The European Commission raided the offices of Hungarian power companies MVM and Mavir on Tuesday (16th May) morning, stating that the companies were under suspicion of restricting access to the network through long-term contracts.

According to the EC, it had “reason to believe that the companies concerned may have violated EC Treaty antitrust rules that prohibit restrictive business practices and/or abuse of a dominant market position”. The statement did not name the companies, but both confirmed they received a visit, and in fact, MVM told The Heren Report that the delegation was still present on Wednesday (17th May).

MVM is Hungary’s state-owned power wholesale distribution company, providing electricity to the regulated section of Hungary’s power market, and is also the transmission system operator. MVM also owns the Paks nuclear power station, which provides almost 40% of Hungary’s electricity. Mavir operates Hungary’s balancing system across the network, and takes pains to stress its independence from generation and distribution companies.

According to a spokeswoman for Mavir, seven people took part in the surprise visit, four from the EC and three from the Hungarian Competition Authority (GVH). She stated: “It’s not Mavir they’re investigating, it’s MVM, so it’s not clear why they raided us.”

These surprise raids are preliminary to investigations into anti-competitive practices, according to the EC.

Neither MVM or Mavir have been given any details of why they are being investigated, but a spokeswoman for the European Competition Commission said the companies were accused of restriction of access to the network through long-term power purchase agreements. The enquiry is not directly linked to the Europe-wide energy sector competition inquiry, although information from this has helped to formulate the information leading to the raids.

There was no information available as to the timeframe of the investigation. The European Commission statement said that duration could depend on “a number of factors”, and there was no strict deadline.

Hungary’s power market was partially liberalised from 2003, with large users consuming more than 6.5 GWh annually able to source power from providers other than

MVM. Residential users are still under regulated tariffs, paying EUR 131.27/MWh (including VAT) since 2005, but prices have almost doubled since 2001, when the regulated price was EUR 74.08/MWh. The market is due to be fully liberalised in 2007.

According to the Hungarian Energy Office, Hungary’s total power market is 39.4 TWh annually. Hungary imported 15,637 GWh in 2005, primarily from Slovakia, and exported 9,410 GWh, mainly to Croatia.

(THE HEREN REPORTS - EDEM 10094 / 17 May 2006)