SPANISH companies are keen acquirers of businesses elsewhere in European Union countries, Britain especially, but the Spanish government is much less welcoming when other EU countries want to buy assets here. A case in point is the attempt by the German power company E.ON to purchase Spain's electricity firm Endesa. Madrid has been blocking this deal for many months despite disapproving noises from the EU Commission in Brussels which ruled in August that the restrictions imposed on the deal were illegal under EU law. But apparently E.ON and Endesa kept talking and arrived at an understanding which, however, simply substituted new conditions which Brussels has found just as objectionable as the previous ones. They include stipulations that the new merged company would keep the Endesa brand, use domestically-produced coal and not divert gas to markets outside Spain.

The EU Commission has given Spain until December 13 to withdraw the conditions; if Spain refuses, Brussels could adopt a formal decision “requiring Spain to withdraw the conditions which are incompatible with EU law”. The Spanish government claims that conditions in other cross-border deals have contained similar restrictions and that Spain is being discriminated against; it has indicated that it would be content to see the issue settled in the European Court, a process that could take years. Meanwhile, Spain's utility Iberdrola has just agreed to buy Scottish Power for 11.6 billion pounds. Whitehall was silent.


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