MILAN - Italy's antitrust authority has ordered Spanish utility Iberdrola and Germany's E.ON to reinstate the original electricity and gas contracts they had with customers, it said on Friday.

The watchdog also asked Italian utilities Iren and Dolomiti to stop what it alleged to be "illegitimate notices" regarding changes to the economic conditions of their offers.

The authority, which opened an inquiry into utilities last week, said that companies must report within five days on the steps they had taken to comply with the precautionary measures.

The watchdog last week accused Iren and Dolomiti of making unlawful unilateral changes in the electricity supply price.

Iberdrola and E.ON were challenged over the way they communicated with customers in Italy who were having difficulties paying their bills and who were then offered new contracts on less favourable terms.

"We will comply with the preliminary measures, and we continue to cooperate with the investigation, following the procedures specified by the Antitrust Authority" an Iberdrola spokesperson said, adding that the group remained confident that its actions "were in compliance with the law" and in the interests of its customers.

A spokesperson for E.ON reiterated it was cooperating with the Italian authorities, adding it believed to have acted legitimately and in compliance with current regulations.

Iren, and Dolomiti had no immediate comment on Friday's decision.

(Reporting by Agnieszka Flak in Milan, David Latona in Madrid and Miranda Murray in Berlin, editing by Keith Weir and Louise Heavens)