Finance Minister, Giulio Tremonti met with EC Competition Commissioner Neelie Kroes at the Commission’s Brussels headquarters to discuss the matter.

However, commenting after the meeting, Commissioner Kroes noted that the European Commission had not received any notification under the EC Merger Control Regulation, and that she was therefore unable to comment regarding any possible impact on effective competition resulting from the proposed merger.

She stated that the EC will thoroughly and impartially analyse any takeover bid involving Suez if and when notified in accordance with EC Merger Control Regulation.

Speaking on French radio with regard to the matter, Europe's Justice Commissioner, Franco Frattini also appeared to dampen the hopes of the Italian authorities for immediate EC intervention, observing that although the move represented "a blow against the spirit of the European common market", it did not appear to be illegal under European law.

However, according to Reuters, he added that:

"I don't think that something that is bad for Europe is good for Paris. We have to relaunch the spirit of the single market that we are in danger of losing."

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