Competition Council: Giant Corporations And Preferential Contracts, The Main Risks To A Free Energy Market

The establishment of two giant energy corporations having a dominant market position and the lack of transparency in contracts signed between State-run energy producers and private partners enjoying preferential treatment are the main sources of risks to a free energy market in Romania.

These are the conclusions of a joint report released yesterday by the Competition Council and the Romanian Academic Society under the title "Competition - The Key To Economic Development And Consumer Welfare."

According to the report "the potential establishment of two companies with a dominant market position, which aggregate entities that account for most of the energy industry (electricity / gas / coal) and especially a possible corroboration between this measure and the failure to finalize reform measures to separate distribution from supply, are a major risk that may materialize in penalties imposed by the European Commission." The same case applies to "bilateral electricity contracts concluded between State-run partners and private partners for prices that are unfavourable to the State."

"The Competition Council is interested in three aspects of this case. The first is that the two companies in question should not be large enough to dominate and distort the free market. The second is that the integration of the energy sources into the energy production process should not result in cross-subsidies between the different systems. Last but not least, we are interested in preventing any unlawful vertical arrangements, meaning that energy production and energy distribution should not be placed in the same basket," Competition Council Chairman Bogdan Chiritoiu stated.

He further explained that preferential contracts signed between State-run entities and private companies enjoying preferential treatment posed "a competition problem" as they enabled some consumers to have access to much less expensive energy than others.