© Springer-Verlag Berlin Heidelberg 2015
Pierre Kobel, Pranvera Këllezi and Bruce Kilpatrick (eds.)Antitrust in the Groceries Sector & Liability Issues in Relation to Corporate Social ResponsibilityLIDC Contributions on Antitrust Law, Intellectual Property and Unfair Competition10.1007/978-3-662-45753-5_15

15. Romania

Anca Buta Muşat 

Muşat & Asociaţii Attorneys-at-Law, Bucharest, Romania



Anca Buta Muşat

15.1 The Evolution of the Grocery Market in the Market Economy Context

Prior to the political changes of 1989, agricultural production and sale of grocery products were the exclusive attribute of the State via its empowered agencies. With the agricultural reform of 1991,1 individual property over agricultural lands was restored, but many individual owners sought different forms of joint ventures in order to make their ownership economically profitable. Thus, a large number of agricultural associations were established, mostly encouraged by the 1994 Law on the Lease of Agricultural Lands.2 Following the 2005 Law on Land Reform3 and the enabling of foreign citizens to acquire agricultural lands in Romania, more associations were established alongside large ownerships. Notwithstanding the above, the majority of large agricultural exploitations focus on grain cropping, due to the specific qualities of the soil in Romania; less interest is being manifested towards cropping of vegetables. This is also due to the fact that alongside the dissolution of the socialist agricultural property, in the very first years after 1990, the vast majority of facilities making up the national irrigation system—which is crucial to vegetable cropping—were rendered nonusable while the State (the owner thereof) did not perform any investments whatsoever in this particular respect.

On another hand, a considerable portion—if not the majority—of the Romanian agricultural land is still individually exploited for the purposes of satisfying individual consumption needs. However, the costs of individual exploitation of land for agricultural purposes usually exceed the economic power of its owners, and the Government consequently supports such exploitation via biannual subsidies aimed at partially (and, practically, insufficiently) financing the spring and autumn agricultural campaigns. As a result, much land is left unexploited, irrespective of legal provisions sanctioning the passivity of landowners.

As to the processing sector, the socialist units (such as farms, slaughterhouses and dairies) were privatized following the abandonment of the socialist economic model. Some of these units were privatized and converted into successful businesses, while others were simply closed down. A tendency that was noticeable at least in the last 15 years was the preference of private investors to invest in Greenfield processing sites. Nevertheless, not all socialist units were overlooked, but given their economically strategic locations and dimensions the acquisition, reconditioning and refurbishment thereof proved in many instances cheaper and more economically feasible than a Greenfield investment.

Lastly, the grocery retail sector has experienced in its own turn important changes as compared to the socialist period. While the 1990s was marked at first by the dissolution of state-held retail units and by the establishment of numerous privately held corner shops, the first decade of the twenty-first century was marked by the entry on the Romanian market of a series of large retailer chains at both cash & carry and retail (hypermarkets, supermarkets, discounters) levels. The late entry on the Romanian market of the modern forms of grocery retail has determined a strong competition at client level between the two. Pursuant to a 2009 Report of the Competition Council, in 2009, a majority of 60 % of Romanians preferred to acquire their grocery from a traditional trade unit (corner or neighborhood shop), while only 40 % preferred modern retail. However, the data and information comprised in said report might have changed with the expansion of different retail chains in Bucharest and the larger cities.

15.2 Impact of Competition Rules on the Grocery Sector

15.2.1 Romania’s Competition Laws and Regulations

Competition is regulated in Romania via two major enactments.

The first and most important one is Competition Law no. 21/1996, as republished and further amended and supplemented (the “Competition Law”).4 The Competition Law captures under its ambit acts and facts perpetrated on the Romanian territory or possibly affecting the Romanian territory irrespective of the nationality of the natural or legal persons responsible thereof (pursuant to Article 2). The authority vested with enforcing the Competition Law is the Competition Council (the “RCC”).

Article 5 paragraph (1) of the Competition Law contains a general prohibition of anticompetitive practices and does not distinguish between different industry sectors or fields of the economy. As such, the general prohibition of anticompetitive practices (be they horizontal or vertical) applies to all acts and facts that go against such prohibition (bid rigging, resale price maintenance, market sharing and limitation of output). Of the aforementioned, resale price maintenance deserves a special attention, as there is a fine distinction between recommended and imposed resale prices, an issue that is subject to scrutiny by both national and EU competition authorities.

Article 6 of the Competition Law sets forth a general prohibition of any abuse of dominance. Dominance is legally presumed to exist whenever an undertaking holds a market share of more than 40 %. Neither in respect of this particular prohibition does the Competition Law make any distinction as to specific conditions for its enforcement in respect of given sectors of the economy.

Similarly, the rules on merger control, laid down in Articles 10–15 of the Competition Law, are of general and mandatory application in all sectors of the economy, the RCC exposing a wide decision-making practice in mergers in the grocery retails sector.

The second major enactment is Law no. 11/1991 on the fight against unfair competition (“Law no. 11/1991”).5 It provides a general prohibition on unfair competition and exemplifies what acts or facts constitute unfair competition. However, given its broad and interpretable provisions, it was not practically enforced on a large scale. Currently, the RCC is vested with its enforcement (acting in such capacity as of 2010 when it took over from the Ministry of Finance) and has initiated a legislative process for the amendment thereof with a view to giving way to private enforcement of the law rather than a State-directed one.

15.2.2 Modernization of the Laws Governing the Sale of Perishable Goods in Romania

Although the Competition Law does not contain provisions particularly aimed at the retail market, the Competition Law was construed and developed by the RCC on the occasion of various decisions rendered in the field of retail. On a separate note, there are some enactments governing specific issues concerning competition in the retail market.

Government Ordinance no. 99/2000 on product commercialization and market services (the “GO no. 99/2000”)6 is one such example. It regulates both general aspects of conducting commercial businesses (functioning hours, public authority endorsements, the role of public authorities in the commercialization activity, etc.) as well as certain competition-related aspects such as the rules on different types of discounted sale. Specifically, Article 17 of GO no. 99/2000 prohibits predatory pricing practices. In the optic of the law, predatory pricing takes the form of sale of products at prices equal or inferior to the acquisition costs. Nevertheless, GO no. 99/2000 allows certain exceptions from such rules, one of them being in the case of perishable goods (food/grocery products).

In 2009, Parliament adopted Law no. 321/2009 on the commercialization of food products (“Law no. 321/2009”)7 in order to settle different dissonances between suppliers and the large retail chains. Essentially, it provides for specific rules on commercialization of groceries while also consecrating an entire chapter to prohibiting certain anticompetitive practices in the field such as (1) reciprocal obligations of sale and purchase of products to and from a specific third party, (2) charging and payment for services that are not directly related to the sale process, (3) charging and payment of fees aimed at supporting the expansion of the retailer’s facilities, (4) the requirement by the retailer that the supplier not sell its products to other retailers at an equal or lower acquisition cost and (5) unlawful delisting of products by the retailer.

GO no. 99/2000 and Law no. 321/2009 are the only enactments governing the grocery retail sector. Nevertheless, there are sector-specific norms and regulations, all of which comply with the general rules laid down by the two aforementioned enactments.

As described above, the grocery retail sector is subject to the provisions of the Competition Law in the same manner as all other sectors and economy fields.

15.3 The Romanian Grocery Retail Market Under Scrutiny by the Competition Council

15.3.1 Background

Unsurprisingly, the RCC paid due attention to the grocery retail sector, given the tensions between modern and traditional forms of retail and between suppliers and retailers altogether, which existed in the sector after the year 2000 (landmark year for the consolidation of modern forms of retail in Romania). The RCC Chairman issued Oder no. 97/18.03.2008, whereby a sector inquiry was launched with a view to analyzing the food retail sector in Romania (the “Sector Inquiry”). The 200-page (annexes included) Sector Inquiry Report (the “RCC Report”) was released to the public on September 2009 and proves to be a useful instrument for Competition Law enforcement in the grocery retail sector.

Before the RCC launching of the Sector Inquiry, there were certain points of contention between the retailers and the suppliers, which were brought to the attention of the RCC. Moreover, the RCC was confronted with several merger control and individual exemptions (an institution now repealed under the current form of the Competition Law) that were taking place or were affecting the grocery retail sector. Officially, the RCC motivated its launching of the Sector Inquiry on the necessity for the authority to hold a clear image of the overall sector, and it covered the years 2005–2008.

15.3.2 Scope of the Sector Inquiry

Pursuant to the RCC Report, the Sector Inquiry covered six major aspects, as follows:


the identification and assessment of the markets that make up the grocery retail sector;



the assessment of the application and practical functioning of the “most favored client” clause (the “MFN clause”);



the analysis of slotting allowances as part of the contractual relationship between retailers and their suppliers;



the clarification and assessment of the concept of “category management”;



the identification of the manner in which costs are determined, prices are set and profits are achieved on the production–distribution–retail chain for certain important products;



the identification of potential competition law issues.


15.3.3 Conclusions and Recommendations Made by the Competition Council

As a preliminary remark, the period under assessment from the RCC was limited to 2008 (or, in some cases, 2007), and the conclusions thereof were made public on September 2009. Therefore, the below must be read while having in mind the aforementioned:


The scales of modern and traditional forms of trade are clearly tipped in favor of the traditional ones (corner and neighborhood shops), which cover 60 % of consumer preferences as compared to 40 % covered by hypermarkets, supermarkets and discounters. Considering the period covered by the RCC Report, we deem that such results may have been altered due to different factors such as the proliferation of discounter chains on the Romanian market, price competition, variety of products, etc.



The importance of sales via the cash & carry format has decreased due to the significant number of entries by hypermarket/supermarket/discounter chains, consumers being more attracted by the easiness of access (cash & carry stores require holding of a membership card as their target clients are resellers and not final consumers).



There is no competition between the cash & carry format and small retailers, given that (a) the latter generally procure their merchandise from the former (see (ii) above) and that (b) there are clear differences between the number and variety offered by the two formats to the final consumer.



Modern forms of trade compete against traditional ones based on the fact that the latter represent the initial form of trade present in the Romanian market. However, this conclusion is valid only until modern forms of trade will have a majority in the Romanian market, this particular point in time marking a shift in the behavior and preferences of the end consumer. After such moment will be reached, traditional forms of trade will no longer compete with the modern ones but will be perceived by the end consumer as complementary thereto.



The value of the Romanian trade of groceries was estimated at the level of 2008 to be the following: (a) RON 83 billion (roughly EUR 21.2 billion) was the total value of current consumption goods, (b) RON 54.4 billion (roughly EUR 13.9 billion) was the total value of Romanian grocery trade, while (c) RON 22 billion (roughly EUR 5.6 billion) was the total value of Romanian modern grocery trade.



The assessment performed by the RCC’s inspectors indicated that certain of the slotting allowances were not directly linked to the services provided by the retailers to their suppliers, while others presented such necessary connection. The RCC Report provides a nonexhaustive list of permitted and prohibited slotting allowances.



The analysis of the MFN clause led the RCC to recommend the elimination thereof from the retailer–supplier commercial relationships based on the existence of slotting allowances (permitted following the assessment in the RCC Report). For this specific reason, the RCC issued an endorsement concerning the 2009 amendment of the GO no. 99/2000, whereby it recommended the prohibition of the MFN clause in the grocery retail sector.



Category management—over the analyzed period, the increase in the sales of the competitors of category captains has exceeded the sales of the latter. Nevertheless, the RCC Report recommends that the responsibility for managing the shelf space be further assumed by the retailer and not by the category captain.



The negotiation power manifested by certain retailers in relation to their suppliers does not represent a point for consideration from the RCC as long as the retailer does not hold a dominant position on a given market. The RCC sees no point in a distinct and supplementary regulation of the abuse of superior negotiation power. The examples provided by the EU Member State show a scarce, if not totally absent, intervention by the State authority based on such provisions.



At the moment when the RCC Report was issued, private brands held a mere 10 % share among the total number of brands commercialized by retailers, and as such they exercised no competitive pressure. This particular conclusion may have also been altered with the passage of time.



Sales at loss and discounted sales have also formed the object of the RCC’s assessment. The RCC recommended that the Government repeal the prohibition on sales at loss (Article 17 of the GO no. 99/2000), but instead the Government opted to maintain unchanged said prohibition (with certain exceptions covering also the grocery retail activity).



The increase of prices charged by the retailers to the final consumers is consistent with the increases of the prices charged by the producers to suppliers in relation to the retail segment. The RCC points out that bread commercialization is a specific segment in which prices charged to end consumers rise more often than the prices charged in the upstream market. In fact, the RCC investigated two so-called bread cartels in the Maramures and Vrancea counties, following which significant fines for price fixing were imposed on bread producers, distributors and retailers.8



Merger control is the best tool for prevention of potential competition distortion, given the entries of numerous retailers on the Romanian market.



Following the finalization of the Sector Inquiry, the RCC launched four new investigations in the retail sector, cash & carry chains, retailers and suppliers being altogether subject to these proceedings. From the data and information available, the RCC is planning on finalizing the investigations in 2013.


15.4 Merger Control in the Grocery Sector

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