UPDATE 1-EU probes CEZ for alleged market distortion

                                
 * EU probes CEZ, others over alleged actions on Czech market
                                
 * EU suspects distortion of competition on power market
                                
 * CEZ says did nothing wrong, cooperating
                                
 * CEZ shares down 2.5 percent
                                
 
                                
 (Adds CEZ, J&T comments, background, share price)
                                
 BRUSSELS, Nov 24 (Reuters) - The European Commission carried
out surprise inspections at Czech energy firm CEZ <CEZPsp.PR>
and other companies on Tuesday to probe suspicions of
anti-competitive behaviour in the country's power market.
                                
 The Commission said the EU regulator had reason to believe
that actions carried out by CEZ itself, or together with other
players, may have led to distortion of competition and enhanced
CEZ's dominant position in the Czech wholesale electricity
market.
                                
 "Commission officials carried out unannounced inspections at
the premises of CEZ AS and other undertakings located in the
Czech Republic," said Jonathan Todd, spokesman for the EU
Competition Commission.
"The suspected illegal conduct may include excluding
competitors and raising prices on the Czech wholesale
electricity market. These actions if proven, would constitute
violations of EU competition laws."
                                
 Shares in CEZ dropped after the news and traded down 2.5
percent at 862 crowns at 1254 GMT, lagging the main PX <.PX>
index, which shed 0.57 percent, and a slightly higher European
utilities sector <.SX6P>.
                                
 CEZ confirmed the search and said it was cooperating fully,
though it believed it had done nothing wrong.
                                
 "We are convinced that all our steps in the electricity
market are in line with all laws, regulations and ethics," CEZ
said in a statement.
                                
 CEZ said the commission was probing whether the firm could
have impeded competition by creating obstacles to plans by
competitors to build power stations, was potentially involved in
limiting lignite trading, or could have influenced wholesale
power prices.
                                
 A spokesman for privately-held investment group J&T, CEZ's
partner in some projects on the energy market, said the EU probe
also involved his company.
                                
 CEZ, the biggest listed central European company with a
market capitalisation of $27.5 billion, and J&T jointly bought
German coal mine MIBRAG, close to the Czech border, earlier this
year.
                                
 J&T also bought Czech assets from International Power (IPR)
<IPR.L> and has agreed to sell a part of the package, a 49
percent stake in a Prague heating firm, to CEZ.
                                
 CEZ has been in long-term legal battle with privately-held
coal miner Czech Coal, a lignite supplier to CEZ. Czech Coal had
complained to the Czech competition office over the IPR asset
sale, but the office had cleared the deal. Czech Coal had no
comment on Tuesday's probe.
  (Reporting by Bate Felix and Jan Lopatka; Editing by David
Brunnstrom, John Stonestreet)
  ((Reuters Messaging: bate.felix.reuters.com@reuters.net;
Email: bate.felix@thomsonreuters.com; +32 2 287 6812))   
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