Competition Council Head: Romania Maintains Lowest Food Prices in EU Despite Inflation

There is a decrease in competitive pressure in the case of 25% of the monitored sectors.

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Romania still remained the country with the lowest prices in the European Union, especially for food, even though we went through high inflation, declared, on Wednesday, the president of the Competition Council, Bogdan Chiriţoiu.

“Although we went through this high inflation, Romania still remained the country with the lowest prices in the European Union. So, especially for food, we have the lowest prices in the Union. A little above us, with slightly higher prices, are Poland and Bulgaria. I was warned that no one will believe me when I say this and I am prepared for the surprise.The idea is that, however, Romania still has the lowest prices in the European Union and Eurostat says it too”, said Chiriţoiu, at the “Competition in key sectors” conference.

At the same time, the markets in Romania have remained functional and there is competition in the market, which “helps us absorb the inflationary shock”.

“However, if overall, the prices remained lower than in other countries, we also see areas where we have slightly higher prices than in the surrounding countries. The areas we focused on in the investigations were on food products, where we had this kind of higher growth. We will continue to do so. They are an alarm signal, but they are not necessarily evidence of a violation of the law, but they are factors that alert us that something is not working well in that industry and there may be anti-competitive behavior that we need to identify and combat. I say that now the Council is going at its maximum speed, I don’t think we can increase the volume of activity, but we can do a more intelligent activity.Up to this moment, we have carried out 60 investigations”, Bogdan Chiriţoiu explained.

The Head of the national competition authority also said that the council is using new tools, especially negotiations and the new law on food, regarding unfair competition.

“We have an indicator for measuring openness to competition. We see a decrease in competitive pressure in the case of 25% of the monitored sectors. The Romanian economy is starting to be too little concentrated. Perhaps in some sectors we are starting to reach a level where concentration becomes harmful”.

Chiritoiu though underlined that the most problematic reviewed acquisitions were this year the Profi takeover by Mega Image and the Telekom sale.

We have two problematic concentrations. The purchase of Profi by Mega Image, we have the measures together with Mega. Less publicized is the sale of Telekom. It will most likely result with 3 big players remaining.It is important to keep the good things, namely the low prices in the field, but also the quality of the services and, last but not least, those who remain must invest in the networks,” said Chirițoiu.

On the other hand, the head of Competition also showed that although we are still far from the return of the famous “smart guys” in energy, this risk exists and must be carefully watched. The Competition Council president also said that we are waiting for a period when there will be no more money in the market and that Romania must find development models that no longer involve increasing deficits.

Daraban: I am terrified of what awaits us from January 1

Other participants at the Competition Council event voiced several concerns regarding the state’s fiscal and economic policies.

The president of the Chamber of Commerce and Industry of Romania ( CCIR), Mihai Daraban said that the state must reduce its operating expenses, otherwise I’m terrified of what awaits us from January 1 onwards, because it’s normal for the account to come at some point, declared.

“My opinion is that in order to bring more foreign investors to Romania to create those consumer goods for the satisfaction of the consumer, we must have a predictable fiscal framework. And why not, a new attractive taxation, because we have no other asset in our hands as a country to attract foreign investments. We are not in the case of Hungary, which had another type of retrocession of property. The government and local authorities in Hungary can afford to offer land in strategic areas, railways, highways to foreign investors, as in the case of BMW in Debrecen. We, unfortunately, have to resort to large estates and do not understand that the investor in production blocks the money in technology, not like the retailer who can afford to buy land. What could be left to attract investments? A low and predictable taxation in the long term. I’m terrified of what awaits us from January 1 onwards, because it’s normal for the settlement to come at some point. Perhaps the international financial bodies were somewhat complicit in what happened on the domestic market. They didn’t put pressure on us, they said not to meddle, not to affect the electoral process, but I think the reckoning will come”, said Daraban, at the “Competition in key sectors” conference.
The president of the CCIR  also explained that the state must reduce its operating expenses in order to attract more investments.
“Our fight is for the state to reduce its operating expenses, otherwise I don’t see the exit to the port and I don’t see how it will be able to attract investments. Indeed, I think that here is the next challenge: to put pressure on the governors first to solve their problems, the functional problems, so that a comfortable budget can be reached, so that we can go out on the market, to attract the investments that we need so mucha lot,” Daraban emphasized. According to the head of the CCIR, in fiscal year 2023, the turnover of companies active in Romania decreased slightly to 490 billion euros, while the gross profit fell to 51 billion euros.
FIC: Foreign Direct Investment in Romania Falls 21.3% in 2023

And speaking of foreign investments, the authority that monitor FDI in Romania also warned over a decline.

Foreign direct investments in Romania decreased by 21.3%, in the first seven months of the year, compared to the record year 2022, when their value was ten billion euros, said the president of the Council of Foreign Investors (FIC), Daniel Anghel at the same event.

“It is obvious to everyone present at this conference and beyond that foreign direct investments are extremely important for both economic development and a fair, strong competitive environment, the main impact of which is economic growth. We see that we are still facing extremely high inflation rates, as well as large deficits and rising public debt. Romania has proven resilient in the face of economic challenges. Already, the figure of 7.5% seems optimistic in the current context. We see a slowdown following a record year in 2022, when we attracted approximately ten billion dollars in foreign direct investment to Romania. The synthesis of foreign direct investments and the existing stock of these investments currently shows a decrease of 21.3% in the first seven months, amounting to 3.12 billion euros. This decrease is reported against a 2022 in which foreign direct investments totaled ten billion euros. The current stock stands at around 118 billion, but it is extremely diversified, with a significant contribution from the manufacturing industry and three countries leading the podium – the Netherlands, Germany, and Austria,” said Anghel at the conference “Competition in Key Sectors.”

Data presented by the president of the FIC shows that only one-third of companies active in Romania have planned to increase investments in the coming year, marking the lowest level in the past four years.

“Only 36% of investors have planned increases in investments for the next 12 months. This is the lowest level recorded since 2020. Additionally, 43% of companies will maintain investments at the same level as the previous year, while 22% will reduce them. (…) We also see a positive aspect. The majority of respondents (65%) expect business revenues in Romania to increase compared to the previous year, and 66% of respondents expect growth in the domestic market, while in the export market, 50% expect growth and 44% expect stagnation. If we refer to the causes that make investors hesitant, as I mentioned, the macroeconomic framework and fiscal-budgetary policies come into play, and I would insist on this fiscal pact, which comes with a lot of tax changes. Romania, which entered excessive deficit procedure in 2019, benefits from a more preferential regime, I could say. Because other countries have also entered the excessive deficit race, Romania somehow enjoys leniency in this fiscal plan, which will be spread over seven years so that in the end we have a budget deficit of only 3%. We will start this year with approximately 8%. By 2025, an additional 23 billion lei needs to be brought to the state budget from tax revenues,” Daniel Anghel pointed out.

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