Franchise Romania Business BLOG

In Romania, horizontal cooperation agreements are regulated by art. 5, paragraph 1 of Competition Law no. 21/1996, as republished (hereinafter called “Competition Law”) and represent joint agreements or practices between two or more undertakings that operate at the same market level. Said agreements or practices have as an object or may have as an effect the restriction, prevention or misrepresentation of competition, and are prohibited, as they are rightfully invalid.

Horizontal agreements may involve both real competitive undertakings (which act on the same relevant market or which, in the absence of the agreement, have the capacity to rapidly modify their production in order to enter the relevant market without significant additional costs or risks), as well as potential competitive undertakings (which, in the absence of the agreement, could make additional investments in order to enter the relevant market).

Single branding exclusivity – resulting from the imposed obligation, or from the financial incentives granted by a supplier to the purchaser, in order to persuade the latter to purchase products only from the respective supplier or from a certain market.
Exclusive distribution – the supplier agrees to sell its products to a single distributor within a certain territory, while at the same time restricting the distributor’s possibility to carry out active sales in a territory different than the assigned territory.
Selective distribution – restricts the number of authorized distributors and the product resale channels, on the basis of selection criteria imposed, firstly, by the product’s nature.
Exclusive allocation of consumers – under an agreement of exclusive allocation of consumers, the supplier agrees to sell its products to a single distributor for purposes of resale to a certain consumer segment.
Recommended and maximum resale products – under a vertical agreement, the supplier may recommend to the distributor the (maximum) resale prices.

By the end of 2004, the Competition Council completed, to a large extent, the process of harmonizing national legislation with the community legislation in the field of competition.
A first consequence of this proceeding is the enactment, in Romania as well, of a new regulation in the field of vertical agreements which implements, as a major novelty element, the policy of self-assessment of the anti-competition effects which this category of agreements is likely to create on a relevant market, and which materializes in the safe-harbor provided, by way of block exemption, with respect to the vertical agreements concluded between undertakings holding a market share of up to 30%, and which contain vertical restraints save for the so-called “hardcore restraints”, the notification of such agreements no longer being required.
Solely in the event that the market share of the undertakings involved exceeds the threshold of 30% or if the vertical agreement contains restraints that are not subject to the block exemption, obtaining an individual exemption shall become necessary.

Vertical agreements are defined as agreements or combined practices executed between two or several undertakings – which operate at different levels of the production-distribution chain – referring to the circumstances in which the parties may purchase, sell or resell certain products or services. Said agreements may be: exclusive or selective distribution, single branding, franchise, the purpose of this listing being of an exemplifying nature. Vertical agreements, by way of interposing in the producer-consumer distribution chain, are also likely to affect and restrict competition, especially by means of the so-called vertical restraints, the most frequent ones are as follows: trademark exclusivity, non-competition, exclusive-selective distribution, recommended resale prices.

The procedure related to the reestablishment of the right of ownership is similar to the aforementioned procedure of return of the real estate properties abusively taken over. According to the provisions of Law no. 247/2005, the term for lodging the petition expired on September 25, 2005. The petition for return should have been registered with the Mayor’s Office in the locality where the claimed land is located.
In this situation as well, the notifications should have been accompanied by justifying documents, proving the capacity of owner of the petitioner or the petitioner’s family, as well as the petitioner’s capacity as heir or legal representative of the former owner.
Also, Law no. 18/1991 and Law no. 1/2000, as amended and supplemented by Law no. 247/2005, added clarifications with respect to the items of evidence that may be produced for the reestablishment of the right of ownership for the agricultural and forest lands.

The persons who, up to the date of November 30, 2005, lodged a return petition with the competent administrative authority (the Mayor’s Office) in the locality where the requested construction or land are located, are entitled to such return. It is noteworthy that the notifications must be accompanied, either on the date when they are lodged with the Mayor’s Office, or on a subsequent date, by justifying documents that prove the capacity of owner of the petitioner or of the petitioner’s family, as well as the petitioner’s capacity of heir or legal representative of the former owner.

According to the provisions of Law no. 10/2001, the persons entitled to the seized properties are as follows:
Individuals who were the owners of the real estate properties on the date of the abusive takeover of the same;
Individuals who were associates of the legal entities that held the real estate on the takeover date;
Legal entities that were owners of the real estate properties taken over, provided that they continued their activity as a legal entity until the date of coming into force of the law or if they resumed their activity after December 22, 1989;
The heirs of the entitled individuals.
The persons who received compensation according to the international agreements concluded by Romania with respect to the regulation of the pending financial matters shall not benefit from the return of the real estate properties or from remedies.

Real estate properties that were abusively taken over include: (i) nationalized real estate properties, (ii) real estate properties taken over pursuant to the seizure of the estate, (iii) real estate properties donated to the state or to other legal entities on the basis of special normative acts adopted during the period March 6, 1945 – December 22, 1989, (iv) real estate properties donated to the state, if the petition for annulment or the petition for the acknowledgment of nullity was admitted by way of a final and irrevocable court resolution, (v) the real estate properties taken over by the state for the failure to pay the taxes for reasons beyond the owner’s will, (vi) the real estate properties considered to have been abandoned, on the basis of an administrative decision or a court resolution, during the period March 6, 1945 – December 22, 1989, (vii) the real estate properties taken over by the state on the basis of laws or other normative acts unpublished, on the takeover date, in the Official Gazette or the Official Bulletin, (viii) the real estate properties taken over by the state on the basis of Law no.139/1940 on requisitions, and which were not returned or for which the owners did not receive equitable compensation, (ix) any other real estate properties taken over by the state under a valid title, (x) other real estate properties taken over without a valid title or in breach of the legal provisions in force, as well as those taken over without legal grounds under orders of the local bodies of the state authority or administration.

The procedure for the assignment of a concession contract is initiated by the publication of a participation ad in the Official Journal of the European Union, which must contain at least the information of the standard form adopted by the European Commission. Such publication of the participation ad is mandatory in all cases where the assessed value of the concession contract to be assigned exceeds the equivalent value in lei of Euro 5,000,000. Concession contracts are assigned under the same procedures as the public acquisition contracts.

According to Emergency Ordinance no. 34/2006, regarding the assignment of public acquisition contracts, public works concession contracts and service concession contracts (the “Ordinance”), the beneficiary must indicate, in the participation ad, the criterion for the assignment of the relevant public acquisition contract, which, once determined, may not be changed during the unfolding of the whole assignment procedure.

A criterion for the assignment of public acquisition contracts may be only:
a) either the most economically profitable bid;
b) or, exclusively, the lowest price.

Where a public acquisition contract is assigned by employing the competitive dialog procedure, the assignment criterion must be the most economically profitable bid only.