EU Watchdog Warns on Resale Restrictions

Regulator says contract clauses may hinder competition; Power company could be fined up to 10 pct of turnover.

The EU antitrust watchdog told Bulgaria's state-run power firm that restrictions on where the electricity it supplies is resold could amount to anti-competitive behaviour and lead to a fine.

The European Commission said many contracts between Bulgarian Energy Holding (BEH) and other companies included clauses restricting where the firms could sell the electricity supplied by BEH.

For example, the regulator said some clauses stipulated the power could only be sold in Bulgaria while others required it to be exported.

The Commission said such restrictions could hinder competition and affect the liquidity of electricity markets.

"Such behaviour, if established, has the effect of distorting the allocation of electricity within the single market ... and raising artificial barriers to trade between Bulgaria and other member states," the Commission said in a statement on Tuesday.

If BEH is found to have abused its dominant position, it could face a fine of up to 10 percent of its annual turnover.

BEH said the EU investigation concerned certain elements in electricity contracts signed by three of its units - National Electric Company, the thermal power plant Maritsa East 2 and the nuclear plant Kozloduy.

It said it would examine the Commission's objections and send a detailed response later this year.

Electricity prices have been a politically toxic issue in the European Union's poorest member, where protests over high electricity bills toppled the government early last year.

BEH is one of the largest energy companies in the Balkans. It had revenue of 5.7 billion levs ($3.89 billion) in 2013, with assets worth 14.9 billion levs at the end of the year, its consolidated reports showed.

The EU investigation was opened in November 2012 and BEH can request an oral hearing to make its case before the Commission and national competition authorities.

Separately, it is also being investigated by the Commission for potentially blocking rivals from accessing Bulgaria's gas transmission network.

The Commission has been seeking to rigorously enforce its rules on a single energy market, which are meant to ensure better distribution of available energy supplies and to improve the security and affordability of energy in the 28-member bloc.

Reporting by Julia Fioretti