Neelie Kroes,
European Commissioner
for Competition 
Madrid, Spain --- (METERING.COM) --- January 22, 2007 – The Spanish energy market continues to attract plenty of attention – last week because it appeared that the takeover of U.K. utility ScottishPower by Iberdrola of Spain was well on track, and this week because of the possible sale of Endesa to E.ON of Germany.

Two companies indicated an interest in acquiring Endesa some 18 months ago – E.ON and Gas Natural of Spain. The Spanish government supported the bid by Gas Natural, as a means of keeping Endesa in Spanish hands, and laid down a long list of conditions which it said E.ON had to comply with before its takeover bid could be approved.

This attracted the attention of Neelie Kroes, the European Commission competition commissioner. E.ON’s bid for Endesa had already received regulatory approval from the Commission, but three months later Spain's national energy commission tried to block the sale by introducing the list of 19 conditions.

The Commission labeled these conditions illegal, and the Spanish government agreed to drop most of them. It still, however, retained some – principally that E.ON would have to leave the Endesa brand intact for five years, use domestic coal, and retain Endesa’s generating assets in North Africa. In December last year the Commission decided that these conditions were also illegal, and gave the government until last Friday to withdraw them.

Madrid has told the EC that it will not withdraw the last conditions, which leaves the way open for Brussels to open an infringement procedure.

The Spanish government feels vindicated, however, by the fact that E.ON has since upped its offer for Endesa. It appears unlikely that Gas Natural will be able to beat the improved offer, and E.ON is likely to win the takeover battle, which will make it the largest energy utility in Europe.