UPDATE 5-EU court says Spain broke law over Endesa deal

(adds Spain will lift conditions, follow ruling, paragraph 6)

By Michele Sinner and David Lawsky

LUXEMBOURG/BRUSSELS, March 6 (Reuters) - Europe's top court condemned Spain on Thursday for defying a European Commission judgment on an energy firm takeover and warned Madrid it must obey Brussels' rulings even when it thinks they are wrong.

The European Court of Justice said Spain violated European Union law by placing conditions on the failed 42 billion euro ($64.2 billion) acquisition of Spanish utility Endesa (ELE.MC: Quote, Profile, Research, Stock Buzz) by Germany's E.ON EONG.DE.

"Spain has infringed community law by not withdrawing the conditions for E.ON's acquisition of Endesa," the court said. The Commission, executive arm of the 27-country European Union, called on Spain to follow the court ruling.

"We expect Spain and all member states to take note of this ruling and respect community law," said Jonathan Todd, a spokesman for European Competition Commissioner Neelie Kroes.

A Spanish government spokesman minimised matters: "The effects of the decision are practically nil as the deal never took place. For this reason the government accepts the decision."

Later he told Reuters that Madrid would act to carry out the ruling. He said: "The conditions will be eliminated."

E.ON Chief Executive Wulf Bernotat said the decision was "meaningless to us. It's almost history".