Some time ago, a merger control case I was working on, involving the gambling sector (among other things), raised an interesting problem regarding the role of competition law.
During a meeting with the competition authority, one of the inspectors focused extensively on whether the transaction being considered would limit consumer access to gambling services. Gambling was on the rise in Romania, then as now.
The inspector’s enquiry suggested a discrepancy between two public aims, one of promoting well-being, and the other of ensuring wide access to services. Should competition policy support access to products and services with potentially harmful effects (e.g., addiction) that the state is simultaneously trying to fight? To what extent can the benefits of competition, e.g., low prices and wide access, deepen various social concerns?
As part of the EU, Romania’s competition policy is in line with Europe’s. In essence, EU competition law seeks to enhance consumer welfare. However, this does not necessarily distinguish between the various types of products and services. For instance, lower prices make even potentially harmful goods more accessible, but wide access to certain goods is not always in the best interests of consumers.
During communism, Romanians faced significant shortages. When the regime fell in 1989, the impoverished population was quickly exposed to an influx of Western goods and services. In the years that followed, the level of education declined. Coming out of communism, many consumers were thus likely less able to discern what was harmful.
When the Romanian competition law was enacted in 1996, it mirrored EU legislation. It is unclear to what extent competition policy was adapted to reflect the consequences of the political change in the country on a social level, particularly regarding Romanian consumers.
Currently, there is a separation between competition law and other regulatory areas. Namely, competition law is foremost concerned with promoting low prices and wide access to goods and services, while the harmful aspects of such goods and services are addressed via separate regulations, including the creation of consumer protection laws, the enforcement of a minimum drinking age, the mandating of graphic pictures on cigarette packs, and the imposition of excise duties on tobacco and spirits.
From a public policy viewpoint, it would be interesting to examine to what extent these regulatory areas could be more interrelated and whether competition law could be reshaped in order to play a more complex role, with a greater focus on consumer protection and actual social issues.
The question is particularly relevant considering that, according to the European institutions, competition law must take into account legal, economic, political, and social context.
Reshaping competition policy involves analyzing such considerations as economic efficiency, the opportunity of state intervention, procedural aspects, and the need to weigh public and private interests.
Currently, according to official data, at least one in four Romanian children suffers from one form of obesity or another, and infant obesity is in fact the consequence of excessive and unqualified consumption. Also, around 100,000 people in the country suffer from an addiction to gambling, and, at least in rural areas, there are about three times more gambling and betting venues than pharmacies.
Thus, the question remains whether Romanian competition policy could play a more active role in promoting consumers’ well-being. Is the unconditional focus on the access of end consumers to goods and services, without sufficiently considering the current social and economic context, outdated? Could it in fact even be harmful? I definitely believe that these are questions that need to be addressed without delay.
By Mihai Radulescu, Senior Partner, Radulescu & Musoi
This Article was originally published in Issue 8.5 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.