FINES OF 880 MILLION LEI - THE RESULT OF THE INVESTIGATION ON THE FUEL MARKET Oil companies to go to court over the decision of the Romanian Competition Council

• The fines levied against the oil companies are the highest in the history of the Competition Council

• Bogdan Chiriţoiu says that the Authority may never levy such a huge fine again

• The court to decide whether the oil companies will have to pay or not

Yesterday, the five largest oil corporations in Romania were fined 880 million lei by the Competition Council for breaking the law. The fine amounts to about 3% of the 2010 turnover of each of the companies, which intend to go to court in order to challenge the decision of the Competition Council which comes on the back of an investigation of the oil industry. It will therefore take another three years to know whether the greatest fines ever levied by the Romanian Competition Watchdog (the president of the Competition Council expects that there won't ever be fines of this size, because we have no markets of this caliber) will be paid or not.

The "OMV Petrom" group (of which "OMV Petrom" was fined 366.5 million, and "OMV Petrom Marketing", was fined with 137.28 million lei), "Lukoil" Romania (fined with approximately 136.89 million lei), "Mol Petroleum Products" (which was fined 80.26 million lei), "Rompetrol Downstream" (fined with about 184 million lei) and ENI Romania (which represents the "Agip" chain of gas stations was fined about 12.9 million lei) violated the Law of Competition and the Treaty for the Functioning of the European Union, according to the Competition Council, by entering an anti competition agreement to pull from the market the "Eco Premium" gas variety (unleaded gas with lead substitute additives).

The companies in question deny the findings of the investigation which the competition watchdog conducted in the past few years on the oil market, claiming that the decision is illegal and unfounded, and the accusations are without merit. Dan Pazara, the head of communication of "OMV Petrom", said: "In our opinion the sanction is unjustified and we are going to challenge it in court. The decision of the company to no longer sell unleaded fuel was in compliance with the regulations which stipulated the withdrawal of this type of fuel from the market starting with January 1st, 2009. This decision was beneficial for consumers, since the «Eco Premium» fuel was replaced with a product that was perfectly compatible from a technical point of view, cheaper and less polluting". Besides, according to Bogdan Chiriţoiu, the president of the Competition Council, "OMV Petrom" received the highest fine, due to aggravating circumstances, since it was the initiator of the anti-competitive agreement, as proven by the investigation.

At the same time, "Rompetrol" was awarded extenuating circumstances, as its fine is the lowest in terms of the percentage of its turnover, - less than 3% -, as said by the president of the Competition Council: "«Rompetrol» did not directly participate in the meetings with the other companies, but it didn't denounce them either, it knew what was happening and acted accordingly".

The management of "Rompetrol" expressed its surprise at the decision of the Competition Council: "We feel that, concerning «Rompetrol Downstream», the conclusions of the investigation report are totally unfounded and unproven, and the decision of the Competition Council to sanction the company is both illegal and unfounded. The commercial activities conducted by «Rompetrol Downstream» have always been in strict compliance with the legal dispositions. «Rompetrol» was not informed concerning the existence of a common plan to pull the «Premium E4» gas variety from the market and did not expressly or implicitly approve such a shared plan. The market behavior of «Rompetrol» has always been independent and has been focused exclusively on complying with the provisions of the law which required that the sale of the aforementioned type of gas continue until January 1st, 2009, and the subsequent switching to the production of fuel compliant with the Euro 5 regulations. The «Rompetrol» group has decided to halt the production of the «Premium E4» gas type in November 2008, with the mention that the product continued to be sold until the stocks were exhausted". "Rompetrol Downstream" is determined to challenge the decision of the Competition Council in Court.

Constantin Tampiza, the advisor to the president of "Lukoil" for the Romanian projects, said that the company had decided to stop selling that specific type of fuel as early as 2005: "We had decided as early as 2005 that we would stop selling that type of fuel in Romania. In Russia, that type of gas had been taken off the market since 2008. «Eco Premium» had a toxicity ratio of 3-4%, a higher price than the newly introduced fuel and higher logistic costs. The decision of the Competition Council is unfounded".

"MOL Romania" will submit a request to suspend the execution of the decision of the Competition Council and will challenge it with the Court of Appeal of Bucharest, company officials said: "«MOL Romania» used to buy all of the «ECO Premium» gas from local producers or from distributors. «MOL Romania» says that the removal of «ECO Premium» from the company's fuel portfolio was an individual business decision, and not the result of an anticompetitive agreement or of concerted practices".

The head of the Competition Authority said that MOL was the first company to remove the type of fuel in question from the market.

Bogdan Chiriţoiu said that he expects that the Competition Council will be sued by the companies it fined: "The law prohibits competing companies from exchanging and harmonizing information. What they do is their business, but they shouldn't know what their competitors are doing. The Competition Council found that in 2007-2008, the oil companies had talks about pulling a certain type of fuel from the market. (...) It was their right to do it, but they should have done it individually. We have proof that they agreed to do it together. (...) It is very likely that we will go to court. The companies were announced yesterday (ed. note: Monday, February 9th), and in about a month they will receive the detailed decision. Within 30 days they will be able to challenge this decision in court".

The head of the Competition Council said that such a lawsuit could take about three years until a ruling is issued. However, the companies need to pay the fines and, depending on the ruling of the Court, the money will remain with the state budget or will be returned to the six companies. There is also the possibility of the Prosecutors' Office suspending the sanctions until the end of the trial (like it happened in the case of "Orange" and "Vodafone"), and the companies would have to pay bail, said Bogdan Chiriţoiu. Up until recently, the bail was set at 30% of the fine, but it was recently changed by the Parliament, to up to 20% of the fine.

Of the evidence supporting the recently concluded investigation, Bogdan Chiriţoiu mentioned emails which circulated between companies, and the minutes of the meetings of the members of the Association of Oil Businesspeople.

He said that these fines - the only ones in Europe on the competition market - will not affect the price of gas, since it depends on the international prices.