Romania

• 16/10/2020
• Jurisdictions

Romania does not have a stand-alone FDI screening mechanism in place. In 2011, Romania modified Competition Law No. 21 of 10 April 1996 (the Romanian Competition law), which currently provides that the Supreme Council of National Defence (CSAT) can review transactions for potential threats to national security after notification from the Romanian Competition Council (RCC). It does not matter whether the acquiring company is registered in Romania, another EU or EEA country or a third country.

Scope

The FDI screening mechanism is triggered if there is an operation to take over the control of undertakings or assets of interest from the point of view of national security in one of 13 areas established by the CSAT by Decision 73 of 27 October 2012. The areas relate to national security strategy or sectoral security strategies in the sectors of (i) citizens’ and communities’ security; (ii) border security; (iii) energy security; (iv) transport security; (v) security of vital resources supply systems; (vi) critical infrastructure security; (vii) security of informational and communication systems; (viii) security of financial, fiscal, banking and insurance activities; (ix) security of the production and circulation of armaments, ammunition, explosives, toxic substances; (x) industrial security; (xi) protection against natural disasters; (xii) protection of the agriculture and the environment; and (xiii) protection of the privatization of State-owned enterprises or their management.

Review Criteria

The CSAT will assess whether the takeover of an undertaking or of certain assets by another undertaking poses a risk to national security.

Application procedure

The FDI screening mechanism does not require separate notification. It is initiated by the notification procedure under competition law if the RCC is of the opinion that the notified transaction raises issues of national security. If this is the case, the CSAT analyses potential national security risks associated with the transaction.

Generally, under the notification procedure, the parties must provide the following information (i) the parties' financial and ownership characteristics; (ii) parties' links with other companies; (iii) certain details of the transaction; (iv) details of the relevant market(s) and (v) impact of the transaction.

Filing Fees

The submission of a notification file to the RCC is subject to the payment of a filing fee of RON 4,775 (about EUR 1,000).

Implementation and Government practice

The screening procedure is divided into two phases. When the RCC receives a notification of an economic concentration, it performs a prima facie check of the takeover’s national security implication. If the RCC considers that it should be reviewed from the point of view of national security, it must inform the CSAT of potential national security risks and provide information on (i) the parties involved and their identification data; (ii) their field of activity; (iii) the manner of accomplishing the operation; and (iv) the object of the transaction.

If the CSAT reaches the conclusion that a takeover of an undertaking or of certain assets by another undertaking poses a risk to national security, the Government, pursuant to a proposal from the CSAT, will issue a decision to prohibit the takeover. If the acquisition does not pose national security risks, the procedure is resumed before the RCC.

To date, the CSAT has not blocked any merger or acquisition under the FDI screening mechanism.

Due process

The final decision of the CSAT must be communicated to the prime minister, government of Romania and the RCC. The RCC in turn communicates the decision to the notifying party. There are no appeal avenues mentioned in the legislation, however, the activity of the CSAT is submitted for examination and verification by the Romanian Parliament.

Time limits

If the CSAT decides to block a takeover, the RCC must inform the notifying party within 10 days from receiving the CSAT Decision. If the procedure is resumed before the RCC, It must inform the notifying party within seven days from the date of the communication sent by the CSAT.

During the CSAT’s assessment of national security risks, the deadlines prescribed by the Romanian Competition Law for the RCC to assess a concentration of undertakings are suspended until the CSAT delivers its decision to allow or block the takeover.

Confidentiality

There are no specific provisions regarding the protection of confidential information in the Romanian Competition Law.

Sanctions

The relevant legislation does not provide for specific sanctions for violations of the above obligations or non-compliance with the relevant procedures.

Legislative developments

Currently, there are no legislative developments in Romania related to FDI screening.

 

The above information is a summary that does not constitute legal advice. For exhaustive information, advice, and assistance please get in touch with our lawyers.