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Slovakia fines Slovnaft, tramples on free market principles

Slovakia fines Slovnaft, tramples on free market principles
Slovakia’s Finance Ministry fulfilled its ealier promise and fined Hungarian gas and oil company Mol Rt’s local subsidiary Slovnaft AS for 1.35 billion korunas (Euro 35.5 million) for hiking its pump prices above the expected rate, Mol Communications Director György Bacsur confirmed a newswire report from Dow Jones. In late January, when the Slovak government first announced plans to fine the company, Slovnaft told Bratislava’s daily Pravda that it would seek justice in Slovak and European courts if the ministry approved the fine. Sources close to the company also confirmed that the management regards the decision as nonsense in economic terms and is determined to fight against it all the way to Brussels. In a supposedly free market economy, the government simply cannot go to such extremes as imposing a discriminative penalty like this, Kornél Sarkadi Szabó, a senior analyst with Raiffeisen Bank Rt, told BBJ Online. The fine violates EU norms and free market principles, he added. According to another source, the explanation offered by the Slovak finance ministry for the decision is that Slovnaft’s prices were “unreasonably high” in 2004, which allowed the company to reap a profit between 2002 and 2004 that was too high in the government’s opinion. A finance ministry audit concluded that Slovnaft’s prices were boosted by unjustifiable costs – an argument that makes no sense at all as Slovnaft’s prices follow global market prices, not the company’s costs. “The finance ministry's step is not in line with the picture Slovakia is trying to paint of the investment climate in the country,” MOL Strategy Director Michel-Marc Delcommune said.