In the process of the privatisation in 1995 Electricité de France International S. A. (EDFI) acquired 47,55% ownership of North Transdanubian Electricity Supplier Co. (Északdunántúli Áramszolgáltató Rt. - ÉDÁSZ) and also 47,71% ownership of Southern Hungarian Electricity Supplier Co (Délmagyarországi Áramszolgáltató Rt. - DÉMÁSZ), in the framework of which EDFI also acquired the right to appoint the majority of the managers and half of the supervisory board in both undertakings.

Bayernwerk AG acquired 47,25% ownership of Southern Transdanubian Electricity Supplier Co. (Déldunántúli Áramszolgáltató Rt. - DÉDÁSZ) also in 1995, acquiring similarly the right to appoint the majority of the managers and half of the supervisory board of the undertaking.

In March of 1997, based on its sectorial assessment, the Hungarian Energy Office permitted BAG to acquire 23,75% of the voting rights of ÉDÁSZ from EDFI, furthermore, to acquire the right to appoint one member of the board of directors and two members of the supervisory board within the 3-3 persons` possibility guaranteed for EDFI. Having this permission BAG applied for an authorization of the Office of Economic Competition so that the transaction should be concluded lawfully.

The Competition Council of the Office of Economic Competition stated that the aggregate turnover of the participants of the planned transaction exceeded HUF 1O billion (ECU 5O million) and the turnover of both participants exceeds HUF 5OO million (ECU 2.5 million) each, so the notification thresholds of the Competition Act in force are fulfilled and from this point of view the transaction is subject to notification. The Competition Council examined separately whether the transaction should be deemed a concentration in the sense of the Competition Act. Namely, BAG stated that the transaction is not qualified as a concentration because merely the parcel of shares of EDFI (and its rights to appoint leading managers) are divided, on the other hand a 23, 775%- stake ensures only minority rights. The Competition Council stated that the transaction is qualified as acquiring control of another undertaking pursuant to Article 23 (2) b) of the Competition Act and this is not questioned by the circumstance that EDFI and BAG will not jointly have more rights than EDFI used to have alone. Furthermore, the two companies intend to establish a "Cooperation Committee" in order to ensure uniform actions on ÉDÁSZ decision-making fora.

The Competition Council carefully examined the possible effects the transaction may exercise on the market. In the framework of the examination the Council stated the following facts:
undertakings controlled by ÉDÁSZ do not carry economic activity on the markets on which BAG and undertakings controlled by it operate,
although ÉDÁSZ, DÉMÁSZ, the other electricity supplier controlled by EDFI as well as DÉDÁSZ controlled by BAG carry on identical activities but on geographically fully separated areas. For the time being professional regulation does not make possible for these undertakings to enter on each other`s geographic markets. (Though in the long run, e. g. in the case of green field investments, this is a possibility but this would concern only a small part of the turnover of these suppliers, that is why this would not influence their business policy decisions),
ÉDÁSZ, DÉMÁSZ and DÉDÁSZ would not get into a dominant position even as buyers because their common seller, the Hungarian Electric Works Co has monopolistic position,
the investigation did not find any fact referring to any other disadvantageous effect of the transaction in respect of economic competition.
Taking into account all these circumstances the Competition Council stated that the planned transaction does not create or strengthen a dominant position on the relevant market by the concentration and it does not influence substantially the competition between the undertakings concerned. That is why the Competition Council authorized the planned purchase of shares on BAG`s side.

May 16, 1997. Budapest

Dr. Bodócsi András sk.
Fógel Jánosné dr. sk.
Dr. Kállai Mária sk.
Véghelyi Ágnes