IN ORDER TO DETERMINE WHETHER AN ECONOMIC CONCENTRATION IS BEING CREATED The Competition Council has begun the cooperation with the European Commission concerning the privatization of CFR Marfă

The Competition Council has begun the cooperation with the representatives of the European Commission on the matter of the privatization of CFR Marfă, with the two authorities to decide whether the acquisition by Grup Feroviar Român (GFR) of the freight railroad operator will create an economic concentration, according to Bogdan Chiriţoiu, the president of the Competition Council.

He said that the analysis process is at an incipient stage, as from a legal point there are six months available for adopting a decision in that regard.

Bogdan Chiriţoiu told us: "I have been to Brussels and I have met the representatives of the European Commission. We have also approached the topic of CFR Marfă. At the moment, we are exchanging information and we are awaiting the notification of GFR. The company needs to draw up its own notification brief. We will have a period of a few weeks to review the situation, and then we will talk to the European Commission. Legally we have six months on hand to make a decision".

The president of the Competition Council also told us that there are three possible situations - the entitled authorities can approve the acquisition of CFR Marfă by GFR, they can reject it or they can accept the deal subject to certain conditions.

He also said that GFR will need to pay the amount which it has committed to, in parallel with the competition authorities, and he emphasized: "These are things that are taking place in parallel, they are not related to one another".

The representatives of the Grampet Group, which owns GFR, told us that there have been preliminary discussions with the officials of the Competition Council, and he went on to say: "There have already been preliminary discussions with the Competition Council, because we are very seriously concerned with getting the approval of the authorities in Brussels for the deal. We have submitted two addresses: one prior to the privatization, of our own accord, and another one during the privatization procedure. According to these informal communications, we don't expect any other insurmountable problems.

We will however take all the necessary steps when it comes to the Competition Council, namely the sending of notifications, as soon as we finish the discussions with the Ministry of Transports and the contract is signed.

The situation in Romania has precedents in other countries, such as even Austria or Germany; unfortunately, the central and South-Eastern European market doesn't seem to be too attractive yet for the competition to be acerbic, but it remains open to any operators, the competition is not being obstructed".

Grup Feroviar Român, controlled by Romanian businessman Gruia Stoica, was selected as the winner of the privatization of CFR Marfă, after offering 202 million Euros for 51% of the shares of the company.

At the end of last week, Transportation Minister Relu Fenechiu announced that GFR has committed to invest around 200 more million Euros and to spend 1.5 million Euros on environmental investments.

At the time, the minister emphasized that he would talk to the representatives of the Competition Council, on the possible creation of an economic concentration through the acquisition of CFR Marfă, with a market share of about 50%, by GFR, which has a market share of about 30%.

The representatives of the Competition Council recently told us, that according to the law, if the total turnover of all the companies involved in an economic concentration exceeds 5 billion Euros, and the total turnover made in the EU by at least two of the companies exceeds 250 million Euros, the approval of the European Commission is required for the deal to go through.

Bogdan Chiriţoiu said that GFR will have to wait for the decision of the authorities habilitated in the sector, before effectively taking over the majority stake in the state owned company.

Grup Feroviar Român was the only investor that submitted a binding offer, for the privatization of CFR Marfă, after the Romanian-Austrian joint venture Transferoviar Grup - Donau Finanz withdrew from the bidding process and American company OmniTRAX was disqualified for not submitting the non-binding offer.