BRUSSELS, Aug. 25 (Xinhua) -- The European Union (EU) on Friday threatened to overturn Spanish restrictions on a takeover bid by Germany's biggest utility E.On AG for Endesa -- Spain's largest power company.

    The EU's executive arm, the European Commission, issued an official warning that Madrid had exceeded its authority in blocking E.ON from buying all of Endesa.

    "The Commission has informed Spain formally that it has come to the preliminary conclusion that Spain has violated EU merger laws," Commission spokesman Jonathan Todd told reporters.

    In its preliminary view, the Commission said the Spanish restrictions had breached rules on the free movement of capital and the freedom of establishment, as they were neither necessary nor proportionate on the grounds of public security.

    Spain has until Sept. 4 to respond to the EU executive's decision.

    Brussels's battle with Madrid is part of an EU campaign to open energy markets to competition and knock down barriers to takeovers.

    Spain's National Energy Commission decided in July that the 26.9-billion-euro (34.3-billion-U.S. dollars) deal would not be approved unless E.On agreed to sell about a third of Endesa's power generation assets, saying the move was meant to reduce risks to supply in strategic sectors in Spain.

    Madrid had given its backing to Spain's Gas Natural SA which was also seeking a takeover of Endesa. Enditem