LAW ON STATE AID
No. 143 July 27, 1999

Scope of the law

Article 1.

The purpose of the present Law is to define State Aid, and the modalities of authorizing, granting, controlling, inventorying, monitoring and reporting State Aid, with the view of creating and maintaining a normal competitive environment.

Definition of State Aid

Article 2.

(1) For the purposes of this Law, "State Aid" shall mean any support, regardless of its form, granted by the State through State resources, granted by public authorities or any other bodies administering on behalf of the State.

(2) State Aid shall cover all measures resulting in a net transfer of public funds to an undertaking or in revenues foregone by any public authorities (whether actual or contingent), which provide an undertaking with a financial or economic benefit that it would not receive without those measures. Resulting benefits shall be considered a State Aid if they confer a specific advantage only upon certain undertakings or upon certain goods, services or regions.

(2) State Aid may take the form of an aid scheme or individual aid.

(4) An aid scheme is a system on the basis of which specific allocations of aid may be granted to undertakings which are defined in a general and abstract manner.

(5) An individual aid is any form of State Aid that is not granted on the basis of an aid scheme.

(6) State Aid shall include, among other things: subsidies, including export subsidies; debt write-offs or operating losses compensation; fee and tax exemptions, reductions or deferrals; foregoing of normal returns on public funds, including granting of loans with preferential interest rates; guarantees given by the State or public authorities on preferential terms; equity injections by the State or public bodies if the rate of return on such investments is less than the return normally expected by a prudent private investor; reductions in the price of goods supplied and services provided by public authorities or bodies administering state resources, including sales of publicly owned lands below market price.

Definition of Existing Aid

Article 3.

(1) "Existing Aid" is an individual aid or an aid scheme, which satisfies one of the following conditions:

a) existed prior to the entry into force of the present Law; or

b) has been authorized by the Competition Council; or

c) the Competition Council did not take a decision as provided in the law within the time provided by the Law.

(2) Specific allocations of aid granted as part of an Existing Aid scheme shall be deemed to be an Existing Aid, unless the Competition Council has expressly required in its decision on the aid scheme the notification of such specific allocations of aid.

Measures and State Aids falling outside the scope of the Law

Article 4.

(1) Fiscal measures that are included in domestic fiscal norms, applicable to all undertakings;

(2) Aid in the form of general public services provided to any business activity, on terms and conditions not favoring certain sectors and undertakings;

(3) Loans from State sources or guarantees given by public bodies in accordance with current market conditions;

(4) Equity participation of the State or other public bodies, if the rate of return on such investments is at least equal to the return normally expected by a prudent private investor;

(5) Aid having a social character or granted to individual consumers, provided that such aid is granted without discrimination related to the origin of the products or services concerned;

(6) Aid to eliminate effects caused by natural disasters or exceptional occurrences.

Authorization of the State Aid

Article 5.

Any State Aid, in any form whatsoever and regardless of its recipient, must be authorized by the Competition Council from the point of view of its effects on competition, save as otherwise provided by this Law.

Notification of State Aid

Article 6.

(1) Save as otherwise provided in this Law or in regulations pursuant to this Law, any plan to grant new State Aid or to alter and Existing Aid shall be notified by the granter of the aid to the Competition Council.

(2) A notification of State Aid shall contain all the exact and complete information the Competition Council requires in order to form a view of the compatibility of the State Aid with this Law. The Competition Council shall adopt implementing regulations concerning the form, content and other details of notification within 90 days after the present law comes into effect.

(3) The Competition Council shall notify the receipt of each notification to the Competition Office within 15 days.

(3) The notification shall become effective when the information provided in it is exact and complete.

(5)  If the Competition Council believes that the information provided in the notification is inexact or incomplete, it shall request additional information within 20 days following receipt of the notification.

Standstill Clause

Article 7.

New State Aid or changes to Existing Aid may not be put into effect until the Competition Council has made a decision to authorize the State Aid or until the aid is deemed to be authorized.

Examination of the notification and initiation of proceedings

Article 8.

(1) The Competition Council shall examine the notification as soon as it is received.

(2) Where the Competition Council finds that the notified measure does not constitute State Aid, it shall record that finding by means of a decision.

(3) Where the Competition Council finds that the notified measure does not raise doubts as to its compatibility with this Law, it shall issue a decision to authorize the State Aid.

(4) Where the Competition Council finds that the measure raises doubts with regard to its compatibility with this Law, it shall decide to initiate an investigation.

Time limits for initiating proceedings and for decisions

Article 9.

(1) The Competition Council shall make the decision referred to in Article 8(2), 8(3) or 8(4) within 30 days after the notification becomes effective.

(2) If the Competition Council decides to start and investigation, it will have to make a final decision within not more than four months after the date the investigation started.

(3) If the Competition Council fails to make the decisions within the time limits mentioned, the aid can be legally put into effect after giving prior notice to the Competition Council and shall then become "Existing Aid".

(4) These time limits do not apply if the State Aid is not notified or if the notification is not effective.

Revocation of a decision

Article 10.

To revoke a decision previously made based upon incorrect information received during the procedure the Competition Council has the obligation to give the aid granter the opportunity to submit its comments.

Investigation powers

Article 11.

For the implementation of this Law, the Competition Council and the Competition Office shall have the investigating powers provided for in articles 39-46 of the Competition Law, No. 21/1996.

Decisions on a new aid or alteration of an Existing Aid

Article 12.

(1) In the case of new State Aid or alteration of an Existing Aid, the Competition Council will balance the positive effects of the aid in the development of certain economic activities or areas against the risk of harmful effects on competition.

(2) After such review, the Competition Council may decide:

a) that the notified measure does not constitute State Aid;

b) to authorize the State Aid;

c) to authorize the State Aid, imposing through its decision conditions and obligations intended to ensure that the State Aid does not significantly distort the normal competitive environment and does not affect the proper application of the international agreements to which Romania is a party;

d) prohibit the State Aid if it significantly distorts the normal competitive environment and affects the proper application of the international agreements to which Romania is a party;

(3) When the Competition Council makes a decision to prohibit a State Aid and if the aid has nonetheless been granted, such aid must be annulled and recouped by the granter of the aid or repaid by the end user.

Decisions regarding Existing Aid

Article 13.

(1) The Competition Council and Competition Office shall permanently monitor all Existing Aids. If an Existing Aid is considered to substantially distort the normal competitive environment and to affect the proper application of international agreements to which Romania is a party, the Competition Council shall request to the granter of the aid to take appropriate measures in order to eliminate the incompatibilities with this Law. These measures may include a recommendation to annul or alter the Existing Aid. These recommendations shall be conveyed to the Competition Office so that it can monitor the implementation of such measures.

(1) If the granter of the aid has not taken the measures within the measures within the period of time indicated in the request, the Competition Council may decide that Existing Aid shall be stopped or may impose conditions and obligations intended to ensure the compatibility of the aid with the provisions of this Law. The decision shall not have a retroactive effect and must allow the granter of the aid a reasonable period of time in which to comply with the decision.

Aid which may be authorized or prohibited

Article 14.

(1) The following measures constitute State Aid which may be authorized by the Competition Council:

(a) aid for research and development, provided it is designed for one of the following activities:

– fundamental research, understood as an activity directed to acquire new scientific knowledge, and to draft and verify new hypotheses and theories, without an industrial or commercial purpose, and which ensures a large dissemination of its results;

– applied research, understood as an activity having as its objective the acquisition of knowledge to be used in developing new products, processes or services or to significantly improve incumbent products or services;

– research at a pre-competitive level, understood as an activity which is used for transformation of the results of the applied research into plans, schemes or documents for new products, processes or services, even if these are meant for sale or utilization and which include the manufacturing of an experimental model and an initial prototype for purposes other than commercial.

The closer to the market a project is, the lower the degree of subsidization should be.

For fundamental research, the aid may cover up to 100% of the gross investment.

For basic research, the aid may cover up to 50% of gross investment.

For pre-competitive level research, the aid may cover up to 25% of gross investment or through fee and tax reductions in differentiated rates with the equivalent effect.

(b) Aid to small and medium-sized enterprises, having no more than 250 people, if intended to offset disadvantages related to the size of the firm in question;

(c) Aid for environmental protection, provided that the "polluter pays" principle is observed; investments specifically designed to reduce pollution and/or reduce the electric consumption per product unit may be subsidized up to 25% of the gross amount or through fee and tax reductions in differentiated rates with the equivalent effect;

(d) Aid for the training of employees and for the creation of new jobs provided that it is not granted in economic sectors where there is over-capacity. Aid to maintain jobs shall be considered as restructuring aid;

(e) Aid granted to economic sectors with problems of over-capacity to rationalize the structure of industry by ensuring a gradual reduction of production and employment provided that such measures should be strictly limited in duration and accompanied by a restructuring program. When evaluating problems of over-capacity, the international situation is to be taken into account;

(f) Aid for regional development, to the extent that it does not influence competition and only if the purpose of this aid is to assure undertakings in the area at issue equal economic footing with undertakings in other parts of the country, provided that this should not lead to an increased production capacity in sectors already suffering from problems of over-capacity. Regional development aid may be related to the initial investment or job creation, or may take the form of an aid of continuing character, designed to overcome regional or permanent disadvantages;

(g) General aid for promoting exports through such actions as national weeks, international fairs, presentation shops, etc., provided that should benefit all interested undertakings;

Aid to promote cultural and heritage conservation;

Aid to promote health care and education.

(2) When assessing the effects of State Aid, the Competition Council shall take into account the cumulative effects of all types of aid granted to a single recipient.

(2) The Competition Council may prohibit measures that constitute State Aid, such as:

(a) export aid or any aid contingent, in law or fact, upon export performance in so far as such aid may affect the proper application of international agreements to which Romania is a party;

(b) aid to compensate for operating losses of undertakings, either directly or through the forgoing of payments due to the state;

(c) aid for problem economic sectors suffering from structural over-capacity or to enterprises in difficulties, if it is not accompanied by a restructuring program and is not strictly limited in duration. Restructuring aid must be part of an individual plan to restore an undertaking’s long-term viability within a reasonable period. Where there is over-capacity on the relevant market, an irreversible reduction in capacity, in proportion to the amount of the aid received, must be provided for;

(d) aid given as a rescue measure to specific undertakings, unless given solely to provide time for devising a restructuring plan including long-term solutions and to avoid acute social problems;

(e) Aid measures applied so that they discriminate in favor of domestically produced goods and against similar goods produced in countries that participate in international agreements to which Romania is a party, and in which such discrimination is prohibited.

Participation of the Competition Office in the Competition Council’s deliberations

Article 15.

The head of the Competition Office or a person delegated by him/her shall represent the Government in the Competition Council’s deliberations and may make recommendations for the Council’s consideration.

Definition of "Unlawful Aid"

Article 16.

For purposes of this Law, "Unlawful Aid" is a State Aid, other than an Existing Aid or aid that is exempted from the obligations to notify in compliance with this Law, granted without authorization from the Competition Council or granted after being notified, but before the Competition Council issued a decision within the legal time limits.

Recovery, repayment or suspension of the aid

Article 17.

(1) The Competition Council may request the Court of Appeals, having jurisdiction in the area where the granter of the State Aid or the recipient has its principal offices, to annul the administrative act granting the aid, and, therefore, to order the recovery, repayment or suspension of payment of any Unlawful Aid.

(2) The president of the Court of Appeals may issue an interlocutory decree for recovery, repayment or suspension or the Unlawful Aid. That decree may be appealed to the Supreme Court.

Recovery of prohibited State Aid

Article 18.

(1) When a State Aid, which has been prohibited by a decision of the Competition Council, is however granted, the Competition Council may request the Court of Appeals, having jurisdiction in the area where the granter of the aid or the recipient has its principal offices, to annul the administrative act granting the aid and, therefore, to order the recovery of the aid by the granter of the aid from the recipient or to order the repayment of the aid by the recipient.

(3) The Competition Council may also request the Court of Appeals to order the recovery or the repayment of State Aid in cases in which the recipient does not comply with the conditions or obligations provided in the authorization.

(4) The decision of the Court of Appeals may be appealed to the Supreme Court.

(5) Actions provided for in this chapter are appealed following the contentious administrative procedures.

Recovery of interest and of damages caused by an Unlawful Aid or prohibited aid

Article 19.

(1) In the case of an Unlawful Aid or a prohibited aid, the Competition Council may also request the Court of Appeals to order the recovery, by the granter of the aid, or the repayment, by the recipient of the aid, of the accrued interest on the State Aid at a rate proposed by the Competition Council. Such interest may be imposed:

a) in case of prohibited aid, from the date the aid was at the recipient’s disposal until it is recovered;

b) in case of Unlawful Aid that will eventually be authorized by the Competition Council, from the date when the aid was at the recipient’s disposal until its authorization by the Competition Council.

(2) Apart from the above provisions, any person has the right to seek compensation for the damage caused by the grant of State Aid in violation of the obligation not to grant such aid until authorized by the Competition Council.

De minimum threshold

Article 20.

Aid granted to an undertaking, over a three-year period, amounting to a total amount of 1 (one) billion lei is deemed to be authorized and is not subject to the notification obligations, according to the conditions which will be established through regulations by the Competition Council.

Block exemptions

Article 21.

(1) The Competition Council will adopt regulations for block exemptions establishing the categories of State Aid deemed to be authorized and, therefore, not subject to the notification requirements. These regulations will specify, in a distinct way, for every category of aid:

a) the purpose of the aid;

b )the categories of recipients;

c) the threshold values expressed either in terms of aid frequency or in terms of maximum aid amounts;

d) the conditions related to the cumulation of aid granted to the same recipient;

e) the monitoring conditions by the Competition Office.

(3) The regulations may:

a) fix threshold values or other conditions which determine the necessity of notifying individual aid grants;

b) exclude certain economic sectors from the scope of application of such regulations;

c) include additional provisions used in the analysis of the compatibility of the exempted aid.

Implementing regulations and guidelines

Article 22.

(1) The Competition Council may also adopt and implement such regulations and guidelines other than those referred to under Articles 20 and 21 to define the substantive criteria to be met for the authorization of State Aid, in particular those regarding certain economic sectors or particular objectives of the State Aid.

(4) The regulations provided under Article 6(2) would be adopted within 60 days after this Law comes into force.

(3) For the application of Article 14(1), the line ministries will elaborate specific regulations within 90 days after this Law comes into force.

(4) The regulations and guidelines provided for under Articles 20, 21 and 22(1) of the Law will be adopted within 6 months after this Law comes into force.

(6) The regulations, guidelines and modifications require the advisory opinion of the Legislative Council, after which they will then be formally adopted by the Competition Council’s plenum, put into effect through an Order of the President of the Competition Council and finally published in Official Gazette .

(7) The Competition Council’s regulations may be appealed through the contentious administrative procedures in the Court of Appeals within the area of the plaintiff’s domicile.

CHAPTER VI
INVENTORYING, MONITORING AND REPORTING STATE AIDS

Inventory of State Aids granted during previous years

Article 23.

(1) The Competition Office shall draft an inventory of individual aids and aid schemes for the last three years prior to the adoption of this Law.

(2) All information necessary to carry out this inventory shall be provided to the Competition Office by the competent authorities. The reporting procedures to the Competition Office shall be established by a Government Decision, no longer than 2 months from the date the Law comes into force.

Annual updating of the State Aid inventory

Article 24.

(1) The inventory of State Aids shall be updated by the Competition Office every year, taking into account the following elements:

a) new aid schemes and new individual aids which have been notified to and authorized by the Competition Council;

b) new aid schemes and new individual aids exempted from the notification obligations by the Competition Council;

c) aid schemes which end within the reporting year;

d) State Aids notified to the Competition Council.

(2) In order to update the inventory, the authorities which design the aid schemes and the aid granters, as well as the recipients of the aid are required to forward information to the Competition Office as follows:

a) The authorities who design aid schemes and the aid granters shall forward information related to:

– the nature of the aids granted;

– the conditions imposed on the granting of the aids (when applicable);

– the origin of the aid;

– the estimated amount of each granted aid;

– the duration of the aid schemes (when applicable);

b) the recipients of the aids shall report the amount and the form of the aid(s) they received; they shall also forward information necessary for the identification of such aid(s). The reporting procedure shall be established by a Government Decision, no more than 2 months after the date this Law comes into force.

(3) The Competition Office shall also be informed, by the authorities, the bodies who administrate funds in the name of the state, on one side, and the undertakings to whom the execution of some public services of general interest was submitted, on the other side, about the financial transactions which take place between them to assure complete transparency in this subject area.

(4) The procedures concerning modalities of information will be established by Government Decision no later than 2 months after the date this Law comes into force.

(5) The Competition Council will communicate its decisions on State Aid to the Competition Office so that the inventory can be updated regularly.

Technical assistance on State Aid schemes under preparation

Article 25.

When preparing a new State Aid scheme, or the renewal, prolonging or modification of an existing scheme, the authorities that design the scheme may request technical assistance from the Competition Office.

Monitoring of Existing Aids

Article 26.

(1) For the purposes of this Law, monitoring means surveying the aids and assessing their value, as well as proposing measures to ensure that anticipated results from the State Aid are achieved.

(2) Monitoring is an on-going process, summarized every year by a report.

(3) Monitoring State Aids is the responsibility of the Competition Office.

(4) To carry out its duties, the Competition Office may request the assistance of experts from the authorities who design aid schemes and from the aid granters.

(5) The Competition Office has the following responsibilities:

a) Assessing the difference between the amount of the individual aids actually granted and the amount provided for in the aid schemes;

b) Evaluating the total amount of aid received by undertakings from various schemes;

c) Surveying the implementation and observance of existing State Aid schemes;

d) Assessing the impact of granting aids.

(6) The monitoring procedures of the Competition Office shall be established by a Government Decision within 2 moths after the date this Law comes into force.

Annual Report

Article 27.

(1) The Competition Office shall draft an annual report on State Aids granted in Romania. This report shall be published in the Official Gazette .

(2) The report shall contain the following:

(1) details on aid schemes and individual aids:

a) existing within the reporting year;

b) notified to and authorized by the Competition Council during the reporting year;

c) granted during the reporting year, without the obligation to notify.

(2) comments on:

a) the total amount of aids granted;

b) the actual achievements of the aid schemes as compared with their anticipated impact;

c) the main recipients of aids presented by economic sectors and regions. These comments shall state the objectives of the aids received by each main recipient.

 

Thresholds

Article 28.

The thresholds, expressed in terms of percentage or absolute values, under Articles 14 and 20 may be updated through an order of the Competition Council’s President.

Appeals of the Competition Council’s decisions

Article 29.

Competition Council decisions issued under this Law may be appealed by interested parties within 30 days of their publication or, in some cases, their communication, in accordance with the administrative contentious procedures in the Bucharest Court of Appeals. There is no right to appeal the decision of the Court of Appeals but it may be challenged by appeal to the Supreme Court.

Confidentiality

Article 30.

(1) The Competition Council and Competition Office their staff or other public employees shall not disclose information or documents acquired as a result of the application of this Law and which contain business secrets or are covered by the obligation of professional secrecy.

(2) Any person who uses or discloses documents or information having business secret character, received or acknowledged during work or work-related duties, for purposes other than those stipulated in this Law, will be held liable according to the criminal law, and may be forced to remedy the damages caused.

(3) Information and documents may be forwarded to other competition authorities, in compliance with the international agreements to which Romania is a party, provided such competition authorities are bound by similar rules of confidentiality.

Entry into force

Article 31.

(1) This Law shall enter into force on January 1, 2000

(2) On the date this Law comes into force, provisions on State Aids from other governmental acts shall change accordingly.

Published in Official Gazette no.370 of August 3, 1999