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"It is highly unlikely that the call for tenders for 5G gets held this year"

EMILIA OLESCU
Ziarul BURSA #English Section /

"It is highly unlikely that the call for tenders for 5G gets held this year"

(Interview with Bogdan Chiriţoiu, president of the Competition Council)

It is highly unlikely that the call for tenders for the implementation of 5G gets held this year, said Bogdan Chiriţoiu, the president of the Competition Council. According to him, we do not yet have the circumstances to ensure a call for bids that would lead to what the authorities want - quality and low prices.

Bogdan Chiriţoiu explained that the novelty in this process is national security. Also, the 5G network is far more dense than the current networks and requires more poles and more antennas, which entails very high costs. Last but not least, there is an uncertainty concerning Telekom, which is in talks, with a number of operators to sell off its operations. Until these problems are resolved, it is not recommended for the call for tenders to be held, he concluded.

Reporter: The Constitutional Court yesterday rejected the notices submitted on the amendments made to the Competition Law. What is your opinion on the decision of the RCC?

Bogdan Chiriţoiu: We will wait until the Romanian Constitutional Court announces the argumentation for its decision. But, beyond the constitutional aspects, the draft law violates European legislation. Therefore, it has to be corrected and harmonized with the European provisions in order for its implementation to become possible. Until these aspects are clarified, the situation doesn't change.

Reporter: What investigations are you conducting this year and which ones are you going to complete until the end of 2020?

Bogdan Chiriţoiu: This year there have been fewer mergers and acquisitions, but we have worked intensely and we are in the course of closing approximately 20 cases. In the coming period, we will complete the investigation concerning financial services, more specifically leasing. We also have ongoing and nearing the end, investigations concerning the big calls for tenders on the timber market. We will also complete the investigation that eMAG is involved in, a case where we are looking at how their platform works.

We are in talks with them concerning their making of their operation compatible with European legislation. When you have a platform which sells products from third party vendors, not just your own, you shouldn't give the latter preferential treatment to the detriment of the former.

As a matter of fact, new legislation for that kind of activity is going to be drafted. So, we will establish, in the coming months, how a European regulation in the sector will operate in Romania and we will bring a number of clarifications on how platforms of that type should operate.

We also have ongoing a number of investigations concerning local cases.

Reporter: Online platforms represent the business for which the pandemic has been advantageous...

Bogdan Chiriţoiu: In a way, this period is beneficial for those on the digital segment. The pandemic will accelerate the evolution in an area that had already been growing, retail was moving from offline to online. Computerization decreases the need for intermediation, and customers can directly obtain the purchases of goods or tourist services, etc. Computerization is a growing economic sector and we need to ensure it will operate efficiently. That is why we have investigations in pertaining to it.

Reporter: An accelerated evolution of computerization also involves advanced technology. We are in the midst of the steps for organizing the 5G call for bids, which keeps getting postponed. The situation seems tense in that area, opinions concerning the draft law on the legislative framework for the implementation of 5G technology are contradictory...What is your take on this situation?

Bogdan Chiriţoiu: In Romania, we have been very successful in implementing 4G technology. The country in general, ourselves, the Competition Council, the ANCOM, and the Government have succeeded in making things work better in this area. When it came to 4G, we had 4 players present on the market, there was intense competition, which led to good quality services and good prices. Starting from that successful experience, we want the same thing for 5G - good quality of services at a low price.

The novelty in that regard is our concern about national security, which we didn't have before. My opinion is that we have returned to normal, in that regard. For a few years we have lived in an fantasy-level good world, now things have come to the point where they look like they've looked over the course of history and national security issues are making a comeback.

In terms of the 5G call for tenders, is is natural disturbance, it is a new element, which will probably result from the limiting of the access of some suppliers to the market. But we need to make sure that we won't reduce competition to such a degree that we affect the quality, and particularly the price of the services.

In that context, both us and the government think that there is no point in rushing things and that and that it is very unlikely to hold a call for tenders for 5G this year. We now do not have the circumstances that would allow us to hold a call for tenders that gets us what we want - good quality and low prices. We have some preconditions. We need to clarify this aspect concerning national security. We need to see how Romania, perhaps in cooperation with other partner countries, will decide which hardware suppliers are safe and which aren't. Based on that, we will know how many hardware providers we have. Of course, we would want to have as many as possible, so that the competition between them will lead to a lower price. If we are going to have too few players on the market, then the price will be too high. As long as we do not have enough hardware suppliers, it makes no sense to rush the call for tenders. Certainly more players will enter the market, if we wait. We have some European players or from allied countries who are advanced, but they need time to clarify their offers.

Now, speaking of another matter, the 5G network is far denser than the current networks and it takes more poles and more antennas, which means higher costs. It is important for that hardware to be as easy to install as possible, meaning the system for issuing construction permits needs to be simplified. In that regard we have complaints from operators that the current procedures are clumsy and they need to be simplified.

In that regard, we need to see under what terms do we allow companies to cooperate. We want to see an exchange of information, a coordination of the behavior between the, we hope, four operators that will provide the 5G services. At the same time, if each of them built their own network, the investments and the costs would be too high. And so we need to come up with some rules that allow them to share the cost of the investment. In the 4G stage, we approved cooperation on specific issues for pairs of operators. We also have rules concerning how networks can be shared, but there is still work to be done on them.

So far we have been more open to the sharing of poles and more reluctant when it came to sharing antennas. Now, for 5G we should allow the sharing of active elements. The Ministry of Communications is preparing a draft in that regard. Once the draft law which is currently being debated is approved, will also be made public the so-called Communications Code, which contains the rules for building permits and for facilitating the sharing of networks. We need to have these twp regulations at an advanced enough stage for operators to be able to plan their investments and the amounts they can offer the state per license.

Of course the authorities want to have this network as quickly as possible, which would help the growth of the economy, to build a number of digital services using the 5G network. But we won't be able to get quality and good prices for customers unless we clarify first the terms for making these investments.

At the same time, we have a uncertain element, namely Telekom, which is currently in talks with a number of operators to sell its operations. For the moment, our approval hasn't been sought, nor has that of Brussels. I mean there are talks, but they have not yet reached the stage where the sale agreement can be sent for approval to us and to the European Commission. Until we know for sure if Telekom wants to remain in Romania or if some other company takes its place, it is rather difficult to hold the call for tenders, because we do not know what operators we can rely on.

All of these aspects need to be clarified to allow us to hold a successful call for tenders. That is why I think it is a smart thing not to rush the call for tenders, not to jump into the pool before checking the water level.

Reporter: Given the pandemic, this year there have been plenty of state aids. What news in that regard?

Bogdan Chiriţoiu: There has been constant work on the matter of state aids this summer, in Romania and all over Europe. Many measures have been approved,by profiting from an easing of the legal framework. Governments have been allowed to pump more money into the economy. As an intervention mechanism, our measures are similar to those passed all over the EU. We provide guarantees to SMEs as well as to big companies, we support commercial credit, various forms of lending that do not go through banks. Because Romania isn't that well developed in terms of banking coverage, it was important for us to have measures dealing with leasing, commercial credit, etc. We also have measures which target sectors that have been heavily affected by the crisis, such as tourism, rent for retail spaces and transports, especially airlines.

Reporter: What is the situation at CFR Marfă?

Bogdan Chiriţoiu: This year, the measures for shaping up the legal framework concerning Covid have taken center stage. The strictly traditional cases - CFR Marfă, CE Oltenia, Tarom - have seen no progress. A state was approved for Tarom, a restructuring plan for CE Oltenia has been sent, and where CFR Marfă is concerned, we are preparing the restructuring plan which to send to the Commission.

One of my concerns is that we have a number of companies investigated by the European Commission and we will need to to agree with the European institution on a restructuring plan for the saving of some companies, and such a restructuring plan can involve a listing, and that is while recently a law has been passed which prohibits listings state-owned companies over the next two years. As a result, we will need to bring an amendment to the law.

Reporter: Lately, in the context of the pandemic, a large number of producers have begun making masks and disinfectants, which we can find with most retailers. What is the situation on that market like, in terms of competition?

Bogdan Chiriţoiu: The good thing is that many manufacture that kind of products and prices have normalized. The challenge for us was during the first months of the pandemic, when the manufacturers had not yet appeared and there was a shortage, and then we tried as much as we could to prevent major price increases, to keep price hikes in check, with moderate success, I think.

Reporter: There have been price increase trends for food products as well...

Bogdan Chiriţoiu: The food products market has functioned quite well. Demand has increased for products that weren't being usually bought, but food products used to be consumed before as well. There have been problems in this area as well, but I am glad that prices haven't increased that much and that the political system has kept its cool. Because, under the impact of fear, there have been some risky proposals as well - for instance, there has been a proposal in the parliament to freeze the prices of food products, which would have led to a disaster. We could have experienced shortages, speculation, we would have experienced madness. We have helped politicians keep their cool and not make decisions based on fear.

Reporter: What is new where legislation is concerned?

Bogdan Chiriţoiu: There is a concern in the EU to balance the ratio between big and small companies. There is also a regulation which has come into effect and concerns online trade.

At the same time, there is a European directive concerning unfair practices in the food products retail, which needs to be implemented into the national legislation.

We also want to change the legislation on unfair competition, generalizing the approach of the two European regulations, and expanding it, so that we apply the same rules to the other sectors in the economy.

Also from Brussels, we need to implement a regulation which allows countries to coordinate in checking foreign investments. We expect a regulation to appear concerning the verification of state aids which companies receive from their countries of origin, as well as a legislation concerning dirty energy, based on fossil coal, which is cheaper. Also the directive approved last year - ECN Plus -, which bolsters the investigative means used by the competition, needs to be implemented into our legislation by spring.

Reporter: Thank you!

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