RTPR, acting on behalf of the Electrica Group’s electricity distribution company, and ACT Legal Romania, acting on behalf of the Delgaz Grid, have persuaded Romania's High Court of Cassation and Justice to rule on behalf of their clients ad several other distribution companies in a long-running dispute involving claims of anti-competitive behavior brought by Digi Communications, a member of the RCS-RDS group.
According to ACT Legal Romania, “in 2016, two companies from the Digi Communications Group ...(Delalina and Foto Distributie), filed a claim with the Bucharest Court of Appeal seeking to obtain the right to provide power distribution services through parallel distribution networks in areas allocated to distribution concessionaries.” According to the firm, “the claimants challenged secondary legislation issued by ANRE granting concessionaries the right to oppose the entry of other distribution operators in the areas allotted to them … [and they] requested the annulment of the concession agreements.”
In addition, ACT Legal reported, claimants also “filed a plea of unconstitutionality against provisions of the Romanian Energy Law regulating the organization and functioning of the distribution service.” The plea was dismissed by the Romanian Constitutional Court in 2020. "Finally," according to ACT Legal, "the HCCJ confirmed that Romanian energy rules grant power distribution concessionaries monopoly rights in the areas entrusted to them under the concession agreements, thus ending the five-year-long dispute."
According to RTPR, "after almost five years of trial before the Bucharest Court of Appeal and HCCJ and two objections of unconstitutionality ... the ruling pronounced ... by the High Court emphasized the conformity of the current electricity distribution system ... with [the country's competition laws]." According to RTPR, "an opposite solution would have dynamited the current system, jeopardizing the public service nature of the electricity distribution."
According to RTPR, the Court ruled "that the current concession system did not eliminate competition and did not breach the principle of economic freedom, its specificity lying in the fact that competition takes place at the moment of the tender for awarding the concession right for this public service, which, once granted, has an exclusive character."
ACT Legal Romania’s team included Managing Partner Stefan Botezatu, Counsel Gabriela Olteanu, Managing Associate Cristian Radu, and Senior Associate Daniela Goreacii.
RTPR's team was led by Partner Valentin Berea and included Counsel Alexandru Stanoiu.
"We are happy that we finally have a definitive ruling in this file in which our opponents have raised very interesting administrative and constitutional law issues," said Berea. "Basically, the merits of the case concerned the relationship between the regulation of public services of general interest, such as electricity distribution and the general principles regarding competition and economic freedom. Although as a competition lawyer I am a supporter of competitive markets, in this case it is obvious that the natural monopoly granted by law and concession contracts to electricity distributors is not compatible with unrestricted competition. The benefits of competition are achieved in this sector mainly for electricity supply, which is currently a liberalized market. I find the comparison with the railways eloquent: is it efficient to build separate railway networks that compete with each other, or is it preferable to develop the existing network to be used by several rail transport service providers, in a competitive regime? After all, it is a matter of legislative opportunity, which a court cannot censor, because it would breach the principle of separation of powers."