SPANISH companies could be forced to hand back billions of euros in tax breaks used to help them take over foreign companies after the European Commission launched an investigation.

Officials from the EC claim state aid rules were possibly broken through Spain’s corporate TRLIS tax law, which gives Spanish companies tax reductions when they acquire stakes in foreign businesses.

The probe follows complaints by MEPs that the law allowed Spanish companies to beat offers.

The commission said the complaints alleging illegal use of state aid primarily concerned mobile operator O2’s takeover by Telefonica, Spain’s biggest telecoms group, and bids by Sacyr, Albertis and Cintra for highway concessions in France.

“Many believe these tax breaks give an unfair advantage to Spanish companies buying foreign companies,” an EC spokeswoman said.