By Stephen Jewkes
MILAN (Reuters) - Spain's Iberdrola (MC:IBE) has accused its Italian peer Enel (MI:ENEI) of unfair competition and reaping the rewards of being state controlled as the two utilities go head to head in a bidding war in Brazil.
In a letter sent to the EU Commission, Iberdrola said Enel was taking decisions on investments it would not be able to do if it were not controlled and supported by the Italian government.
"It is critical that the European Commmission... prevents any Member State from passing legislation, adopting policies and taking measures that favour state-controlled companies and ... distort the level playing field," Iberdrola said.
Enel, which is 23.6 percent controlled by the Treasury, is currently slugging it out with Iberdrola to win control of Brazil's largest power distribution company Eletropaulo.
On Wednesday Enel raised its bid for Eletropaulo to 32 reais (6.6 pounds) per share only to see it immediately topped by an improved bid from Iberdrola's Neoenergia of 32.1 reais.
Enel, Europe’s biggest utility in terms of market value, paid around 39 billion euros (34 billion pounds) to take control of Spanish utility Endesa (MC:ELE) eight years ago.
It competes with Iberdrola in many markets around the world, including Latin America. Last year Iberdrola said it was entering Italy's retail power market, targeting 5-7 percent of the country's more than 37 million consumers.
In its letter to the Commission, Iberdrola said Enel benefited from a privileged "factual and regulatory" situation in Italy that guaranteed it cheaper and easier access to capital markets.
It said it was looking at legal actions to make sure the EU Commission looked into whether Enel and the Italian state were complying with competition rules applicable to state-owned or controlled companies.
The European Commission declined to comment, Enel was not immediately available for comment.