The conditions imposed by energy regulator CNE over German energy giant E.ON are illegal, the Commission ruled on 26 September.
According to the Commission, Spain has violated EU merger rules by imposing conditions on the German utility that run contrary to the principles of freedom of establishment and free movement of capital.
Moreover, CNE applied its decision without prior notification and approval by Brussels, which is also contrary to EU rules on cross-border mergers, the Commission added.
The ruling is considered as a victory for Competition Commissioner Neelie Kroes who has made the fight against European protectionist resurgence one of her political priorities.
“The Commission will uphold its right to apply the EU’s merger control rules to the benefit of all companies,” said Kroes in a statement.
Spain’s newly appointed Industry Minister, Joan Clos, already announced that he would respect the ruling, saying “it would be inherently unintelligent … to fail to address the Commission’s comments”. “European legislation is Spanish legislation,” Clos added, according to press reports.
In November, Brussels is widely expected to give a green light to a proposed merger between Suez and GDF, which has also drawn criticisms for being driven by protectionist motives. The move was announced by the French government in February to counter an upcoming bid on Suez by Italian utility Enel.