The European Commission has formally requested that Spain explain why the conditions imposed by Spanish energy regulator CNE in relation to E.ON's takeover of Endesa, which were declared contrary to community law, have not been withdrawn as requested.

On September 26, 2006, the Commission adopted a decision to the effect that CNE’s decision, subjecting E.ON’s bid for Endesa to a number of conditions, breached Article 21 of the EU Merger Regulation.

In particular, the Brussels authority concluded that Spain had violated Article 21 of the Merger Regulation due to the adoption of CNE’s decision without prior communication to (and approval by) the Commission and the submission of E.ON’s acquisition of control over Endesa to a number of conditions contrary to the EC Treaty’s rules on freedom of establishment and free movement of capital.

Moreover, the September decision required Spain to withdraw without delay the conditions imposed by CNE, which had been declared incompatible with community law.

However, three weeks after the notification of the European Commission decision, the Spanish authorities have not informed the body of any steps or measures taken in order to comply with the September decision.

The failure to respond has now led to a request of explanation which takes the form of a letter of formal notice, the first stage of infringement proceedings under Article 226 of the EC Treaty. If there is no satisfactory reply, the Commission may decide to issue a formal request to Spain to withdraw the relevant conditions. This would be in the form of a reasoned opinion, the second stage of infringement proceedings.