The European Commission took a defiant Spain to the EU's highest court on Wednesday for interfering in German utility E.ON's 42.3 billion-euro ($56.5 billion) bid for Endesa.
The widely expected move was the latest legal complication in a take-over battle for Spain's biggest utility that has raised accusations of economic nationalism and fears a deal could be mired in litigation for years.
In a statement, the European Union executive said it was taking action against Spain for not scrapping all the conditions it slapped on E.ON's bid and which the EU ruled illegal last year. Spain withdrew some of the conditions in November. "We believe these conditions fit in with EU law and so will stand up in court," a source at Spain's industry ministry said.
Industry Minister Joan Clos said Europe itself was to blame for the wrangle over E.ON's bid. "We have ... rigorous laws on capital movements but we still don't have a common energy policy," he was quoted as telling news agency Servimedia. "While that process is not finished (the government) has the right to defend our energy supply."
The case came as Spanish market regulator CNMV said it saw no legal problem in a deal between E.ON and savings bank Caja Madrid which may help the German power giant have a say in Endesa despite its two major shareholders planning a counterbid in an increasingly complex 18-month take-over battle.
On Monday, Italian utility Enel and Spanish builder Acciona, which together own 46 percent of Endesa, unveiled plans to make their own 41 euro/share bid after E.ON raised its offer, for the third time, to 40 euros a share.
CNMV has banned Enel and Acciona from making an offer for six months but Enel said on Wednesday it would ask the regulator to lift this ban. The possibility of E.ON/Caja Madrid and Enel/Acciona both holding major stakes in Endesa has sparked talk of a break-up of the power group. Enel and Acciona have also said they could split the company up in the future.
Clos was quoted as saying a split would be "problematic" but that the government would not be able to intervene. In the meantime, E.ON plans to take Enel and Acciona to court while Enel wants to sue Caja Madrid for siding with E.ON.
CNMV has been criticised for its actions over the Endesa battle, first forbidding and then allowing E.ON to raise its offer price and not fining Enel/Acciona for essentially making a counterbid when another offer was open.
Economy Minister Pedro Solbes defended the watchdog on Wednesday. "The CNMV has my total support and is having to deal with a really complicated situation," Solbes told reporters.
The government has made no secret of wanting to keep Endesa in Spanish hands. State holding company Sepi, which owns 3 percent of Endesa, is due to hold a board meeting on Wednesday and could announce whether it intends to sign up to E.ON's bid.
Spain's resistance to E.ON, along with take-over resistance from the Italian and Polish governments, have raised concerns in Brussels about governments trying to protect big national firms in sectors such as energy, transport and banking. "The Commission is determined to enforce a European Union based on law," EU competition spokesman Jonathan Todd said.
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