Generally, EU competition regulators will review M&A deals where the two companies involved generate one third or more of their revenues outside their home states. In this case however, the EU has decided that both Gas Natual and Endesa are sufficiently dependent on Spain for their income that the case should fall under the jurisdiction of Madrid-based investigators.

EU competition commissioner Neelie Kroes said that, after a careful assessment, we concluded that, under existing EU merger control rules, the proposed deal does not have a [EU] community dimension.

The consensus among observers is that Spain is likely to prove more amenable to passing the takeover than Brussels.

Endesa is trying to resist the E22 billion hostile takeover bid from Gas Natural in what risks becoming an increasingly protracted and intemperate battle. Last week, the Spanish energy regulator approved Gas Natural’s approach albeit with some conditions attached. Gas Natural has already pledged to divest up to E9 billion worth of assets to Iberdrola if the deal goes through.