(BRUSSELS) - EU regulators told Spain on Wednesday to drop some conditions Madrid had imposed on a bid by Enel and Acciona to take over Spanish power company Endesa after finding they were illegal.

In the latest twist in a long-running standoff, the European Commission said the conditions broke EU merger rules and ordered Spanish authorities to withdraw them by January 10.

In Madrid, a spokesman for the Spanish ministry of industry said the government maintains the conditions are consistent with EU regulations but would study the Commission finding before responding.

After long blocking a bid by German company EON for Endesa, the Spanish government gave the green light in July to a combined bid by Acciona, a Spanish construction group, and Italian energy concern Enel to acquire Endesa but attached a string of conditions.

The Commission said the illegal conditions included an obligation for Enel and Acciona to maintain Endesa as an independent company and to retain its decision-making centre in Spain.

The European Union's top competition watchdog also cited limitations on Endesa's debt service ratio and on the company's dividends distribution policy.

Equally, the Commission said an obligation on Endesa generation assets to purchase amounts of national coal was incompatible with EU rules, as was the obligation to keep far-flung assets not on the Spanish mainland within the Endesa group.

Madrid and the European Commission had already clashed over EON's bid for Endesa, which was seen in Brussels as an example of crude protectionism by Spain against another European company.

Further details - European Commission

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