Today we’ll tell you about the fines given by the Competition Council in the electricity sector.
The Competition Council has fined the hydropower producer Hidroelectrica, which is currently undergoing insolvency procedures, and ten of its former contractual partners, a total of 37 million euros for concluding anti-competitive agreements in the field of electricity production and trade. The companies Hidroelectrica, Elsid and Electrocarbon have admitted having taken anti-competitive action and, as a result, their fines have been reduced. The President of the Competition Council Bogdan Chiritoiu, said in an interview on Radio Romania:
“We have fined them for having signed very long-term contracts which essentially covered the entire output of Hidroelectrica, so there were no more power resources available for other companies that intended to enter the market, no more electricity for the trading platform, more specifically for the electricity exchange OPCOM, and, last but not least, no more cheap electricity for household consumers, which were forced to use more expensive, coal-based energy. Three out of the 11 companies, namely Hidroelectrica and two industrial consumers, have admitted having broken the law, therefore they have received milder penalties. The others very likely will be called to court. But we are confident that we have a sound case and the court will accept our claims. In any case, they will have to pay the fines to the National Tax Administration Agency. What is also important is that most of the contracts were cancelled by Hidroelectrica in 2012, but that decision was challenged in court. So these electricity suppliers took Hidroelectrica to court to challenge its decision to cancel those contracts.”
But how are things now on the local electricity market, after Hidroelectrica cancelled the long-term contracts? Bogdan Chiritoiu:
“Since the cancellation of the contracts, the situation has improved. At present, household consumers get electricity from the cheapest producers in the country, Hidroelectrica and Nuclearelectrica. In this respect, things are looking up for consumers, unless, of course, the court finds that it was against the law for Hidroelectrica to cancel the contracts. But for the time being, households are getting cheaper electricity.”
The Romanian competition watchdog started this investigation in 2012, after finding relevant indications during a general inquiry on the electricity market. During the investigation, several electricity suppliers filed lawsuits against the Competition Council, for using documents seized in unannounced inspections to their offices. Those trials delayed the investigation by more than a year. Here is the President of the Competition Council, Bogdan Chiritoiu, again:
“Our only concern is about the operation of the electricity exchange. It is indeed important for transactions to take place in a transparent manner, via these platforms, these exchange systems, which help ensure that producers get a fair price and in their turn big electricity consumers have access to advantageous prices. Over the past few years, things have been better, we have seen higher amounts traded in the electricity exchange, and the price of electricity has dropped of late. These are good signals indicating the proper operation of the market. The long-term contracts were distorting competition and this is why we have fined the companies involved, but since the contracts were cancelled things have improved.”
In turn, Remus Borza, representing Euro Insol, the judicial administrator of Hidroelectrica, told Agerpress agency that the Competition Council decision would help Hidroelectrica in its lawsuits against the companies leeching off this electricity producer, in that it proves that those contracts had been illegal. “When we cancelled their contracts, in 2012, those companies claimed damages of more than 600 million euros, and the Competition Council’s decision basically leaves them without any chance to get any money from Hidroelectrica,” Borza explained. According to him, out of the 75 claims originally brought against Hidroelectrica, nine are still pending. “I would rather pay 4.6 million euros to the Romanian state, which is the fine from the Competition Council, then give money to people who never worked a day in their life and have sent all their companies’ profits abroad,” Remus Borza added. He argued that those long-term contracts were the main factor of Hidroelectrica being forced into insolvency proceedings, because between 2003 and 2012 they made the company lose more than one billion euros, the difference between the very low prices in the contracts and the actual market prices. Remus Borza also said that some contracts had even stipulated sale prices that were under the production costs.
(Translation by A.M. Popescu)
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