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Brussels, 26 September 2006

Free movement of capital: Commission calls on Spain to modify the law amending the functions of the Spanish electricity and gas regulator

The European Commission has decided to ask Spain formally to modify the legislation that extends the powers of the Comisión Nacional de Energía (CNE), the Spanish electricity and gas regulator. The legislation requires the authorisation of the CNE for the acquisition of over 10% of share capital, or any other percentage resulting in significant influence, in companies engaged in regulated activities or in activities subject to special administrative control. It also requires such authorisation for the acquisition of the assets needed to carry out these activities. The Commission considers that these provisions may unduly restrict the free movement of capital and the right of establishment as enshrined in EC Treaty rules (Article 56 and 43 respectively). The Commission's request takes the form of a 'reasoned opinion', the second stage of the infringement procedure laid down in Article 226 of the EC Treaty. The first stage of the infringement procedure, the 'letter of formal notice', was issued in May 2006 (see IP/06/569). In the absence of a satisfactory reply from Spain within two months of receiving the reasoned opinion, the Commission may decide to refer the matter to the European Court of Justice.

The Spanish law in question is Royal Decree-Law 4/2006 of 24 February, which amends the functions of the Comisión Nacional de Energía, the Spanish electricity and gas Regulator. This law includes provisions that subject the acquisition of over 10% of share capital, or any other percentage giving significance influence, in a company that engages, directly or indirectly, in regulated activities or activities subject to special administrative control, as well as the direct acquisition of assets to carry out these activities to an authorisation procedure. The Decree-law includes the reasons on the basis of which the CNE may grant or refuse such acquisitions: the existence of risks in relation to the above activities; the inability to perform them as a consequence of other activities carried out by the acquiring or acquired company; protection of the general interest and reasons of public security.

Having analysed the Spanish reply to the letter of formal notice, the Commission still considers that the prior authorisation procedure for the above-mentioned acquisition operations goes beyond what is necessary to safeguard the minimum supply of essential energy products and services and may deter investment from other Member States, in violation of the freedom of capital movement and the right of establishment. Moreover, EU secondary legislation already transposed – or in the process of being transposed – clearly covers the concerns of the Spanish authorities in this regard.

In conclusion, the Commission takes the view that the special powers provided for by the Spanish law may unduly restrict the freedom of capital movement (Art 56) and the right of establishment (Art 43).

The Commission also decided today that the decision of the CNE subjecting E.ON's bid for Endesa to a number of conditions breaches Article 21 of the EU merger Regulation (see IP/06/1265).
The latest information on infringement proceedings concerning all Member States is available at:

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