‘Luxembourg Six’ must still clear competition hurdles, cautions Monti

Date: 07/06/01

By Laurence Frost

THE adoption of EU competition and state aid rules could pose a serious obstacle to accession for some candidate countries, according to Competition Commissioner Mario Monti.

The anti-trust chief said in order for the European Commission to recommend the closure of 'competition chapter' negotiations as planned later this year, applicant countries would have to clear several hurdles. The Union executive has so far refused requests for transition periods, arguing that the current rules allow enough flexibility.

In a briefing to eastern European journalists, he highlighted concerns over the state of play in even the leading 'Luxembourg Six' candidate countries - Poland, Hungary, Estonia, the Czech Republic, Cyprus and Slovenia.

These worries are due to resurface when the Commission sends representatives to meet competition chiefs from applicant countries at a conference in the Slovenian capital, Ljubljana, later this month (18-19 June).

Among the six, Monti said, "regrettably, the situation is still not satisfactory", adding that the gap between legislation and enforcement was a cause for concern.

Most candidate states already had some sort of anti-trust regime in place for monitoring competition between companies, he said, but a system for controlling state aid was often lacking.

The Commission's last assessment at the start of this year found Cyprus to be the worst performer, with no state aid legislation in place and no controlling body set up. It said the country's tax-break regime would breach Union rules. Fiscal aid was also a problem in Hungary, since it was not subject to the existing state-aid controls, and company tax incentives - notably to the motor industry - were in violation of EU rules.

Poland had made "considerable progress" with state-aid legislation introduced this year, the report found. But there was no record of enforcement by which to gauge its success, and Warsaw was still allowing aid to steel makers that would be illegal by EU standards. Estonia also needed to broaden the scope of laws introduced in 2000, while Slovenia emerged ahead of the pack with "no major problems" reported with its rules of the same year.

The Commission will update the progress report on the six countries when it meets their competition authorities at Ljubljana. "It will be the best opportunity to find out how far the countries have progressed, and whether we'll be able to advise ministers to close the competition chapters," said one Commission official.

But some of the signs are already there. Early reports suggest that Slovenia is still at the ahead of the pack and Cyprus still lagging behind, with persistent worries over the exclusion of its offshore tax scheme from legislation introduced in April.

Article forms part of a survey on enlargement.