Commission refers CROATIA to the Court for failing to amend the law on the privatisation of the energy company INA-Industrija Nafte, d.d. (INA)

The European Commission has decided to refer CROATIA to the Court of Justice of the EU for failing to align the 2002 law on the privatisation of INA-Industrija Nafte, d.d. ('INA law') with EU rules on the free movement of capital and the freedom of establishment.

INA-Industrija Nafte, d.d. (INA, d.d.) is the main Croatian energy company, partially owned by the Croatian Government. The INA law grants the State special powers in this company, including vetoing INA's decisions relating to the sale of shares or assets above a certain value. The State can also oppose important management decisions, such as a change in the company's activities, the granting of concessions or authorisations and the location of its registered office.

The fact that the Croatian State can refuse to approve important decisions that would be in the company's interest may negatively impact company shares and reduce the INA's attractiveness to investors.

The Commission considers that the State's special powers provided for in the INA law unduly restrict the free movement of capital and freedom of establishment. It acknowledges that the objective of protecting the security of energy supply is a legitimate public interest shared by the EU and could justify restrictions to the freedoms listed in TFEU. However, such restrictions must be proportionate. In the present case, the INA law empowers the Croatian State to oppose important company decisions without needing to justify their veto in terms of potential threats to security of supply or other public policy, or in the public interest.

In the Commission's view, these unconditional veto powers go beyond what is necessary to protect security of energy supply and are therefore disproportionate.

The Commission remains open to efforts by the Croatian authorities to find a solution to this case, notwithstanding today's decision.

Background

Croatia took the commitment to align the so-called INA law with EU rules before its accession to the EU. In November 2014, the European Commission decided to take action against Croatia for failure to amend such law. After assessing the observations of the Croatian authorities in December 2016, the European Commission sent a reasoned opinion to Croatia to formally request the amendment of the INA law, on the ground that it violates the rules of the Treaty on the Functioning of the European Union (TFEU) on the freedom of establishment (Art. 49 of TFEU) and the free movement of capital (Art. 63 of TFEU). To date, Croatia has not complied with the Commission's reasoned opinion.

For More Information

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  On the monitoring the EU law in the area of free movement of Capital movements.
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  On the key decisions in the July 2017 infringements package, see a full MEMO/17/1935.
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  On the July infringements package (on letters of formal notices only), see a full MEMO/17/1936.
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  On the general infringements procedure, see MEMO/12/12.
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  On the EU infringements procedure.

IP/17/1949