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Hungary Mining Act violates EU state aid rules: EC

The European Commission has concluded that a 2005 agreement, in combination with an amendment, in 2008, to the Hungarian Mining Act, between the Hungarian government and the Oil and Gas Company MOL conferred a financial advantage on the company that cannot be exempted under EU State aid rules.

By today's decision, the Commission requests the Hungarian government to recover the aid that the latter has calculated at HUF 30.3 billion (EUR 112 million).

“The investigation has proven that MOL benefitted of a financial advantage by paying lower mining fees than its competitors. This type of clearly discriminatory aid is not allowed under EU rules," said Commission Vice President and Competition Commissioner Joaquín Almunia.

In January 2009, the Commission opened an in-depth investigation regarding an alleged state aid measure put in place by Hungary in favour of the national oil and gas company MOL. The measure under assessment was an agreement between MOL and the Hungarian government dating back to 2005, according to which MOL's mining royalty payments on extracted hydrocarbons remained fixed for the majority of its hydrocarbon mining fields until 2020. An amendment of the Hungarian Mining Act in early 2008 significantly raised the fee, whereas MOL's mining fee obligation remained at the lower levels stipulated in the 2005 agreement.

After an investigation during which the Hungarian government and all parties concerned where given the opportunity to submit their views, the Commission concluded that the financial advantage conferred on MOL could not be approved under EU State aid rules as it represents an operating aid. The Hungarian authorities have calculated the aid thus granted to MOL at HUF 30.3 billion (€112 million) that the Commission seeks reimbursement to the State, including interest.

EU State aid control is an essential component of competition policy and ensures a level playing field for companies in Europe. They also avoid Member States engage in wasteful subsidy races, which are non-sustainable for individual Member States and detrimental to the EU as a whole.

The Commission encourages Member States and regions to prioritise action to strengthen the competitiveness of their economy as well as increase social and regional cohesion. State aid towards research, development and innovation projects, towards training, renewable energy or the protection of the environment are amongst the types of support that can be allowed under rules that are clearly defined and public.

More information on EU State aid rules

More information on the case: C 1/2009

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