UPDATE 1-Firms slam Slovak move to up control of utilities

(Adds government comments in paragraphs 6-7)

BRATISLAVA, Nov 12 (Reuters) - Slovakia risks losing its position as an attractive investment spot due to a law reducing foreign investors' rights in utilities, the German-Slovak Chamber of Commerce and Industry said on Wednesday. The Slovak parliament last week passed a new law boosting government powers in utilities in which the state has majority stakes and foreign investors hold management rights secured in privatisation deals signed with the previous administration.

The new law gives the government the right of veto over the domestic sales price charged by dominant natural gas company SPP, as it wants to stop SPP's foreign shareholders, E.ON EONG.DE and Gaz de France (GSZ.PA), from seeking hikes in retail prices.

"The new law turns the fundamental and contractually guaranteed decision powers in energy companies upside down," said the German-Slovak Chamber of Commerce and Industry, which said it represented 270 companies employing 70,000 people.

"The state, which is the 51-percent owner, will be able to significantly influence price policy of private investors," said the business lobby grouping members with a combined turnover of 11 billion euros.

Prime Minister Robert Fico's Smer party, the dominant faction in the cabinet, rejected allegations the new law interfered with the management rights of foreign shareholders.

"The 49-percent owners of SPP -- Gaz de France and (E.ON) Ruhrgas -- still have four out of seven members of the board and continue to manage the company despite the fact that the state owns the majority 51 percent stake," Smer said in a statement.

Slovakia has become a favoured investment spot in central and eastern Europe, attracting automotive, electronics and other companies with low taxes, a cheap and skilled workforce and proximity to western and eastern markets.

Fico, who replaced a centre-right cabinet after winning a 2006 election on promises to take better care of the poor, has not made good on pledges to dismantle the 19-percent flat tax rate, cut fiscal gap and help secure euro adoption in 2009.

Companies have also criticised several of his government's steps as worsening the business environment, including giving trade unions stronger powers and pushing through a law forbidding private health insurers from keeping profits.

Slovakia has received new foreign investments after the government change two years ago, such as an expansion in the operations of electronics companies Samsung (005930.KS) and Sony (6758.T).

However, the new law interfering with ownership rights is not a welcome signal for future investors, the German chamber said.

"The new and retroactive change in signed contracts will not be without consequences for investment conditions in Slovakia.

"Investors will be discouraged if they cannot rely on contractual promises of the Slovak state," the chamber said. (Reporting by Peter Laca; Editing by Simon Jessop and Andrew Macdonald)