The European Commission launched legal action against Spain today for making it harder for foreign firms to take over domestic energy companies, an EU official said.
Germany's E.ON has won European Commission clearance for a €29 billion bid for Spain's Endesa .
The bid is stuck in the Spanish regulatory process while the country's energy regulators decide whether it can go ahead.
Spain's Gas Natural has made a lower bid for Endesa and the Spanish government favours a domestic tie-up.
Gas Natural's offer has been suspended by a commercial court on grounds that it may have contravened European takeover rules.
Spain earlier this year beefed up the powers of its utility regulator, making it more difficult for a foreign company to acquire a Spanish rival.
Brussels has launched a series of legal actions against member states in recent weeks in a bid to safeguard the EU's internal market and allow the free movement of capital.