RESTRICTED
WORLD TRADE WT/WGTCP/W/38
1October 1997
ORGANIZATION(97-4069)
Original: English Working Group ontheInteraction
between Trade andCompetition Policy
COMMUNICATION FROM ROMANIA
Thefollowing communication, dated 16September 1997, hasbeenreceived fromthePermanent
Mission ofRomania withtherequest thatitbecirculated toMembers.
_______________
I. RELATIONSHIP BETWEEN TRADE AND COMPETITION POLICY
Romania isaware that,inparticular fordeveloping ortransition economies, itisimportant
toviewtradeliberalization policy asaclosecomplement ofcompetition policy because thefirstprovides
forcompetitive market structures while competition lawsareconcerned withtheconduct inthemarket.
Regarding thecomplexity ofthecompetition policy issues, bothatnational andinternational
level, theprocess ofintegration isonlyatitsbeginning andtheadoption oftheinternational principles
inthenational legislation isonenecessary step.
Thecompetition rulesareexpected toensure thatanti-competitive restraints donotblock the
flowoftrading goods, services andfactors ofproduction across borders andthatanti-competitive private
restraints donotreplace public restraints aftergovernmental barriers fall.
Anti-competitive exclusionary restraints obstruct trade, andthatiswhythese areprohibited.
Forthesereasons, acompetition lawisneeded forfacilitating competition anddeterring market-
obstructing behaviour, being fullycompatible withthegoals oftrade andmarket integration.
II. PRESENTATIONOFTHEROMANIANCOMPETITIONLAWNO.21/1996ANDOFTHE
SECONDARY LEGISLATION INTHE FIELD OFCOMPETITION
TheRomanian Competition Lawwhich wasenacted on30April 1996 andentered intoforce
on1February 1997, isharmonized withtheprovisions oftheECcompetition legislation, covering
alltheaspects provided forintheTreaty ofRome.
Anti-competitive agreements
Thus, inthesame wayasArticle 85oftheTreaty ofRome, Article 5oftheRomanian Law
prohibits agreements andconcerted practices, affecting competition.
TheLawisbased ontheprinciple ofprohibition andinstitutes abanonthose agreements aiming
to:WT/WGTCP/W/38
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(a) fixdirectly orindirectly, inaconcerted way,thesaleorpurchase prices, tariffs, rebates,
supplements, aswellasanyother unequitable terms oftrading;
(b) limitorcontrol production, distribution, technological progress orinvestments;
(c) share outdistribution markets orsupply sources according toterritorial criteria, sales-
and-purchase volume orother criteria;
(d) impose unequal terms forequivalent services totrade partners, thuscausing a
competition handicap tosome ofthem;
(e) conditioning theconclusion ofcontracts byimposing thepartners toaccept certain
clauses foradditional services which, either bytheirnature orbycommercial usage,
donotrelate tothecontract object;
(f) participate, inaconcerted manner, withcollusive tendering tobidsorother forms of
tender participation;
(g) eliminate competitors fromthemarket; limitorobstruct theaccess tothemarket, the
freeexercise ofcompetition between other parties, aswellastheagreements fornot
buying from orselling tocertain parties, without reasonable justification.
TheLawalsosetsupaprocedure bywhich parties mayseekexemption fortheseprohibitions,
oncriteria balancing theanti-competitive andpositive effects onconsumers andonnational economy,
bothconcerning agreements andeconomic concentrations.
Abuse ofdominant position
Inthespirit ofArticle 86oftheRome Treaty, theRomanian Lawalsoprovides theprohibition
ofabuse ofdominant position thatmayconsist mainly in:
(a) imposing, inadirect orindirect way, thesaleorpurchase prices, tariffs orother
unequitable contract clauses, aswellasrefusing todealwithcertain suppliers or
customers;
(b) limiting production, distribution ortechnological development totheusers'or
consumers 'prejudice;
(c) imposing unequal terms forequivalent services tothetrading partners, andprejudicing
theircompetitive position onthemarket;
(d) conditioning theconclusion ofcontracts byimposing additional services which, either
bytheirnature orbycommercial usage, donotrelate tothecontract object;
(e) importing products andservices thatdetermine theoverall price andtariff level on
theeconomy, without theusual bidsandtechnical -commercial negotiations;
(f) imposing excessive prices orpractising, predatory, undercost prices, toeliminate
competitors, orexporting under production costsandcovering thedifference through
higher prices onthehome market;WT/WGTCP/W/38
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(g) exploiting theeconomic dependence ononeorseveral company(ies) when aclient or
supplier doesnothaveanequivalent alternative, orbreaking offacontract forthesole
reason thatthepartner refused tocomply withunjustified commercial clauses.
InArticle 4oftheLawitisprovided thattheprices ofproducts andthetariffs ofservices
andworks arefreely determined, through competition, inaccordance withdemand andsupply. Prices
andtariffs charged bytheregies autonomes andthose charged fornatural-monopoly activities orfor
theactivities subject tospecial legalregulations, shallbesetupwiththeCompetition Office 'sconsent.
Mergers
TheRomanian Competition Lawprovides inadistinct chapter thecontrol ofeconomic
concentrations, following themodel oftheEuropean Council Regulation (EEC) No.4046/1983, having
asitsobject ofprohibition ofanyeconomic concentration which creates orstrengthens adominant
position asaresult ofwhich effective competition would besignificantly impeded.
Sanctions
Inanother chapter oftheLawareprovided thesanctions tobeimposed fortheinfringement
oftheLaw, according toRegulation No.17/1962; thesanctions areaimed todiscourage any
anti-competitive behaviour ofbothprivate andstate-owned undertakings.
Institutions
Administering andenforcing thisLawareunder theresponsibility oftheCompetition Council -
autonomous body andCompetition Office, investigative body, subordinated totheGovernment.
TheCompetition Council, setupon6September 1996, isdefined asanautonomous
administrative authority; thefactthatithaspower tosanction anditsworking procedure, brings it
close toabody having juridical attributions.
TheCompetition Council hasaconsiderable decision power, being abletoissue sanctioning
decisions,suspendingorbanningmeasuresregardingtheanti-competitivepracticesthathavebeenfound,
aswellasorders toeconomic operators toreturn totheirprevious state.
TheCompetition Council endorses theGovernment decision drafts orother normative bills
which mayhaveanti-competitive impact, aswellasthemeasures initiated bythecentral orlocal
administrative bodies, orbythose having legal ability torestructure theregies autonomes and
undertakings where thestateisthemain owner.
TheCompetition Council gives alsoadvice onstateaidpolicy andstateaidschemes fromthe
point ofviewofcompetition.
Furthermore, inthevirtue oftheCompetition Law, theCompetition Council mayrecommend
andpropose measures tobetaken bytheGovernment andcentral andlocaladministrative bodies, aimed
atfacilitating themarket andcompetition development.
Theabilities oftheCompetition Council, asprovided forinArticle 27oftheCompetition Law,
confer tothisauthority adecisive roleinprotecting, maintaining andstimulating thenormal competition
environment.WT/WGTCP/W/38
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Secondary legislation
Fortheenforcement ofthisLaw, andtaking intoconsideration theEuropean Union secondary
legislationinthecompetitionfield,theCompetitionCouncilelaboratedand,withtheLegislativeCouncil's
supervision, adopted on28February 1997, asetofRegulations andGuidelines. These arecompulsory
fortheCompetition Council, Competition Office, economic operators andassociations ofeconomic
operators, central andlocal administrative bodies, institutions andbodies cooperating with the
Competition Council.
These Regulations andGuidelines weresetupfollowing themodel ofthesimilar EUregulations
andareaimed toapply unitary andtransparently theCompetition Law, inconditions ofjuridical security
andtheyreferto:
TheRegulation onadmitting theeconomic concentrations
ThisRegulation comprises:
- instructions onnotification oftheeconomic concentrations;
- indications regarding thenotification modality andfilling inthenotification form;
- notification form oftheeconomic concentrations;
- clarifying aspects regarding theeconomic concentrations.
Pursuant tothisRegulation, fortheeconomic concentrations where themarket share ofthe
newresulted entity doesnotexceed 20%, theinvolved parties mayaskthepermission oftheCompetition
Council tosubmit ashort form notification.
Thethresholdoftheturnover,fromwhichthenotificationoftheeconomicconcentrationbecomes
compulsory, established bytheCompetition Lawatlei10billion, canbereviewed, i.e.itcanbechanged
bytheCompetition Council whenever itisnecessary, butwithin periods notshorter thansixmonths.
TheRegulation onapplying theprovisions ofArticles 5and6from theCompetition Lawrelated to
anti-competitive practices
ThisRegulation provides foraunitary procedure for:investigating cases ofanti-competitive
agreements andpractices, ofabuse ofadominant position; filling inandsubmitting bytheeconomic
operatorstheirapplicationsforcomfortletters,negativeclearanceandindividualexemptions;examining
theapplications and,uponcase,initiating investigations; aswellasproviding foranunitary procedure
forissuing andenforcing thedecisions.
ThisRegulation essentially provides for:
- theconditions under which aregranted theindividual exemptions foragreements,
decisions ofassociation andconcerted practices which meettheconditions stipulated
intheLaw;
- thenotification forindividual exemption; prorogation ofthese exemptions;
- theelementsdefiningthedominantpositionofaneconomicagentontherelevantmarket;WT/WGTCP/W/38
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- theinvestigating procedure;
- thehearing procedure oftheeconomic operators which participate totheagreements,
decisions ofassociation andconcerted practices;
- thedecision-making procedure.
Thedecisions granting exemptions willspecify thedatewhen theystarttobeapplied, theperiod
ofvalidity,theconditionsandobligationswhichmustbeobservedbythebeneficiariesoftheexemptions.
Theindividual exemptions mayberenewed, byrequest, ifthenecessary conditions arestillmet,and
theymayberevoked ifanychanges werefound. Anychange mustbecommunicated without delay,
inwriting, totheCompetition Council, bythebeneficiaries oftheexemptions.
TheRegulation ongranting block exemption inrespect ofcertain categories ofagreements, decisions
ofassociation andconcerted practices fromtheprohibition setoutinArticle 5(1)oftheCompetition
LawNo.21/1996
ThisRegulation provides forthefollowing categories ofagreements liable toexemption:
- agreements onexclusive distribution;
- agreements onexclusive purchasing;
- agreements onresearch anddevelopment;
- agreements onspecialization;
- agreements ontechnology transfer andknow-how licensing;
- agreements onfranchising;
- agreements ondistribution, servicing andspare partsprovided during validity andafter
validity period forvehicles;
- agreements ininsurance field.
EachChaptersetsoutdetailedexemptionconditionsandcriteriaforeachcategory,thenotification
system, while theAnnexes tothechapters provide fortherespective notification form.
TheRegulation specifies that,within aperiod ofmaximum 60daysfrom thedatewhen the
notification becomes effective, theCompetition Council willproceed, afterexamining thenotification
andonacase-by-case basis, asfollows:
(a) willissue adecision granting theexemption;
(b) willissueamotivateddecisionfornon-qualifyingthenotifiedagreementintherespective
exempted category.
If,within theabove-mentioned period, theCompetition Council didnotissue adecision, it
would beconsidered thattheexemption wasgranted intacitmode.
Theexemption stays valid aslongastheconditions upon which itwasgranted donotalter.WT/WGTCP/W/38
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Anysignificant alteration oftheconditions oftheagreement based onwhich thebenefit of
exemption wasgranted bydecision orintacitmode, willbewithout delay communicated, inwriting,
totheCompetition Council, bytheinvolved parties. TheCompetition Council willpromptly decide
whether towithdraw ormaintain thebenefit ofexemption.
Guideline ondefining therelevant market inorder toestablish thesignificant market share
ThisGuideline isessentially:
- defining theproduct market;
- defining thegeographic market;
- defining therelevant market forcases ofanti-competitive practices stipulated by
Articles 5and6oftheCompetition Law;
- defining therelevant market foreconomic concentrations.
ThisGuideline isintended toassist theeconomic operators indrawing uptheirapplications
forindividual exemptions from theprohibitions setoutinArticle 5(1)oftheCompetition Law, in
drawing upthenotifications forqualifying inoneofthecategories exempted fromthesameprohibitions,
anddrawing upthenotifications ofeconomic concentrations, according totheRegulations issued by
theCompetition Council.
Guideline oncalculating theturnover fortheanti-competitive behaviours stipulated inArticles 5and
6oftheCompetition Lawandforeconomic concentrations
ThisGuideline mainly clarifies:
- theconcept ofturnover;
- adjustmentoftheturnovercalculationrulesfordifferenttypesofoperations(acquisitions
ofpartsofundertakings, staggered operations, turnover ofthegroups ofundertakings,
ofjointventures, ofstate-owned economic operators);
- calculationrulesforcreditinstitutions,otherfinancialinstitutions,insurancecompanies.
Thepurpose ofthisGuideline istomake practical andprocedural clarifications which are
necessary inapplying thearticles oftheCompetition Lawrelated totheturnover, withtheadjustments
anddetails forcalculation rules specific forcertain types ofeconomic operations andactivities.
Regulation onorganizing, functioning andprocedures oftheCompetition Council
This, essentially, provides for:
- theorganizational structure oftheCompetition Council;
- theorganizing system ofthespecialized andfunctional departments;
- procedural functioning rules: debates andmaking decisions inplenary sessions by
theCompetition Council; theregisters oftheCompetition Council.WT/WGTCP/W/38
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ThisRegulation stresses thepreserved rightoftheCompetition Council toinvestigate anycase
considered tobeaninfringement upon theprovisions oftheCompetition Law, disregarding thedate
itoccurred.
ThisRegulation specifies alsothemanner inwhich theconcerned parties mayexpress their
opinions (thisrightisprovided forintheCompetition Law), aswellasthemanner inwhich theymay
access files.
ThisRegulation provides fortherequest tobeaddressed totheMinistry ofJustice, inorder
toobtain investigative powers forthecontrol staffoftheCompetition Council.
III. INTERNATIONAL AGREEMENTS CONCLUDED BYROMANIA
Asglobalization increases, itisbecoming anecessity tobring thecompetition andtradepolicy
within acommon regulatory framework forenterprises which operate internationally.
TheWorld Trade Organization (WTO) anditsrelated instruments hasatitsdisposal asolid
foundation asfarastrade policy isconcerned.
Acounterpart intheform ofaninternational competition codeisnotyetinsight.
Inthemeantime, bilateral agreements canserve asastop-gap measure.
Romania hasconcluded anAssociation Agreement with theEuropean Union andits
Member States.
ObservingtheprovisionsofArticle64ofthisAgreement,theRomanianCompetitionAuthorities,
together withtheEuropean Economic Commission -Directorate General IV-Competition, worked
out"Competition Rules Applicable toUndertakings", perpetrating anti-competitive practices inthe
territories oftheCommunity orofRomania and"State AidRules" fortheimplementation ofthe
provisions ofstateaidwhich cover anyaidgranted bytheStateorthrough Stateresources inanyform
which distorts competition insofar asitmayaffect trade between theECandRomania. ThisSetof
Rules isgoing tobeapproved bytheAssociation Council Romania -UEinoneofitsfuture meetings,
being already signed atexperts 'level.
Thecompetition rulessetupinRomanian national legislation arealsoobserving theprovisions
oftheFreeTrade Agreement, concluded withEFTA countries.