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January 18, 2022
BUSINESS

The preventive and corrective role of the Competition Council

The Competition Council has announced last week the launching of a campaign at national level (Constanța, Piatra Neamț, Baia Mare and Craiova), meant to inform the economic actors and the large public about a part of its basic activity that is less known, specifically the preventive and corrective role, by offering advice to the business environment and the public authorities, further to various investigations or in-depth analyses of different markets, whenever imbalances are noticed, or elements perturbing the competition environment or practices that might affect fair competition. By recommendations and clear and specific requirements, formulated towards the companies, Government, ministries and various public institutions and by yearly reporting requirements regarding the implementation of the recommendations and commitments, within determined periods of time, the competition authority monitors the evolution, ensuring, basically, support for establishing business strategies and contributing to the setup of an equitable environment for all stakeholders: the companies, the consumers, the State.

Thus, during the last two years, the Competition Council has participated to the development of significant economy sectors, by offering viable recommendations to the players acting on the beer market, as well as sugar, mineral water, tobacco, medical services, and also in the case of the economic concentrations in the retail sector.

After the consolidation of the position of the first two competitors on the beer market, having market shares of over 30%, the Council has recommended them to re-assess their exclusive distribution system. The authority has required the amendment of the agreements concluded by the beer manufacturers with the HoReCa operators (for instance, the promotion agreements involved display exclusivity and, in some of the cases, the purchase of a minimum beer volume and/or the limitation of the supply source to the nominated distributors). In order to increase the competition in the HoReCa segment, the agreements regarding the draught equipment may be unilaterally terminated by the HoReCa units without penalties, while the clause regarding the purchase of the agreed volumes from the distributor indicated by the manufacturer shall be removed from the agreements.

After completing the investigation performed on the cigarettes market, the Council has ascertained some perturbations of the market caused by the increasing phenomenon of smuggling and counterfeiting. In order to identify the short, medium and long-term measures, necessary to reduce the impact of the illicit trade, the Council has recommended the Government to establish a regional Group for fighting the illicit cigarette trade, consisting of representatives of the Romanian authorities having duties in this field, the Ministry of Finance, the National Agency for Fiscal Administration, the General Customs Direction, the Ministry of Internal Affairs, the General Inspectorate of the Romanian Police, the Gendarmerie and the Local Police, of the similar authorities from Moldova, Ukraine, Bulgaria and Serbia, as well as of the cigarette industry. Furthermore, it has requested the companies British American Tobacco, JT International and Philip Morris to send periodical information, for three years, in January, with regard to the measures implemented together with the competent authorities. According to the information recently sent, smuggling has grown from an average of 16% in 2014 to 19.2% in January 2015, while at the time, the establishment of the work group is in progress. Moreover, the Competition Council has requested the Ministry of Finance to amend the procedure for publishing the maximum price list for cigarettes.

The Competition Council has made a series of essential recommendations also in order avoid the increase of the prices on the sugar market. In order to disperse the concerns of the authority related to the concentration of the market as a result of the acquisition of the enterprises Zahărul Liești SA and Lemarco Cristal SRL by Agrana Zucker GmbH, the latter has undertaken to transfer the import rights also to other sugar manufacturers located on the territory of Romania, under non-discriminatory conditions, ensuring thereby the competitors the access to alternative supply sources of cheap raw material. At the same time, Agrana has undertaken not to acquire another sugar factory for a period of five years.

Regarding the mineral water sector, the Competition Council has recommended the company Olănești Riviera SA, the concessioner of the therapeutic mineral water deposit, to respond to the requests of the competitors in regard of the supply of mineral water, and that any limitation of supply should be objectively justified. Thus, the company Olănești Riviera SA has undertaken to sell the mineral water resources to the interested third party companies, by organizing an open and transparent auction, where the sale criteria are not exclusively financial, and to which the concessioner shall also participate.

The recommendations of the Competition Council for the retail sector aimed at the economic concentration resulted after Mega Image has acquired Angst, and the retailer Auchan has purchased the Real store network. In order to avoid the hazard of the unjustified price increase, Mega Image has undertaken, at the request of the Competition Council, to concession the activity of two shops located in Bucharest (Academiei and Amzei), for a period of ten years, whereas Auchan has undertaken to refrain from the opening or acquisition of new stores in Craiova and Târgu-Mureș, for a period of five years as of the date of authorization of the concentration.

In the case of the medical service market, the purpose of the recommendations of the Competition Council is to ensure the access of the population to a quality medical act. In order to remove the concerns of the Council regarding the position obtained by the Fresenius companies in the retail sector of dialysis products, Fresenius has undertaken to supply products both to the dialysis centres from its own network and to third party centres, either public or private owned.

“These are only a few examples. The Competition Council is visible to the large public especially when the mass media reflects the commencement of various investigations or the application of fines and penalties. The role of the Competition Council is not limited, however, to coercion. In addition to the intervention in the legislative process, by the issuance of conformity approvals, the Competition Council also plays the role of a consultant, both for the public authorities and for the business environment. By its decisions, after analysing the information available on different markets, the Council steps in by recommendations and requirements in order to correct the dysfunctionalities. The recommendations are concrete and specific, and the Competition Council follows up the implementation of the commitments and the effects thereof on the markets, in time (3, 5 or 10 years). Thus, the Competition Council fulfils the function of an adviser for the authorities and for the business environment, while for the application of the recommendations and the formulation of the commitments, the expertise of our specialists is vital. We would like the economic actors to rely upon our expertise and strong knowledge in the economic sector, in order to restore a normal competition environment. The actual competition between the companies, whatever the market, represents in fact the key to economic development” has stated Dan Ionescu, counsellor at the Competition Council.

 

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