Legislation and jurisdictionRelevant legislation and regulators
What is the relevant legislation and who enforces it?
Merger control, as well as the other main areas of competition law, is governed primarily by the Competition Law 21/1996 (the Competition Law), as republished and amended. The provisions of the Competition Law are further complemented by the provisions of the Regulation on Economic Concentrations, approved by Romanian Competition Council (RCC) Order No. 431/2017, and the provisions of the Guidelines on the concepts of concentration, concerned undertaking, full-function joint ventures and calculation of turnover, approved by RCC Order No. 386/2010 (the Guidelines).
Ancillary restraints are covered by the Guidelines regarding ancillary restraints, approved by RCC Order No. 387/2010. Remedies are covered by the Guidelines on remedies in the merger sector, approved by RCC Order No. 688/2010, and the relevant market is covered by the Guidelines on the definition of the relevant market, approved by RCC Order No. 388/2010.
The authority in charge of enforcing the merger control rules in Romania is the RCC. Furthermore, according to the newly adopted foreign direct investment (FDI) screening regime, the approval of the FDI Screening Commission is required for transactions that might impact national security.Scope of legislation
What kinds of mergers are caught?
A merger is defined, for the purposes of the Competition Law, as being a transaction that results in a change of control over an undertaking or undertakings, or parts of an undertaking or undertakings on a lasting basis.
As such, there are two types of mergers:
- a merger between previously independent undertakings or parts of undertakings; and
- the acquisition of control over one or more undertakings or parts of one or more undertakings by one or more natural persons already controlling at least one undertaking or by one or more undertakings.
What types of joint ventures are caught?
The creation of a joint venture may amount to a merger, provided that the joint venture is a full-function joint venture (ie, an undertaking that carries out its activity on a lasting basis and that performs all functions of an autonomous economic entity).
Is there a definition of ‘control’ and are minority and other interests less than control caught?
Control is defined by article 9(6) of the Competition Law as the possibility of exercising decisive influence on an undertaking. Control may arise on the basis of rights, contracts or any other elements that, either separately or taken together, and taking into account the legal or factual considerations involved, allow a party to exercise a decisive influence over the behaviour of an undertaking, in particular through:
- ownership or rights to use over all or part of the assets of an undertaking; or
- rights or contracts conferring a decisive influence over the structure of an undertaking, the voting process or the decision-making process of the management bodies of an undertaking.
The acquisition of a minority shareholding may amount to a notifiable concentration if – and only if – it is considered to amount to an acquisition of control, in particular through the existence of veto rights concerning certain strategic decisions of the respective undertaking. There are no plans that have been made public to review legislation regarding review transactions that do not involve control acquisition.Thresholds, triggers and approvals
What are the jurisdictional thresholds for notification and are there circumstances in which transactions falling below these thresholds may be investigated?
The merger control provisions are applicable to concentrations where the undertakings concerned generated combined worldwide turnover exceeding €10 million in the previous financial year, and each of at least two of the undertakings concerned achieved Romanian turnover exceeding €4 million in the previous financial year. There is no intention that has been publicly announced to set up alternative thresholds based on the transaction value.
Transactions falling below the above thresholds may only be scrutinised on national security grounds, based on the FDI screening mechanism.
Is the filing mandatory or voluntary? If mandatory, do any exceptions exist?
The filing is mandatory, and there are no exceptions.
Do foreign-to-foreign mergers have to be notified and is there a local effects or nexus test?
Foreign-to-foreign transactions are subject to merger control by the RCC if the respective parties meet the turnover thresholds test. The lack of local effect, while not removing the requirement for notification, may lead to the concentration being assessed under the simplified procedure.
Are there also rules on foreign investment, special sectors or other relevant approvals?
A review on national security grounds will be triggered by the acquisition of control on undertakings that are active in a wide range of sectors that are considered sensitive. A new more restrictive FDI screening regime has been adopted and might impact transactions involving non-EU investors.
- The new regimes apply to non-EU direct and indirect investors, for investments that are more than €2 million in areas that are sensitive from the perspective of national security (very broadly defined areas).
- The new regime introduces a standstill obligation for all pending transactions. The non-EU investor is subject to fines of up to 10 per cent of the worldwide turnover for breaching the standstill obligation. Such sanctions will enter into force within the next 30 days.
- Non-EU investors shall be bound to submit a stand-alone filing (independent of a separate merger control filing).
- The screening shall be conducted by the soon-to-be set-up FDI Screening Commission, which shall take over the role of the Supreme Council of National Defence, once organised by government decision.
- The substantive test shall be based on the criteria provided in article 4 of the EU FDI Screening Regulation 2019/452.
- The maximum review timeline is 135 days after the filing is complete:
The new law does not apply to EU investors; therefore, the current screening regime is not altered. Investments by EU investors that are subject to local merger control rules may be screened by the FDI Screening Commission upon referral by the Competition Council. There is no stand-alone filing obligation imposed on EU investors (except for the merger filing). The Competition Council will only clear the transaction on merger control grounds once it receives the green light from the FDI Screening Commission.
The FDI Screening Commission is now bound to issue an advisory opinion within 30 days, which should contribute in practice to expedite merger clearance procedures by the Competition Council (bound to wait until the FDI Screening advisory opinion is issued).
For transactions that fall below the local merger control thresholds or are subject to the European Commission review, there is no specific procedure applicable to EU investors. In practice, under the current regime, EU investors have sought legal certainty by submitting a stand-alone FDI screening application, as the government has the prerogative to ban transactions involving purely EU investors on the buy side if risks to national security are found. The Competition Law explicitly specifies that the competence of the European Commission must be observed by the government, which in practice will prevent the government from discretionarily vetoing transactions involving EU investors.
Concentrations in certain sectors, such as the financial sector, media sector, energy sector and telecommunications sector, may be subject to a notification obligation to the sector regulator.