WRITTEN QUESTION P-2839/01

by Gary Titley (PSE) to the Commission

(5 October 2001)

Subject: Czech banking laws

In its report of July 2001, the European Parliament alerted the Commission to competition problems in the Czech Republic's banking sector. The recent implementation by the Czech authorities of an unlimited guarantee granted to the CSOB bank, in the context of its take-over last year of IPB, is evidence that such problems are ongoing.

We understand that the Commission is examining that specific case and the wider issue of competition and state aid in the financial services sector of the Czech Republic and other accession countries. While accepting that the Europe Agreement does not provide for satisfactory remedies in specific cases, the Commission nevertheless has a powerful political tool available to it, in the shape of the Enlargement report it is drafting on each of the candidate countries. Reference to existing problems in these reports, backed up by case-specific examples, would send a strong signal to the authorities in the candidate countries that they must address these issues more satisfactorily.

Since I raised this issue with the Commission in the Foreign Affairs Committee of June 2001, I have been informed that the Czech authorities have taken no discernible steps to resolve the situation. Even more worryingly, there are strong indications that the competition authorities in the Czech Republic are not dealing with the case in an independent manner and that proceedings by them to evaluate the state aid in this case are simply being ignored.

The value of the Enlargement reports is that, as well as accurately reporting and analysing the convergence of accession countries towards the acquis, they provide an assessment of the readiness of accession countries to conform with the principles and philosophy of the EU. Could the Commission indicate whether it intends to use the opportunity presented by the publication of the reports to send a powerful message to the Czech Republic that it must address this issue promptly?

Answer given by Mr Verheugen on behalf of the Commission

(5 November 2001)

The Commission has been following attentively the competition dimension of the various restructuring operations in the Czech financial sector, notably in the light of the Czech Republic's obligations under the Europe Agreement. The Commission is of the view that greater transparency is first needed regarding these operations, before any conclusions can be drawn regarding compliance with the Europe Agreement. To this end, the Commission is following up in detail these issues with the Czech authorities using fully the mechanisms of the Europe Agreement.

Furthermore, the overall track record of the Czech Republic of compliance with the competition acquis, including in the financial sector, is currently in the process of being assessed in the framework of the accession negotiations.

The 2001 Regular Report will assess progress of the Czech Republic in meeting the Copenhagen economic criteria and in applying Community competition rules, including in relation to the financial sector. However, it is not possible to divulge the content of the Regular Report before its publication on 13 November 2001.