BOGDAN CHIRIȚOIU: WE MAKE SURE THE NEWLY-LIBERALIZED INDUSTRY ADJUSTS TO THE MARKET REGULATIONS


31.12.2017
The importance of the Competition Council for the power field expands every year, with every new step towards full liberalization of prices at electric power and natural gas. President Bogdan Chirițoiu informed us on the main concerns of the Competition Council and those hot fields from the point of view of competition.

Dear Mr. Bogdan Chirițoiu, how are you going to change the activity carried out by the Council at present so as to answer the new conjuncture of the energy market?

Energy is a priority for us, since as the liberalization process advances, the market substitutes the regulation. Thus, we are in charge with making sure that the newly-liberalized industries adjust to the market regulations and correctly enforce the competition principles.

The Competition Council makes use of all the available tools, both investigative, and prospective tools, in an intent to always be in on the continuous growth of the energy field. We completed or we carry on sector investigations by which we collect data and information to better understand the operation of this industry. Based on these, we issue recommendations to the decision-making authorities (the Government, the Parliament, the Energy Regulatory Agency) to improve the legislative framework, the market regulations. If we find out signs of infringement upon the competition law, we set off investigations.

 

In this regard, during the recent years we completed several such investigations and we have been carrying on some others. In the field of fuels we had two investigations that concluded with significant penalties, while in the field of power we finished the case of Hidroelectrica, which is now in instance, but we are also carrying on investigations in the area of services connected to the power and natural gas supply. Moreover, we are also active in regard to sector investigations. We have finished quite recently an investigation on the electric power field which we rounded up with a series of recommendations to improve competition in the field. We are carrying on a sector investigation on natural gas whose results we are to make public at the beginning of the next year.

In the field of motor vehicle fuels, this year we set off a sector related investigation, starting from the noticed rigidity of prices to retail marketing of fuels in Romania. This phenomenon was noticed after comparing the evolution of prices practiced in Romania to the average of prices at European level, as well as from how domestic prices evolved related to the changes of the international quotations for oil products.

Moreover, this is the field in which we carry out the most analyses. We instrumented and penalized two cases of cartel agreements on the fuels market: six oil companies were penalized by over EUR 200 million and we won processes with these, and in the second case, three companies in the field of en-gros marketing of fuels were fined about EUR 3.7 million.

We worked out recommendations to boost competition on the fuels market, the main beneficiaries being the final consumers. One of our proposals is the removal of barriers when entering the fuels market, respectively the simplification of the procedures for the setting up of supply stations. This way, the competition pressure would increase on the companies active on this market.

In the following period we intend to create a comparison tool for fuels prices, similar to that successfully launched for food products one year ago. The Government made the first step and approved the memorandum on the creation of this system for monitoring fuels prices. We hope this platform will lead to a more transparent market for consumers, so that they may choose vehicle fuels with the best price-quality relation.

What are the most important investigations in course in the power field you think you will complete by the spring of 2018?

We have already mentioned the sector investigation in the field of natural gases. At the end of this year and the beginning of the next year we will finish two investigations on the possible dumping of some bids organized by companies in the field of natural gases and electric power. One of them regards the bids organized by SNTGN TRANSGAZ SA for the award of some construction contracts and restoration of natural gas supply pipes. The information having set off the investigation were furnished by DIICOT.

The second investigation refers to a possible faking of the bids for the award of the contracts for the supply of electric metering devices and related equipment for the measuring of the electric power.

Can you unfold us two or three relevant ascertained facts following the analyses already carried out?

Those we have already listed are investigations still in course and, as such, we cannot reveal information on them. However, I can tell you that following the investigation on the possible abuse of a dominant position of CEZ Distribuție (CEZD), settled by commitments assumed by CEZD, there have been adopted a series of measures leading to the improvement of the direct relation with the electric power suppliers.

The measures adopted assume informing the supplier in regard to the actions of the supplying operator in relation to the clients in its portfolio (especially when the supplier and the supplying operator are part of the same group), actions that directly influence upon the activity carried out by the suppliers on the competition segment of the electric power market.

Last year, the Council carried out a series of inspections at the electric power supply companies, suspecting possible abuses of a dominant position. What have you discovered after these inspections?

Inspections were carried out at E-Distribuție Muntenia (former Enel Distribuție Muntenia) and the headquarters of four companies projecting and carrying out installations for the connection to the electric power system. In this particular case, we suspect that E-Distribuție Muntenia would discriminate some companies providing related services by selecting some operators upon other criteria than those provided by the law in force. This way, the consumers could also be affected by EDM influencing upon the technical solutions suggested to the users, the duration and the costs of connection to the electric power network, as well as the users’ option to choose the suppliers of related services. During the first part of the next year, I think we will finish this investigation.

Moreover, we carried out inspections within several investigations on a possible abuse of a dominant position of Gaz Sud SA on the market of the related services, respectively the technical endorsement of the projects, reception and commissioning of the plants for the use of natural gases. A similar case where inspections were carried out is that of a possible abuse of a dominant position of Distrigaz Sud Rețele SRL.

Another investigation set off this year is that regarding a possible anti-competitional agreement between SC Megaconstruct SRL, SC Mega Conect SRL and SC Instalații Montaj Tehnologic SRL with a view to set up the prices for the production of the plants for the use of natural gases and clients’ division.

A series of strategic decisions of the Government of Romania in regard to the energy field (mining, recoverable energies, natural gas) need the support or benefit from the technical support of the Council to get advices from the part of the European Commission. From this point of view, what are the files in course, and what are the perspectives?

The role of the Competition Council in the field of state subsidy is especially important, being both Romania’s contact point with the European Commission, in this field, and the consultant of the Romanian authorities in implementing public policies. Thus, once the public authorities have set the goals they intend to attain, the Competition Council actively takes part in defining the measures needed to attain such objectives, observing the community regulations and jurisprudence.

A case with a significant social impact, under our attention, is that of the Complexul Energetic Hunedoara (CEH), a company in a difficult condition, that got state subsidy to save itself but could not provide the 50% own contribution or return the subsidy it benefitted from.

In such situation, following the debates with the European Commission, a new strategy was carried out for the company’s reorganization so that the viable part can be saved, also considering that it is located in a mono-industrial area, of high social problems.

The strategy provides the separation of CEH on the structure mining/energy and the incorporation of two companies, one having as a main activity pit coal extraction, and the second one the production of electric power and heat, the viable energy assets coming up for sale. At present, the strategy undergoes analyses, especially with a view to identify the energy groups that could accede to SIEG type subsidies.

In parallel, the agreement of the European Commission was obtained for the award of a state subsidy with a view to cover the costs of the social and ecological measures, as well as the losses generated by the coal production for the mines of Lonea and Lupeni, which will be closed next years.

Moreover, a case which is under our attention is that of the Compania Națională a Uraniului (CNU), which up to the end of 2015 ensured its revenues, mainly, from the contracts with SN Nuclearelectrica (SNN), supplying raw material for the production of the nuclear fuel required for the operation of the Cernavodă Plant.

Considering the high production costs of CNU, the removal of subventions, the low price of octoxide / uranium dioxide on the international market and the rescission by SNN of the contract with CNU for the purchase of uranium dioxide, the company is in a difficult condition.

 

In this context, the Government authorized the Ministry of Power to provide CNU with a subsidy for saving as a loan meant to cover the current minimum expenses for the support of the CNU activities for a 6-month period and to grant the necessary time to work out and launch a plan for the restructuring of the economic and financial activity. We provided consultancy and supported the Government so that the support measure was authorized by the European Commission. Subsequently, a plan for the restructuring of the company was worked out to restore the long-term feasibility of the company, which was notified to the European Commission in June 2017. At present, CNU and the Ministry of Power work for a new approach in regard to the measures for the restructuring of CNU, also benefitting from specialized assistance in the field of state subsidy from the part of the Competition Council.

31.12.2017 · ROMANIA