Last year meant more fines, but also more court cases for the Competition Council
In 2015, the Competition Council carried out the largest number of investigations, namely 21, indicating the second largest sum in terms of fines, namely 53 million Euros, said the council’s president Bogdan Chiritoiu. The council last year finalised 21 investigations compared to 17 in 2014 and began 13 new investigations, 4 more than in 2014. 46% of those investigations looked into possible agreements between cartels, while 15% of them looked into possible cases of abuse of dominant market position. Inquiries targeted, among others, electricity supply, film distribution and the insurance market. In 2015, the Competition Council gave fines amounting to some 53 million Euros, by 12% more than in 2014. The biggest penalty applied to Hidroelectrica, a supplier of hydroelectricity, the fine standing at 37 million Euros. Bogdan Chiritoiu explains:
“We applied the biggest fine to Hidroelectrica and its commercial partners. Because of its long-term contracts and their extension to more than 10 years, Hidroelectrica’s entire electricity output was exhausted, which meant the company had no electricity left for other companies or for trading on the OPCOM market. The company thus had no sufficient liquidity. Last but not least, individual electricity consumers could not benefit from cheaper electricity from Hidroelectrica. They were instead supplied with more expensive electricity produced by the coal-based thermal power station Termoelectrica.”
Bogdan Chiritoiu also told us what happened with the money coming from fines:
“The money raised through the penalties applied to companies is cashed by the National Tax Agency and goes to the state budget. Apart from the damage caused to the market and the violation of the competition regulations, Hidroelectrica also caused damage to itself. The Court of Accounts has drawn up its own report in this respect, and the Prosecutor’s Office is also involved in the investigation. Other state institutions are also interested in the damage caused by Hidroelectrica. We are applying fines for disrupting the market, for encroaching on competitiveness. The companies usually pay these fines. They are enforced by the National Tax Agency. Companies have to pay them within a month of their being enforced, and if the deadline is not observed, we go on trial. There have been cases where a company admitted to its transgressions, and we are obliged to cut back on the fine and drop all charges. Most of the cases however end up in court, and sometimes it takes up to three years before we have a ruling, even though sometimes the court cuts back on the fines. Last year fines were reduced by 20% on average. As a rule, we win most cases, and the courts endorse the fines”.
Other major sanctions were applied to the wholesale fuels market. Three companies got fines amounting to 3.7 million Euros. Bogdan Chiritoiu again:
“We have fined a few companies dealing on the wholesale market for striking illegal agreements. If they admitted to their transgression, they benefited from a reduced fine. What we really want however, is to see the market work properly and to see how consumers are affected. But given that the market varies from one day to the other, it’s hard to draw a conclusion. This is why, we have been monitoring the developments for one and a half year: for instance, oil prices peaked at 114 dollars per barrel in 2014. Romania applies 37% cuts to VAT-free prices, which is very close to what happened in other European countries. So the behaviour in Romania is not any more different from the rest of the European Union. Yet I would like to wait for a few more weeks for the market to stabilize and for all the price slashes to reach the market”.
Bogdan Chiritoiu also told us that at the end of December 2015, the Competition Council had 48 ongoing investigations, by 14% less than in 2014. In addition, it conducted some 13 sectoral inquiries. As regards litigations, the Competition Council was summoned in 198 court cases, by 5% less than in 2014.
(Translated by C. Mateescu and V. Palcu)
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