30 March 2020 – Confronted with a rapid spread of COVID-19 cases — fuelled in part by a high number of citizens returning from high-risk countries — the Romanian government has introduced additional measures to contain the spread of the pandemic and its social impact through the recently enacted Military Ordinance No. 4 regarding measures to prevent the spread of COVID-19 (“the Ordinance”), published in the Official Gazette on 29 March 2020.
1. Measures included in the Ordinance that impact the energy sector
Among additional free movement restrictions and quarantine measures, the Ordinance introduces measures regarding the energy and utilities sectors, as follows:
2. Brief remarks on the price controls included in the Ordinance
The possibility of introducing price controls for certain goods and/or services since the establishment of the state of emergency in Romania on 16 March 2020 has been addressed by the authorities through presidential Decree No. 195/2020 (“Decree No. 195/2020”).
Decree No. 195/2020 also provides that during the state of emergency the exercise of certain rights, such as the right to property and economic freedom, will be restricted considering certain criteria regarding the spread of COVID-19 and the measures necessary to contain the outbreak.
More specifically, with regard to potential price controls during the state of emergency, Art. 15 of Decree No. 195/2020 provides that during the state of emergency prices for medicines and medical equipment, basic foodstuffs and public utility services (electricity, heat, natural gas, water supply, sanitation, fuels, etc.) can be capped to the price average of the three months before the state of emergency was declared.
However, the price controls under the Ordinance consider the price levels applicable on the day the Ordinance was issued, i.e., 29 March 2020, and not the average prices for the three months prior to 16 March 2020 (i.e., the 15 December 2019-15 March 2020 period).
This inconsistency between the price ceilings under Art. 15 of Decree No. 195/2020 and the Ordinance (which should be merely implementing the Decree) could give rise to debate and uncertainty in respect of its application.
It should also be noted that Romanian Competition Law No. 21/1996 (“the Competition Law”) allows the government to adopt price ceilings. Art. 4(3) of the Competition Law enables the government to adopt through a government decision temporary measures to stop an excessive increase in prices or even to impose a ceiling on prices for particular economic sectors during extraordinary circumstances such as crisis situations, a major imbalance between supply and demand, or clear market failure. The measures can be adopted for an initial period of six months than may be prolonged for additional periods of three months, as long as the initial circumstances persist. The law does not include further limitations regarding the government’s freedom to act. However, the price controls under the Ordinance do not appear to be based on the Competition Law but rather on the specific legislation governing the current state of emergency.
For more information contact Iustinian Captariu, Partner, at , or Cătălin Graure, Senior Associate, at .