BRUSSELS (Reuters) – The European Commission charged yesterday that Greece broke EU law by giving state-owned utility Public Power Corporation (PPC) «quasi-exclusive» rights to soft coal. The European Union’s executive arm ordered the Greek state to share with competitors at least 40 percent of the exploration and exploitation rights to the coal, known as lignite, which generates half the country’s electricity. One commissioner raised environmental concerns before the Commission decision, but acknowledged Competition Commissioner Neelie Kroes had a tough task to liberalize a closed market, a source at the EU executive said. «Customers are denied the benefits of competition in the electricity sector when one operator controls virtually all access to Greek lignite reserves,» Kroes said in a statement. Environmental Commissioner Stavros Dimas, who is Greek, had reservations because lignite-fired plants already accounted for 70 percent of Greece’s greenhouse gas emissions and any increase would make matters worse, a Commission source said. Greece liberalized the electricity wholesale market in 2001 but owns the country’s lignite, which is cheap and abundant. «The Commission has concluded that the measures adopted by Greece have distorted competition in favor of state-owned PPC, the former monopoly for electricity production, transport and supply,» the Commission said in the statement. PPC produces 85 percent of the country’s electric power, and 60 percent of that output comes from lignite-fired plants. Dimas was concerned new rivals would build plants and pollute further, making it harder to meet emissions targets. «Dimas regrets the use of such a polluting, outdated and energy-inefficient fossil fuel… as the leverage to create competition,» the source said. A Commission spokesman said the decision would not make matters worse, as Greece was obliged to comply fully with EU health and environmental legislation. «Secondly, if there were more competition in the electricity generation market, then there would be more incentive to invest in efficient technologies that would reduce pollution,» said the spokesman, Jonathan Todd. The source said Dimas hoped that was true, «but at this point it’s theory.» However, Dimas agreed with the goal of increasing competition and recognized the difficulty of attracting new market players, the source said. The European Court of Justice (ECJ), the European Union’s highest court, has ruled it is a violation of EU treaties for a country to favor state-owned entities, the Commission said. Greece has two months to offer proposals addressing the Commission’s concerns and then six months to carry them out. If it fails to comply, the Commission could take further steps and may ultimately haul Greece to the ECJ.