The European Commission has approved the proposed GBP11 billion acquisition of UK energy provider ScottishPower by Spain's Iberdrola, on the grounds that it would not significantly impede effective competition in the European Economic Area.

Iberdrola, which is engaged in electricity, gas, engineering and construction industries and real estate services, operates primarily in Spain and Latin America. ScottishPower, meanwhile, is active in the electricity and gas industries in the UK, with slight market penetration in Ireland.

The investigation revealed that the horizontal overlaps between the activities of both parties are strictly limited to the trading at European level of so-called ‘financial’ electricity and CO2 emissions rights and that their combined position in both markets is also restricted.

The activities of the energy firms are also expected to overlap in the near future in the UK, where the Spanish energy group plans to develop wind farms.

The merged entity will continue to face several strong competitors, the commission stated.

According to the BBC, the Scottish National Party was displeased with the decision, and had hoped that a full inquiry would have been launched.