WRITTEN QUESTION P-1723/03

by Roy Perry (PPE-DE) to the Commission

(19 May 2003)

Subject: Market manipulation in Slovakia

In November 2002, MOL, the Hungarian oil and gas company, agreed to acquire 31 % of the shares of the Slovak company Slovnaft, which is listed on the Bratislava stock exchange. The transaction was subject to clearance from the Czech and Slovak competition authorities, which was obtained and published on 25 March 2003.

Under Slovak law, the transaction put MOL under the obligation to make a public offer for the remaining Slovnaft shares on the Slovak stock exchange. The price of that offer is based on a weighted average over the six months previous to the announcement of the approval by the competition authorities. A few days prior to the publication of the competition authorities' approval, the price at which trades in Slovnaft shares were conducted began to increase dramatically. A number of suspect transactions took place between 17 and 20 March 2003 that could only be based on information on the forthcoming approval by the competition authorities. The aim of those transactions was to drive up significantly the price at which the public offer for the remaining Slovnaft shares would have to be made.

The result of these suspect transactions is that the weighted average price increased by 41 % over a period of four days.

Is the Commission aware of these events? Does the Commission consider these transactions compatible with Directive 2003/6/EC(1) on insider dealing and market manipulation? What steps will the Commission undertake to ensure that the Slovak Financial Market Supervision Office investigates this matter in total independence from the influence of any financial market participants, as the Commission pointed out is necessary in its October 2002 Progress report towards EU accession for Slovakia?

(1) OJ L 96, 12.4.2003, p. 16.

Answer given by Mr Bolkestein on behalf of the Commission

(7 July 2003)

The Commission is not a securities market supervisor and is therefore not in a position, on the basis of the information supplied by the Honourable Member, to pronounce itself whether there are grounds to consider that there has been a case of market manipulation with regard to the price and trading volume of the concerned target company's shares (Slovnaft a.s.). As regards the relevant Community legal framework market manipulation is now covered by the new Directive 2003/6/EC of the Parliament and of the Council of 28 January 2003 on insider dealing and market manipulation (market abuse)(1). However, the deadline for transposition into national law of this Directive is not until October 2004.

If it were to be the case that certain alleged transactions have been carried out with the use of inside information, Council Directive 89/592/EEC of 13 November 1989 on insider dealing(2) might be applicable. However, the Directive cannot be enforced in Slovakia before the Accession Treaties enter into force. Nevertheless, in view of the seriousness of the matter, the Commission will make every effort to liase with the Slovakian authorities in order to address the reported concerns satisfactorily in the context of the accession process.

(1) OJ L 96, 12.4.2003.

(2) OJ L 334, 18.11.1989.