Brussels Could Act Against Spain Over Takeover Block
March 21, 2006
On Monday, the European Commission shrugged off Spain's failure to meet a Friday deadline in telling Brussels why the government had widened the powers of the country's energy regulator, which would enable it to block E.On's all-cash bid of 29.1 billion euros ($34.6 billion) for Endesa.
"We have enough information to come to a conclusion without the information from the Spanish government," EU spokesman Oliver Drewes told AP.
According to those close to the matter, proceedings against Spain for violation of EU treaties could begin next month. Such an action could last years and could eventually end up in the European Court of Justice.
Brussels has voiced concerns that Madrid's plans could create "obstacles" to energy firms from other EU countries seeking to move into the Spanish market.
The plans have spurred EU regulators into action because German energy giant E.ON is in the midst of a hostile bid for the Spanish group Endesa, which Madrid is deeply opposed to and wants to block, favoring instead an earlier but lower bid from a domestic company, Gas Natural.
Judge orders suspension
But on Tuesday, a Madrid judge ordered the provisional suspension of the hostile takeover bid by Gas Natural for Endesa at Endesa's request, a judicial source said.
The judge made the suspension conditional on Endesa paying the court within 10 days a guarantee of billion euros ($1.2 billion) against any damages arising from the proceedings.
Endesa brought the case saying that a pre-agreement for Spanish energy group Iberdrola to pick up between seven billion and nine billion euros of Gas Natural assets, to be divested in the event of a successful bid, violated article 81 of EU rules on free trade.
Gas Natural can appeal against the decision which came less than a week after the European Commission refused to extend Madrid's deadline to explain its backing for the bid in preference to a bigger offer from German giant E.ON.
The judge also suspended a pre-agreement reached between Gas Natural and electricity provider Iberdrola SA on the sale of assets if the takeover went ahead.