TWINNING PROJECT FICHE
1 Basic information
1.1 Programme:
/ ENP National Action Programme (NAP) 20071.2 Twinning number:
/ MD09/ENP-PCA/FI/031.3 Title
/ Support to Implementation and Enforcement of Competition and State Aid Policy1.4 Location
/ Chişinau1.5 Sector
/ Competition1.6 Beneficiary Country
/ Republic of Moldova1.7 Duration
/ 18 months2 Objectives
2.1 Overall Objective(s):
To improve the market economy in the Republic of Moldova by supporting implementation and enforcement of Competition and State Aid policies in line with the commitments of the Republic of Moldova in the EU-Moldova Action Plan.
2.2 Project purpose:
§ Enhance the capacity of the National Agency for the Protection of Competition, in particular the right of own initiative investigations, enforcement orders and effective sanctions (such as fines)
§ Strengthen enforcement of the new competition and State Aid legislation (when adopted) in line with commitments taken by the Republic of Moldova in the framework of the PCA and the EU-Moldova Action Plan, targeting the NAPC, the judiciary and government officials.
§ Improved transparency concerning state aid granting in the Republic of Moldova
§ Creation of a competition culture in the Republic of Moldova.
2.3 Contribution to the Partnership and Co-operation Agreement and the European Neighbourhood Policy Action Plan
2.3.1 The Partnership and Cooperation Agreement (PCA)
The Partnership and Cooperation agreement, concluded between the EU and the Republic of Moldova,[1] (hereinafter ‘the PCA’) highlights the following priorities in the field of Competition and State aid:
‘…To work to remedy or remove, through the application of their competition laws or otherwise, restrictions on competition by enterprises or caused by State intervention insofar as they may affect trade between the Community and the Republic of Moldova’ [Article 48 paragraph 1].
‘In order to attain the objectives mentioned in paragraph 1:
§ 2.1. The Parties shall ensure that they have and enforce laws addressing restrictions on competition by enterprises within their jurisdiction.
§ 2.2. The Parties shall refrain from granting State aids favouring certain undertakings or the production of goods other than primary products as defined in the GATT, or the provision of services, which distort or threaten to distort competition insofar as they affect trade between the Community and the Republic of Moldova.
§ 2.3. Upon request by one Party, the other Party shall provide information on its aid schemes or on particular individual cases of State aid. No information needs to be provided which is covered by legislative requirements of the Parties on professional or commercial secrets.
Article 50 of the PCA discusses the approximation of legislation in the field of competition (including state aid):
2. The approximation of laws shall extend to the following areas in particular: “…… rules on competition…….”
2.3.2 The EU/Moldova Action plan
Within the framework of the European Neighbourhood Policy, Moldova signed with the EU an Action Plan on 22 February 2005. It covers a number of measures to be undertaken by the Republic of Moldova in the field of State Aid (chapter 37) and Competition policy (chapter 38). This document remains a valid driving tool for Moldova's internal reforms at the time being despite the initially foreseen implementation period of three years passed.
The EU-Moldova Action Plan suggests actions in the field of state aid:
§ Implement commitments on State aid under Article 48/2.2 of the Partnership and Cooperation Agreement, by developing full transparency in the field of state aid.
§ Establish a binding, uniform definition of State aid which is compatible with that of the EU (either by legislation or autonomous government act);
§ Establish full transparency as regards State aid granted in Moldova, in particular by (i) drawing up a complete list of aid grantors, (ii) creating a national mechanism for centralising all information on state aid granted in Moldova, with a view to drawing up annual reports on the amounts, types and recipients of aid;[37]
§ And in the field of competition/antitrust:
§ Implement, and build upon, commitments on anti-trust under Article 48.2.1. of the Partnership and Co-operation Agreement by ensuring adequacy and compatibility with the EU of the domestic anti-trust legislation and control regime.
§ Assess the effectiveness of the current legislative framework (competition law of 2000), including respect of the principles of non-discrimination, transparency and procedural fairness;
§ Ensure enforcement of the competition law, in particular by:
§ Establishing the National Agency for the Protection of Competition provided for in the law of 2000, as a politically independent institution,
§ Ensuring adequate legal powers for the competition agency, including decision-making powers; the right of own initiative investigations, enforcement orders and effective sanctions (e.g. fines)
§ Ensuring adequate human and financial resources, as well as training of staff in the competition administration.[38]
2.3.3 Progress to date
The National Agency for the Protection of Competition as an independent authority (NAPC) was established in February 2007. A full description of the NAPC, its structure and functions, is described in details below (under ‘institutional set-up’)
Amendments to the Competition law of 2000 have been developed by the NAPC. These amendments, which are aiming to increase the effectiveness of the current legislative framework, have not yet been adopted (see below under ‘legal framework’). At the same time, the need for a completely new competition law has been identified. As far as secondary legislation/normative acts are concerned, a number of drafts are currently under preparation.
In the field of State aid control, NAPC has drafted a law on state aid and submitted this draft to other Ministries/parties for comments. At this point in time this consultation process has not been completed yet.
2.3.4 Contribution of the current project
The current project is designed to further enhance the efforts achieved to date in the field of competition and state aid policy.
An important purpose of this project is to strengthen Moldova's public administration in addressing the challenges arising in the given area from the Partnership and Co-operation Agreement and the EU-Moldova Action Plan, focusing on the shortcomings highlighted in the European Commission Progress Reports and on the jointly agreed tasks which remain to be fulfilled
3 Description
3.1 Background and justification:
Pursuant to the commitments foreseen by the PCA and the European Neighbourhood Action Plan (ENPAP), competition policy, including antitrust and state aid, is one of the top priorities for the Government of the Republic of Moldova.
As detailed in the ‘legal framework’ section below, the legislative process in the field of competition and state aid needs further support. Although the main legislative instruments are already drafted and they are in the process of adoption, there is a need of completing the legal framework with secondary legislation, procedures, guidelines etc. The NAPC already started this process. In addition, NAPC is expected to adopt a state aid monitoring mechanism, in order to identify a list of grantors and register all state aid granted in Moldova. The experience of a Member State will be valuable in providing the right guidance and support to the efforts of NAPC.
The NAPC is a new independent institution with less than three years of experience. The changes of the legislative framework as well as the experience of day-to-day operations revealed the need for organisational restructuring and improvement of internal procedures. Therefore the NAPC would benefit from additional support in its efforts for organisational improvement, know-how enhancement and experience sharing at all levels of competition law implementation.
3.1.1 Legal framework
Competition
In the field of Competition policy, the ENPAP requires competition legislation and a control and enforcement regime which is adequate and compatible with the EU competition policy and its enforcement mechanisms.
Within this context the Competition law of 2000, which is currently in force, is in the process of being amended. These amendments have been adopted by the Parliament in May 2008 and they are expected to be promulgated by the President of the country before the Twinning project will start.
On the basis of the current amendments, a completely new competition law is planned to be drafted, in order to ensure clearer rules and better procedures.[2]
Apart from a new law on competition, there is a need for additional secondary legislation/ normative acts, which could ensure proper implementation of the competition law. Such secondary legislation could focus not only to substantive issues but also to procedural and practical issues. NAPC has already recognised the needs for secondary legislation and procedures, which should be addressed during 2008-2009.
At the moment (May 2009) there are a number of normative acts/regulations under preparation:
1. Regulation on the definition of relevant markets.
2. Methodology of determining the dominant position on the market.
3. Regulation for the enforcement of the provisions of art. 7 of the Law, on the Protection of Competition nr. 1103-XIV.
4. Regulation concerning the down-raids.
5. Regulation concerning the investigation of infringements to the competition legislation.
6. Regulation on the control of concentrations.
7. Regulation on the value of operations authorized by NAPC
- Regulation on the access to the file.
The Twinning project would further support and enhance the legislative process which will be undertaken by NAPC.
State aid
In the field of State Aid the ENPAP focuses first on the establishment of a binding, uniform definition of State aid which is compatible with that of the EU.
There is no current legislation regulating State Aid in the Republic of Moldova. At the moment a draft law on State Aid has been prepared and consulted with the donors and other ministries after approvals by all interested ministries it has been submitted to the Government. Its approval is pending the appointment of new Government.
Once this law will have been adopted, however, a number of acts (secondary legislation) will have to be prepared, to better define state aid in different fields and define the monitoring procedures.
The Twinning project is expected to further support and enhance the legislative and monitoring process which will be undertaken by NAPC.
Another priority set by the ENPAP is the full transparency regarding State Aid granted in Moldova, which should be achieved in particular by (i) drawing up a complete list of aid grantors, and (ii) creating a national mechanism for centralising all information on state aid granted in Moldova, with a view to drawing up annual reports on the amounts, types and recipients of aid.
At this point in time such mechanism does not exist in the Republic of Moldova. The NAPC recognised the need for (i) the establishment of such a monitoring system, (ii) need of appropriate skills for the NAPC staff to be able to effectively monitor the situation in the field of State Aids and (iii) enhancement of state aid awareness which should be subjected to strict monitoring, among the state granting authorities. Such actions are expected to be undertaken by NAPC once the draft State aid law is adopted.
The Twinning project is expected to further enhance these efforts undertaken by NAPC and work with the institutions who manage Governmental budgets by raising the appropriate awareness.
On the basis of the above, it is expected that by mid-2009 the amendments of the Competition law of 2000 will have already been adopted, while a new draft Competition law will be under preparation together with related secondary legislation. It is also expected that by end-2009 a State Aid law will be in force and the NAPC will be in the process of elaborating secondary legislation and monitoring procedures.
3.1.2 Institutional set up
Since February 2007 the National Agency for the Protection of Competition operates as an independent authority, whose Director is nominated by the Parliament and which reports annually to the Parliament on its operations.
NAPC is organised in the following departments:
1
Organizational Chart of the National Agency for the Protection of Competition
1
The NAPC consists of 41 staff members.
At this point in time the NAPC has:
1. One General Director
2. Two Deputy Directors
3. One Adviser
4. A Legal department (consisting of one Chief and three staff members)
5. A Competition control department (consisting of one Chief and three staff members)
6. A Merger control department (consisting one Chief and three staff members); and
7. A Research department (consisting of three staff members and dealing mainly with market monitoring and sector inquiries).
8. Ten additional staff members working for the finance, (which performs functions related to human resources management as well), public relations and information departments and a driver.
The NAPC identified the need of additional budgetary means and trained personnel. At the moment (May 2009) the NAPC is in the process of recruitment of additional qualified staff, in an effort to more efficiently address the issue of protection of competition in the Republic of Moldova.
The Twinning project is expected to support the NAPC with capacity building through both trainings and sharing of experience.
At the moment there are no official procedures regarding the allocation of cases. Due to the lack of relevant legislation in all areas of competition policy (on the basis of which the departments were created) there is no strict and clear division of responsibilities among the staff. Once the state aid registration and monitoring activity starts, some staff will have to handle these additional tasks as well.
Legal powers - Activities
§ The NAPC is responsible for the protection of competition in all sectors and areas of activity (but there is also an independent regulator in the area of information society).
§ The NAPC was granted adequate legal powers to guarantee proper protection of competition, such as decision-making powers, power of own initiative investigations, power to issue enforcement orders and effective sanctions (e.g. fines).
§ Currently the NAPC is involved in three distinct activities: investigations, market monitoring and legislative activity.
§ The NAPC can initiate investigations upon its own initiative or upon complaint. A number of investigations were carried throughout 2007, which raised the attention of the media as well as of economic operators.
§ The NAPC identified some markets which need close monitoring. A number of market reports are currently under preparation.