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Brussels, 6th March 2008

Mergers: Commission welcomes Court judgment on Spain's failure to withdraw illegal conditions imposed on E.ON / Endesa merger

The European Commission welcomes today’s judgment by the European Court of Justice (case C-196/07) on an infringement case against Spain. The Court found that Spain failed to comply with the Commission's decisions requiring the withdrawal of certain conditions imposed on E.ON’s bid for Endesa. Some of the conditions were imposed by the Spanish Energy Regulator (CNE) in July 2006, others by a Ministerial decision of 3 November 2006. The conditions in question were declared illegal under Article 21 of the EU Merger Regulation by Commission decisions adopted on 26 September 2006 and 20 December 2006 respectively. When Spain failed to withdraw the conditions, the Commission referred the case to the Court in March 2007 (see IP/07/427). The Court ruling confirms that Member States cannot deprive businesses and consumers of the benefits of the Single Market. Today's judgement confirms that the Commission can and should continue to monitor national measures in order to ensure that Member States do not impose unjustified restrictions on cross-border mergers that are the exclusive competence of the Commission.

The European Commission approved the proposed E.ON bid for Endesa on April 25th 2006 under the terms of the EU Merger Regulation (see IP/06/528). However, in July 2006 the Spanish energy regulator CNE adopted a decision imposing a number of conditions on the E.ON bid, which were then modified by a decision of the Spanish Minister of Industry on 3 November 2006. Both these decisions were found by the Commission, on 26 September 2006 and on 20 December 2006 respectively (see IP/06/1265 and IP/06/1853), to be in breach of Article 21 of the EU Merger Regulation. The Commission decisions required Spain to withdraw the conditions which had been declared incompatible with EU law.

Since the Spanish Government did not withdraw the illegal measures, the Commission decided to open an infringement procedure under Article 226 of the EC Treaty. Despite the letters of formal notice and the reasoned opinion, the Spanish authorities did not comply with the Commission decisions. Therefore, the Commission decided to refer the case to the European Court of Justice (see IP/07/427).

Today's judgement is of material significance because it confirms the Commission’s position that Member States should comply with the Commission's decisions requesting the withdrawal of State measures that have been declared illegal because they negatively affect mergers of a Community dimension and are not necessary and proportionate for the protection of a legitimate public interest.

Finally, the Court clarified that, contrary to what the Spanish authorities argued during the proceedings, the fact that EON's public offer failed does not render the action devoid of purpose or interest and does not make it absolutely impossible to implement the Commission's decision.

For more information in relation to the Court judgement, please see the link below.

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