EU vows action against Spain despite EON withdrawal

(BRUSSELS) - The European Union's competition watchdog vowed Tuesday to continue legal action against Spain despite German energy group E.ON's decision to give up its bid for Spanish utility Endesa.

"We will continue our action against Spain before the court," said Jonathan Todd, the European Commission's spokesman for competition affairs.

After trying to get its hands on Endesa for more than a year, E.ON ceded victory late Monday to rival bidders Acciona of Spain and Enel of Italy.

Madrid has been fighting tooth and nail to keep E.ON from taking over Endesa even though the Commission, the EU's top competition regulator, had approved the deal.

The EU's executive arm open a second lawsuit at the European Court of Justice on Wednesday because Spain has defied repeated requests to lift conditions it imposed on E.ON's bid for Endesa.

The Spanish energy regulator CNE set a number of requirements for E.ON, including that it must conserve for five years the Endesa brand name of the biggest Spanish electricity generator.

It also demanded that Spanish coal be used in power stations and said that certain assets could not be sold off.

The Commission lodged a first lawsuit against Spain in January for giving the CNE regulator powers to scrutinise foreign takeovers.

The E.ON-Endesa case has been widely seen in Brussels as a flagrant example of protectionism by Spain.