Why? Well, the Spanish government has provided companies with a tasty tax break that has allows them to claim all the goodwill on foreign acquisitions back against tax over a period of ten years.

In the takeover of Abbey National, Santander enjoyed a €10bn (£7bn) fillip from the Spanish taxman. Telefonica recorded €9bn in goodwill when it snapped up O2.
The tax break has undoubtedly given Spanish companies an edge in takeover battles, and in most cases it has been UK companies on the receiving end. The relief on goodwill has been like making acquisitions on steroids.

At long last, the European Commission has decided to put a stop to what, as far as
I can tell, has been a blatantly unfair advantage.

EU competition commissioner Neelie Kroes has opened a formal investigation into the Spanish scheme and experts believe the EU may even go so far as to demand that Spain claw back the tax from companies that have already benefited.

The Spanish government says the tax break does not discriminate against any sector, is on offer to all companies domiciled in Spain and is a domestic policy that is not any of the EC’s business.

Frankly, I don’t buy it. Tax relief on all goodwill, unlike interest relief, is not a standard tax measure available in most jurisdictions. It is unusual and very generous.

Spanish companies are obviously angry about the EU move. Business in the rest of the EU will probably be highly relieved. The odds of being outbid by a Spanish rival have just become a whole lot shorter.

Nicholas Neveling is a reporter on Accountancy Age