Commission Report 2002 (Romania)

• Progress since the last Regular Report
• Overall assessment
• Conclusion

Chapter 6: Competition policy

Progress since the last Regular Report

Since last year`s Regular Report, Romania has made some progress but many enforcement and administrative issues remain open.

In the anti-trust field, with respect to implementing legislation, regulations on research and development agreements, specialisation agreements and vertical restraints as well as guidelines on horizontal co-operation agreements have been adopted.

The Competition Council has continued to build on its enforcement record over the past year and in 2001 it issued 435 decisions in anti-trust cases, one of which was a prohibition.

In the field of state aid, Romania adopted implementing legislation concerning regional aid,aid to small and medium-sized enterprises, aid to rescue and restructure firms in difficulty, research & development aid, training aid, and environmental protection aid. These regulations will only come into force in January 2003. Romania has proposed a regional aid map for joint adoption by the Association Council. The state aid survey for 1996-1999 was completed in March 2002 and broadly follows the methodology and presentation of the ``Survey on State Aid in the European Union''.

The state aid enforcement record of the Competition Council is still developing. In 2001, the Council adopted 48 state aid decisions, none of them dealing with non-notified or existing aid. The quality of the decisions needs to be improved.

There are still a large number of incompatible fiscal aid schemes which need to be aligned. Existing benefits also need to be converted into compatible aid.

Romania has presented its steel restructuring programme to the Commission although the viability plans of the individual enterprises still need further elaboration. In the steel industry aid for restructuring can only be given if the national and individual restructuring programmes of the companies include necessary measures for reaching viability and making cuts in production capacity, in line with the requirements set out in Protocol 2 of the Europe Agreement.

Overall assessment

In Romania there are two competition authorities: the Competition Council and the Competition Office. The co-operation between the two authorities needs to be improved and the their responsibilities need to be strengthened. Under the current legislation the competition authorities are only occasionally consulted on new laws and comments are not taken into account systematically. The competition authorities should be given the right to oppose legislation restricting competition, and it should be made clear that legislation on competition takes precedence over legislation on businesses and legislation under which state aid is provided. Both the Competition Office and the Competition Council require further strengthening in terms of human resources and training.

As regards anti-trust, Romanian legislation is broadly in line with the acquis provisions. However, the individual notification requirement should be abolished. Romanian competition law currently obliges companies to apply for an exemption even if an agreement would fall under the block exemptions. Excessive notification requirements do not allow the Competition Council to focus its resources more effectively on cases representing the most serious distortions of competition. The most important challenge for the Competition Council is to pursue a more pro-active approach including own-initiative investigations and a deterrent sanctions policy.

In view of the planned modernisation and decentralisation of the application of the EC anti-trust rules, training efforts should be pursued, in particular with regard to the judiciary.

As regards state aid, further transposition of the substantive state aid rules is still necessary. Application of the state aid rules is not comprehensive and numerous state aid measures are not notified to the competition authorities. The Competition Council should take a firmer and more pro-active approach to ensure the effective application and enforcement of the state aid rules, including non-notified aid, and the alignment of existing aid schemes and legislation under which authorities at various levels grant aid. There is also a need to raise awareness among administrations granting state aid of the policy and legislative provisions in this area.

There are continuous problems with the treatment of debt cancellation - a form of state aid which is widely practised by public bodies, especially when state-owned companies are privatised. Implementation of state aid policy in sensitive sectors is still at an early stage.

Conclusion

In its 1997 Opinion, the Commission concluded that notable progress had been made towards the approximation of legislation in the field of anti-trust. However, the Commission also concluded that, as regards state aid, not much progress had been achieved so far and a considerable effort would be necessary to fulfil the requirements in the field of state aid control over the medium term, in particular as regards the establishment of transparency through a credible aid inventory and the adoption of the necessary rules for the credible monitoring of state aid.

Since the Opinion, some progress has been made with the transposition of the acquis in respect of both state aid and anti-trust. At the same time, Romania`s enforcement record in both areas needs to be improved. Knowledge and awareness of competition law remain limited in Romania, in particular among other authorities that are meant to co-operate with the Competition Council and the Competition Office. On legislative alignment, administrative capacities and enforcement record Romania is only partially in line with the requirements of the acquis.

Negotiations on this chapter continue. Romania has not requested any transitional arrangements in this area.

Romania should focus further efforts on continued institutional strengthening and on training staff in both the Competition Council and the Competition Office. It should address the questions of the alignment of incompatible state-aid schemes and the enforcement of competition rules in respect of non-notified aid schemes and existing aid.

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