RCC`s competition policy

impact study
Paul Prisecaru, PhD
Chief Economist
Context: RCC`s 20
years anniversary
What we did
- We used outside experts – economics professors from
the BUES (Bucharest University of Economic Studies);
- Very conservative estimates of consumer savings in
large cases where data was available;
- 10 key industries;
- 19 policy interventions (sanctions, remedies in merger
cases and regulatory interventions), between 2003 and
2016 (most cases after 2007);
- Only simple (easy to replicate) methodologies already
used by established bodies;
- Macroeconomic impact estimation (impact on economic
growth) – rough estimates.
DG Comp methodology
OECD methodology
Is it reasonable?
Total effect of cartels is probably larger

Total effect = Overcharge + Dead Weight Loss + Umbrella Price Effect (?)
RCC`s leaded gasoline case
0.90 Significant increase in the spread
in the 4 months after the sanction

0.80

0.70

0.60

0.50
Price/Liter

The moment when the sanction

was announced
0.40

0.30
Spread average in 2010- Spread average in 2012-
2011 is 0,015 euro/liter 2013 is 0,038 euro/liter
0.20

0.10

0.00

Medie EUR 27 RO
 -
500
1,000
1,500
2,000
2,500
3,000
2011_1
2011_2
2011_3
2011_4
2011_5
2011_6
2011_7
2011_8
2011_9
2011_10
2011_11
2011_12
2012_1
2012_2
2012_3
Quantity traded

2012_4
2012_5
2012_6
2012_7
2012_8
2012_9
2012_10
2012_11
2012_12
2013_1
2013_2
2013_3
2013_4
2013_5
2013_6
2013_7
2013_8
2013_9
2013_10
2013_11
2013_12
100
150
200

50
250

2011_1
2011_2
2011_3
2011_4
2011_5
2011_6
2011_7
2011_8
2011_9
2011_10
2011_11
2011_12
2012_1
Average price

2012_2
2012_3
2012_4
2012_5
2012_6
2012_7
2012_8
2012_9
2012_10
2012_11
2012_12
2013_1
2013_2
2013_3
2013_4
2013_5
2013_6
2013_7
2013_8
Energy market A – quantity & price before and

2013_9
2013_10
after the elimination of anticompetitive contracts

2013_11
2013_12
 800

400

0
1200
1600
2000
2011_1
2011_2
2011_3
2011_4
2011_5
2011_6
2011_7
2011_8
2011_9
2011_10
2011_11
2011_12
2012_1
2012_2
2012_3
2012_4
2012_5
2012_6
Quantity traded

2012_7
2012_8
2012_9
2012_10
2012_11
2012_12
2013_1
2013_2
2013_3
2013_4
2013_5
2013_6
2013_7
2013_8
2013_9
2013_10
2013_11
2013_12
100
200
250
300
350

50
150

2011_1
2011_2
2011_3
2011_4
2011_5
2011_6
2011_7
2011_8
2011_9
2011_10
2011_11
2011_12
2012_1
Average price

2012_2
2012_3
2012_4
2012_5
2012_6
2012_7
2012_8
2012_9
2012_10
2012_11
2012_12
2013_1
2013_2
2013_3
2013_4
2013_5
2013_6
2013_7
2013_8
2013_9
Energy market B – quantity & price before and

2013_10
2013_11
after the elimination of anticompetitive contracts

2013_12
Adjustments to the methodologies
- Cartels imposed by self-regulatory bodies decisions
considered more stable – longer periods taken into account
(Certified accountants – internal regulation of minimum fees for
10 years until prohibition.)
- Downstream markets – smaller affected turnovers in retail due
to relatively small profit margins
- Long term contracts in energy markets – theory of harm (and
effects) similar to a merger
- Precise data available for banking sector impact of the
elimination of early reimbursement fee
- Fuel market – we used the difference between spreads (EU
average vs. RO)
- In order to avoid overestimation (and eliminate risk of
contestation) we used the most conservative values for
affected market dimension and duration!
Highest impact: telecom market
- Prepaid telecom services were plagued by market scale vertical
restraints – RCC imposed drastic structural & behavioural
commitments to the major players
Indicator

Total turnover for the largest 3 operators (Vodafone, Approx. 2.5 billion euros
Orange, Telekom)
Prepaid market % of total market 40%

Total affected turnover Approx. 1 billion euros

Annual price effect 10%

Estimated duration of post-intervention effect 5 years

Estimated total impact Approx. 500 million

euros
20 years of competition policy in Romania
Impact Assessment of RCC’s Interventions
in 2018 vs. budget in euro (KPI like in the
UK – consumer benefits 3x budget vs 5x in
UK) 120
108.5

100
91.8

80

million euro
60

40 46.0 36.4

20
11.2
15.4
0
Total effect Annual effect Total fines Budget

Superior range limit Lower range limit

Macro impact
Competition policy also has a macro impact
Aggregate savings estimation methods
Competition Law&Policy ecforcement
estimated contribution to GDP growth
Competition policy`s impact is significant in the long run

„Distributional Macroeconomic Effects of EU Competition Policy: A General Equilibrium Analysis” by European Commission staff
The new proposal for a Directive to empower the competition authorities of the
Member States to be more effective enforcers and to ensure the proper
functioning of the internal market

Problems identified by the European Commission RCC`s status

Independence, human and financial resources YES

Investigative powers backed by effective sanctions YES

Effective fines for breaches of EU competition law * YES

differences in fines across MS
Divergences in leniency programmes across Europe -

Gaps and limitations in NCAs’ tools and guarantees -

„...even a relatively small increase in the effectiveness of competition policy
enforcement would give a significant boost to productivity. In fact, as shown in Graph
1 below, over the last decade TFP growth has had an impact on total GDP as
important as increases in labour and capital, and it has become the most important
factor during the last five years.”

Impact asessment for the Directive

 What data you need for measuring the
market level impact
Basic data & info - Short description of the case
- Anticompetitive behavior duration (years)
- Short description of NCA`s intervention (fines,
prohibition, interim measures, commitments)
- Value estimation of affected market (in local
currency)
Advanced data - Estimations of the price effect of anticompetitive
& info behavior/NCA intervention (% of average price
levels)
- Profit margins before and after infringement /
NCA intervention (%)
- Quantities traded in the market before & after the
infringement / intervention
- Other relevant factors influencing the market
(market characteristics: e.g. cyclical market)
Thank you!

Q&A