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May 15, 2021

Alro Slatina disagrees with Competition Council sanctions

As we informed in our previous issue, the Competition Council has issued fines against Hidroelectrica and several of its partners/beneficiaries for striking agreements that concerned the contracts concluded in 2004-2012. Alro Slatina is among those sanctioned, receiving a fine of over RON 21 M. According to the company, the fine represents 1.05 per cent of its 2014 turnover.

In a communiqué remitted to the editorial office, Alro Slatina, one of the biggest aluminium producers in Central and Eastern Europe, reaffirms its position according to which the company had a fair commercial relation with Hidroelectrica, in line with all legal provisions that regulate the Romanian energy sector.

At the same time, the communiqué points out that Alro did not conclude a horizontal or vertical agreement in what concerns the contract that the Competition Council analyzed.
Alro will take all the legal measures necessary and will act towards demonstrating, once again, that in relation with the energy producer, it acted in full compliance with the requirements in place.

Being a final energy consumer, Alro didn’t resell electricity, but used it exclusively in the Group’s aluminium production process. Moreover, there is no precedent, in the European jurisprudence, regarding sanctions against a final electricity consumer for vertical agreements for market closing via long term contracts.

The Company has a unique electricity consumption profile in Romania, pays in advance for its electricity supply, allowing its supplier access to a guaranteed financial flow to finance its operational and investment activities, without any collateral over its fixed assets and receivables.

Alro reminds the public that these contracts were the object of an investigation conducted by the European Commission (EC) in a file that targeted a potential “preferential electricity tariffs”. After an in-depth analysis, conducted over several years, the EC concluded “Hidroelectrica charged prices that were fully in line with the benchmark market price”.
As per the EC press release sent out on June 12th, 2015, “following an in-depth investigation, the European Commission has concluded that electricity supply contracts signed by the state-owned Romanian electricity generator Hidroelectrica with certain electricity traders and industrial customers did not involve state aid within the meaning of the EU rules”.

As per a study conducted by the Centre for European Policy Studies (CEPS), the electricity tariff paid by Alro is 4.5 times higher than the lowest price paid by an European company and three times higher compared to the European average.
Alro activates on a highly competitive international market, where some aluminium smelters shut down over the past years, precisely because of unsustainable electricity costs. The Company exports over 70% of its production, and high, uncompetitive prices with electricity determined Alro to shut down 25% of its production capacity.

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