December 8 (SeeNews) - The European Commission has formally requested Croatia to amend the 2002 law on the privatisation of oil and gas company INA-Industrija Nafte d.d. on the grounds that it violates the free movement of capital and the freedom of establishment.
The Commissions request takes the form of a reasoned opinion, however, if Croatia fails to bring legislation on INA in line with EU law within two months, the Commission may decide to refer it to the Court of Justice of the EU, it said in a statement.
INA-Industrija Nafte d.d., the biggest Croatian energy company, is owned by Hungarian oil company MOL with a 49.08% stake and the Croatian government with 44.84%, as institutional and private investors hold 6.08%.
The INA law grants the state special powers in the company, including veto powers over INA‘s decisions relating to the sale of shares/assets with a value exceeding certain thresholds. As a consequence, stakeholders are not able to influence important company decisions in proportion to the value of their shareholdings, which may discourage potential investors from making investments in INA company, the Commission explained.
"The Commission considers that these special powers constitute a restriction to the free movement of capital and freedom of establishment that cannot be justified under the TFEU," it said.
Although the objective of protecting the security of energy supply could justify restrictions to the freedoms listed in TFEU, the Commission also noted that the unconditional veto powers granted to the state by the INA law seem to go beyond what is necessary and proportionate to achieve this objective.
The Croatian authorities undertook the commitment to align the INA law with EU law before its accession to the EU, but it has not modified it yet.