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Background to the investigation The Gazprom case, registered under No. AT.39816 / Upstream Gas Supplies, is one of the most complex and sensitive cases ever examined by the European Commission under Article 102 TFEU. The investigation illustrates the intersection between competition law and the European Union's foreign and energy policy, in a context dominated by the historical dependence of Central and Eastern European countries on Russian gas and the vertically integrated structure of the Russian company Gazprom. At that time, Gazprom had the world's largest natural gas reserves and was the only company authorised to export natural gas through pipelines from Russia. In 2016, Gazprom produced approximately 420 billion cubic meters of natural gas, of which approximately 180 billion cubic meters were exported to Europe, making Gazprom Europe's main supplier of natural gas. Between 2011 and 2015, the Commission carried out a series of ex officio investigations into the gas markets in Central and Eastern Europe, conducting on-site inspections pursuant to Article 20(4) of Regulation (EC) No 1/2003 and requesting information from Gazprom, its customers, and other market participants. The formal investigation was launched in 2012 following several complaints from competition authorities and companies in Poland, Lithuania, Latvia, and Bulgaria. The formal investigation was launched in 2012 following several complaints from competition authorities and companies in Poland, Lithuania, Latvia, and Bulgaria. They accused Gazprom of fragmenting the internal market, imposing discriminatory prices, and using energy infrastructure as a tool for political pressure. In its 2015 Statement of Objections (hereinafter "SO"), the Commission's preliminary assessment raised suspicions of abuse of a dominant position on three different levels, namely: Gazprom allegedly included territorial restrictions in all its gas supply agreements, such as clauses on the destination of gas and export bans, for wholesale customers and certain industrial consumers. In addition, Gazprom allegedly prevented cross-border gas sales through measures with the same effect, namely by imposing metering requirements and a restrictive policy on changes to gas delivery points. Gazprom allegedly applied an unfair pricing policy, charging wholesale customers in Central and Eastern Europe (Bulgaria, Estonia, Lithuania, Latvia, and Poland) prices that may have been excessive compared to Gazprom's costs or benchmark prices, , using, among other things, oil-indexed pricing formulas. Gazprom allegedly exploited its dominant position by making gas supplies and gas prices in Bulgaria and Poland conditional on obtaining certain undue infrastructure commitments. The case was closed in 2018 with a commitment decision pursuant to Article 9 of Regulation (EC) No 1/2003, under which Gazprom accepted a complex set of measures, hereinafter referred to as "Commitments," aimed at restoring fair competition in the market and restoring balance for customers who had accepted unfavorable gas supply conditions in view of Gazprom's dominant position. This was, symbolically, the first competition decision with direct implications for the Union's energy security and demonstrated that competition law can and should be used as a strategic tool for economic integration and geopolitical protection, to ensure fair and free competition throughout the Union. Legal basis As of December 1, 2009, Articles 81 and 82 of the Treaty establishing the European Community became Articles 101 and 102 of the Treaty on the Functioning of the European Union ("TFEU"). The two sets of provisions are essentially identical. For the purposes of this decision, which also covers a transitional legislative period, references to Articles 101 and 102 TFEU should also be understood as references to Articles 81 and 82 of the Treaty establishing the European Community, where appropriate. The TFEU has also introduced natural terminological changes, such as replacing the term Community with Union and the terminology of common market with internal market. Where the meaning remains unchanged, TFEU terminology is used consistently in this decision. The Commission's analysis concerns potential infringements of Article 102 TFEU, namely the abuse of Gazprom's dominant position on the natural gas market in Central and Eastern Europe. Article 102 – formerly Article 82 TEC Any abuse by one or more undertakings of a dominant position on the internal market or on a substantial part of it shall be incompatible with the internal market and prohibited insofar as it may affect trade between Member States. Such abusive practices may in particular consist in: a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions; b) limiting production, marketing, or technical development to the detriment of consumers; c) applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; d) making the conclusion of contracts conditional on the acceptance by partners of additional services which, by their nature or according to commercial usage, have no connection with the subject matter of such contracts.   The Decision to implement the Commitments was issued pursuant to Article 9 of Council Regulation (EC) No. 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the EC Treaty (now Articles 101 and 102 TFEU), as follows: Article 9 – Commitments (1) Where the Commission intends to adopt a decision requiring that an infringement be brought to an end and undertakings offer commitments to meet the concerns expressed by the Commission in its preliminary assessment, the Commission may, by decision, make those commitments binding on the undertakings. Such a decision may be adopted for a limited period and may conclude that there are no longer grounds for action by the Commission. (2) The Commission may, on request or on its own initiative, reopen the procedure: (a)  where there is a material change in any of the facts on which the decision was based;   (b) if the undertakings concerned act contrary to the commitments they have given; or   (c)  if the decision was based on incomplete, inaccurate, or misleading information provided by the parties.   Gazprom's dominant position For the purposes of applying Article 102 TFEU, since it is necessary to establish a dominant position, the Commission first defined the relevant geographic markets for the supply of natural gas in eight countries: Bulgaria, the Czech Republic, Estonia, Latvia, Lithuania, Poland, Slovakia, and Hungary. According to the definition established in United Brands (C-27/76), a dominant position is considered to exist where "economic power enables an undertaking to prevent effective competition from being maintained and to behave to an appreciable extent independently of competitors, customers, and consumers." The analysis showed that each of these markets was highly isolated from the rest of the Union and dependent on Russian imports due to (i) the lack of functional cross-border interconnections, (ii) the absence of alternative sources of supply, and (iii) long-term bilateral contracts concluded exclusively with Gazprom. Gazprom was, de facto, the only supplier capable of meeting the total demand in these markets. In addition, the company exercised direct or indirect control over the transport infrastructure, either through local subsidiaries or through preferential agreements with national operators. The product market While there is a common market for oil and gas exploration, gas supply is a distinct market from oil supply. Oil and gas have different characteristics and are subject to different cost and pricing constraints, and therefore belong to distinct product markets. Oil is mainly used for transport, while gas is mainly used for electricity generation and in industry. The supply market is limited to what is actually consumed in a given geographic market, comprising domestic production and imports. Furthermore, the gas supply market does not include gas transiting through that geographical area. The Commission did not make any further distinction in the market based on gas quality (e.g., between high-calorific and low-calorific gas). The wholesale supply market can be divided into an upstream and downstream market. In the upstream wholesale market, producers and exporters sell large quantities of gas to wholesale traders and importers, as well as indirect sales where gas is sold by the producer/exporter to the wholesale trader/importer on a hub platform or through intermediaries[1] . The downstream supply market refers to subsequent sales by wholesalers and importers to retailers or other downstream wholesalers (i.e., distribution companies). This market is not relevant to the Commission's current analysis. The Commission also analyzed the retail market, considering that Gazprom supplied industrial customers directly in certain parts of Central and Eastern Europe, but it was not considered relevant for this analysis. Geographic market According to established case law and Commission practice, the relevant geographic market comprises an area in which the undertakings concerned are involved in the supply and demand of the relevant products or services, in which the conditions of competition are similar or sufficiently homogeneous and which can be distinguished from neighbouring areas where the conditions of competition are significantly different. Although in some previous cases the Commission has considered that the geographic market for upstream supply can be defined at EEA level, the Commission's analysis in those cases was carried out solely from the demand side perspective, without taking into account supply constraints related to gas transportation. Thus, taking into account the supply side perspective on the upstream supply market, the Commission analyzed the market definition and reported on the limited interconnection infrastructure between markets or the lack of available cross-border capacity, concluding that the definition could also be made at the national level. The Commission's conclusion was therefore that the markets are national in nature, since: the upstream wholesale gas supply markets are characterized by the fact that there is generally a single large national distributor, which is a different entity for each of the CEE countries mentioned, and Gazprom has concluded gas supply contracts with each of these existing national distributors. the contractual clauses contained territorial restrictions combined with take-or-pay obligations, which often corresponded exactly to national demand. This led to no or very little cross-border gas sales. The technical transport capacity and the number of interconnection points between the gas networks of the CEE countries investigated at the time of the infringement were insufficient to allow the free flow of gas across borders, so as to offer customers alternative sources of supply from neighbouring gas markets.   Dominant position Gazprom thus holds a dominant position in each of the national markets relevant to the analysis in the CEE countries, namely Estonia (80-100%), Latvia (70-100%), Lithuania (100%), Poland (40-65%), the Czech Republic (75-100%), Slovakia, Hungary (50-70%) and Bulgaria (80-100%)[2] . Gazprom plays a key role in all the markets concerned, which means that, in the absence of its supplies in the short and medium term, customers risk being unable to meet their gas demand. At the same time, due to its large natural gas reserves, Gazprom can be considered an unavoidable trading partner for a large part of the national consumption of CEE countries. The Commission's preliminary assessment The Commission's preliminary assessment, as set out in the SO, is that the relevant markets should be defined as the national markets for upstream wholesale natural gas supply. Gazprom holds a dominant position in all eight markets in Central and Eastern Europe for upstream wholesale gas supply, which has enabled Gazprom to prevent the free flow of gas throughout the CEE region, fragmenting and isolating the markets investigated. The Commission concluded that market segmentation and restrictions on the free flow of gas were implemented through explicit contractual export prohibitions and destination clauses, as well as other contractual and non-contractual means with an equivalent effect. This restriction of the free flow of gas across CEE borders allowed Gazprom to charge prices above the fair competitive price level in other similar markets. In addition, preventing the free flow of gas across Central and Eastern European borders facilitated Gazprom's position as the main gas supplier to this region and thus enabled it to make its supplies conditional on obtaining infrastructure-related advantages from its customers. Territorial restrictions in the form of contractual export bans or destination clauses and other contractual or non-contractual restrictions having equivalent effect The first suspicion of abuse of a dominant position by Gazprom, as presented by the Commission in the SO, consists in the fragmentation of the internal market through various forms of territorial restrictions contrary to Article 102 TFEU. Gazprom's gas supply contracts contained clauses preventing wholesalers from reselling gas outside their country (re-export prohibitions or resale restrictions), as well as destination clauses, which required wholesalers to use the gas only in their own country or, in some cases, to sell only to certain customers in their own country. Some gas supply contracts contained clauses which, without constituting an explicit export ban or destination clause, could have the effect of preventing the re-export of gas, having an effect equivalent to explicitly restrictive clauses. This market segmentation could also be achieved by Gazprom's refusal to change the gas delivery points or the location where the gas is metered. Territorial restrictions on resale constitute a violation of EU competition law. Commission Regulation (EU) No. 330/2010, specifically Article 4(b), classifies restrictions on the territory in which a buyer may sell the contract goods as restrictions under Article 101 TFEU. Furthermore, the case law of the CJEU[3] , classifies the imposition of restrictions on the use to which the goods may be put or the territory in which the goods may be resold as a restriction of competition contrary to Article 101 TFEU. Furthermore, the Court of Justice has ruled that a clause prohibiting exports, i.e. an obligation to sell only on the domestic market, by its very nature constitutes a restriction of competition[4] , as such a clause is intended to segment markets within the Union, contrary to Article 101 TFEU. Such anti-competitive conduct has also been sanctioned in the past, in the Suiker Unie case, where the Commission concluded that a dominant sugar refinery had infringed Article 102 TFEU by threatening to stop supplying sugar if distributors did not comply with its restrictive export policy. Market segmentation can also be achieved by indirect means, but what is essential in determining the anti-competitive object of a measure is whether, by artificially altering the conditions of competition, it is clearly capable of inducing economic operators to give priority to the domestic market over exports, in contrast to the economic interpretations pursued by the Treaty. Furthermore, the possible argument that an agreement with an anti-competitive object also pursues other legitimate aims is irrelevant to the assessment of the anti-competitive nature of the agreement. It is also irrelevant on whose initiative the clause was adopted and whether it was strictly applied. The Court confirmed that an agreement that has been found to have an anti-competitive object and that affects trade between Member States constitutes, by its nature and independently of any actual effect it may have, a significant restriction of competition. Among the clauses identified in Gazprom's contracts, we mention, by way of example: an extension clause whereby Gazprom has the right to increase the minimum annual quantities of gas under the take-or-pay obligation if the customer re-exports part of the annual quantity of gas, the increase corresponding to the quantity of gas re-exported by the customer. a clause making re-export conditional on Gazprom's consent, in the sense that Gazprom's agreement is required for the use of certain gas metering points each time gas is exported from the country. In conclusion, the Commission's preliminary assessment indicates that all territorial restrictions in the eight CEE Member States may have had an anti-competitive object, consisting in the fragmentation and isolation of the relevant gas markets in Central and Eastern Europe. Charging excessive prices The second suspicion of abuse of a dominant position by Gazprom, as presented by the Commission in the SO, consists in pursuing unfair pricing policies, charging prices in Bulgaria, Estonia, Latvia, Lithuania, and Poland that may have been excessive in comparison with Gazprom's costs, as well as in comparison with other relevant competitive price benchmarks. Gazprom applied oil-indexed pricing formulas in its supply contracts, which contributed to excessive pricing. In addition, the Commission found another factor contributing to unfair prices, namely the absence in the price review clauses of a well-defined, competitive and publicly available price benchmark, such as prices in competitive gas hubs. Article 102(a) TFEU prohibits the direct or indirect imposition of unfair purchase or selling prices or other unfair trading conditions. The Court of Justice has ruled that the application of an excessive price that has no reasonable connection with the economic value of the product supplied constitutes such an abuse of a dominant position[5] . In practice, the CJEU has proposed a two-step test[6] to assess the link between price and economic value and to determine the existence of unfair prices. According to this cumulative test , the Commission must assess (i) whether the difference between the actual costs incurred and the actual price charged is excessive and (ii) whether a price has been imposed that is unfair in itself or in comparison with competing products. With regard to the first stage of the test, neither the courts nor the Commission have determined what level of price difference can be considered unfair, as this depends very much on the product and the market in question. For example, in the Deutsche Post decision, case COMP/C-1/36.915, the Court ruled that a price 25% higher than the company's estimated costs is unfair. With regard to the second stage of the test, a comparison could be made, for example, with the price charged by the same company for the same product in different geographical markets considered to be competitive. Alternatively, a comparison could be made with the prices charged for the same product sold by competitors in the same geographical market or in other similar geographical markets. In the first stage of the test, the Commission carried out the comparison for the years 2009-2013, showing that Gazprom's average prices, net of export taxes, in the five CEE countries significantly exceeded costs, with a weighted average cost mark-up of over 170%. In the second stage of the test, the Commission selected two price benchmarks: Gazprom's long-term contract prices in Germany and prices on European hubs. Although price differences vary from country to country, Gazprom's long-term prices in all five CEE countries significantly exceeded Gazprom's long-term prices in Germany during the period analyzed, averaging between 9% and 24% over the period 2009-2014. The Commission considered that these price differences indicated unfair pricing, particularly given that the gas supplied by Gazprom to Germany and the five CEE countries is perfectly homogeneous, and that the transport costs for gas supplied to the five CEE countries, as well as the standard of living in those countries, are lower. The Commission found that the prices of long-term contracts in the five CEE countries are significantly and persistently higher than the prices on the Dutch TTF hub, on average between 22% and 40% higher between 2009 and 2014. With regard to oil indexation, all long-term supply contracts concluded by Gazprom with the five CEE countries contain a price formula that indexes the price of gas to the price of oil and diesel. Although the contracting parties have the option of indexing contract prices to the prices of other products, and this clause is not considered abusive in itself, it may be considered an unfair term in the context analyzed. Thus, as demand and supply for oil and gas have become largely independent over the years (with prices evolving largely separately), when oil prices reached a higher level, indexation to oil artificially increased gas prices in the five CEE countries, regardless of the characteristics of demand and supply. Thus, by indexing prices to oil, Gazprom's natural gas prices in the five CEE countries significantly and persistently exceeded competitive price benchmarks over the period 2009-2014. In addition, the Commission indicates that the absence of a well-defined, competitive, and publicly available price benchmark in the price review clauses may be one of the main factors that led to Gazprom's high prices in the five CEE countries. In conclusion, the Commission's preliminary assessment indicates that Gazprom was able to pursue an unfair, anti-competitive pricing policy in the five CEE countries by imposing excessive prices, indexing prices to oil and failing to identify a well-defined price benchmark in the price review clauses. Gas supplies conditional on infrastructure commitments in Bulgaria The third suspicion of abuse of a dominant position by Gazprom, as presented by the Commission in the SO, consists in exploiting its position as the dominant gas supplier in Bulgaria to obtain from the Bulgarian gas operator, Bulgarian Energy Holding (hereinafter BEH), a commitment to participate in the South Stream project led by Gazprom. Thanks to its dominant position, Gazprom was able to make gas supplies and gas prices conditional on BEH's commitment to invest in the South Stream project, which was subsequently abandoned. The Commission considered this conditioning of gas supplies and prices on additional obligations by imposing unfair commercial conditions to be anti-competitive. Article 102(d) TFEU applies when the dominant undertaking forces customers to accept other types of additional distinct obligations or unfair commitments in order to obtain the product or service for which the supplier is dominant. This imposition may concern products, services, commitments, investments, or obligations[7] . Specifically, in Bulgaria, Gazprom made the conclusion of a new gas supply contract and the application of lower gas prices conditional on the additional, distinct and unrelated obligation for BEH to participate in the South Stream infrastructure project. Gazprom used BEH's dependence on its gas supplies to ensure progress in the various stages of South Stream, thus forcing it to accept these conditions, despite the fact that BEH incurred significant financial obligations in addition to its existing financial difficulties. From its analysis, the Commission concluded that, in order to achieve the objective of constructing the South Stream pipeline, it was neither necessary nor proportionate for Gazprom to impose the commitment on BEH. Thus, the conditionality allowed Gazprom to obtain benefits that it would not have been able to obtain under conditions of effective competition for gas supplies in Bulgaria. Lack of objective justification or competitive efficiency argument Conduct that at first glance constitutes an abuse of a dominant position may escape the prohibition laid down in Article 102 TFEU if the dominant undertaking is able to provide an objective justification for its conduct or can demonstrate that this conduct generates efficiencies that offset the negative effect on competition. The burden of proof for such an objective justification or efficiency defense lies with the dominant undertaking. The company will have to demonstrate, to the standard of proof required by law, that the conditions for applying such a defense are met[8] . In addition, dominant undertakings may submit evidence that the exclusionary effects resulting from their apparently anti-competitive behavior are counterbalanced or outweighed by efficiency gains that ultimately benefit consumers[9] . The Commission's preliminary assessment is that Gazprom has not provided sufficient evidence that its anti-competitive attitude and conduct could be objectively justified or that it is necessary to achieve efficiency gains that are likely to outweigh the negative effects on competition without eliminating effective competition. Effect on trade between Member States The Court of Justice has ruled that Article 102 TFEU does not require proof that abusive conduct has actually affected trade between Member States, but that it is sufficient that it is capable of having that effect[10] . Thus, European Union law covers any agreement or practice that is capable of threatening the freedom of trade between Member States in a way that could affect the achievement of the objectives of a single market between Member States, in particular by isolating domestic markets or affecting the structure of competition in the internal market. The Commission's preliminary conclusion is that, to the extent that Gazprom may raise artificial barriers to trade and inhibit the free flow of gas in the gas markets of Central and Eastern Europe, Gazprom's conduct may be considered to have a negative, anti-competitive effect on trade between Member States.   Commitments made by Gazprom Initial commitments regarding market segmentation Gazprom has committed to refrain from using (and not to introduce in the future) export bans, destination clauses or any contractual or non-contractual measures with equivalent effect in gas sales contracts, including those concluded through tenders, which could directly or indirectly limit or prohibit the customer's ability to resell all or part of the gas purchased from Gazprom or to move it to another territory. Gazprom has undertaken to amend the relevant gas supply and transport contracts to allow the conclusion of interconnection agreements at the interconnection points between Bulgaria and other EU Member States, as well as to allow the adaptation of the current gas allocation method (allocation according to measurement) to the modern gas allocation method (allocation according to nomination). Gazprom has committed to offer its relevant customers in CEE countries the possibility to request that all or part of their contractual gas volumes delivered to certain delivery points in CEE be delivered to Bulgaria or the Baltic States. Gazprom has committed to offering this swap operation as long as the customer is unable to ensure the transportation of gas from the relevant contractual delivery point to Bulgaria or the Baltic States. As a gas swap is a commercial transaction for which the supplier charges a fee, Gazprom will be entitled to charge a fixed and transparent fee for this service, in line with the tariffs it normally applies on the market for such services. Initial commitment on excessive prices Gazprom has committed to propose either the introduction of a price review clause in contracts with its customers that do not already contain such a clause, or to amend existing price review clauses, with a view to ensuring competitive natural gas prices on the markets in Bulgaria, Estonia, Lithuania, Latvia, and Poland. The new price review clause would allow each contracting party to request a review of gas prices if economic circumstances in European gas markets have changed and/or the contract price does not reflect, among other things, the evolution of border prices in Germany, France, and Italy and/or the evolution of gas prices at liquid hubs in continental Europe. The review may be requested by each party every two years, plus one extraordinary price review every five years. Finally, the commitment provides that, in the absence of agreement on the price review within 120 days, either party may submit the dispute to arbitration. Initial commitment to condition gas supplies on infrastructure commitments in Bulgaria Gazprom has committed to allow its Bulgarian partners to withdraw from the South Stream project without incurring any liability for damages. In the context of the announced cancellation of the South Stream project, Gazprom has agreed that neither it nor any of its subsidiaries will claim damages on the basis of this cancellation. Gazprom has also committed not to seek reimbursement of the price reductions granted to its Bulgarian customer for participation in the South Stream project. Effectiveness of the commitments The purpose of the commitments is to bring Gazprom's market behavior into line with EU competition law and to ensure that businesses and consumers in CEE can benefit from increased competition between different gas suppliers and sources of supply. Such competition already benefits consumers in Western Europe, particularly in markets where there is access to liquid and competitive gas hubs, such as Germany or the Netherlands. The Commission considers that the Commitments, in addition to strictly prohibiting certain types of conduct (i.e. territorial restrictions), also impose positive obligations on Gazprom to facilitate the free flow of gas in Central and Eastern Europe (i.e. the delivery point switching mechanism). Furthermore, the Commitments aim to ensure that the price of gas under oil-indexed contracts in Central and Eastern Europe remains in line with competitive price benchmarks, in particular those of Western European gas hubs. In conclusion, the Commission considers that the Commitments effectively remove the competition concerns and comply with the principle of proportionality. Thus, by adopting a decision pursuant to Article 9(1) of Regulation (EC) No 1/2003, the Commission renders binding on Gazprom the commitments offered by it to meet the concerns expressed by the Commission in its preliminary assessment. The Commitments, as finalized, form an integral part of the decision. Recital 13 of the preamble to Regulation (EC) No 1/2003 states that such a decision does not determine whether there has been or still is an infringement and anti-competitive conduct, and is not punitive in nature. In view of the commitments offered, the Commission considers that there are no longer grounds for action on its part and, without prejudice to Article 9(2) of Regulation (EC) No 1/2003, the proceedings in this case will therefore be closed. However, the Commission reserves the right to investigate and initiate proceedings under Article 102 TFEU in respect of practices not covered by this decision. However, the Commission reserves the right to investigate and initiate proceedings under Article 102 TFEU in respect of practices not covered by this decision.   Noemi Cădariu, Managing Associate – Bradu, Neagu & Associates www.bradulex.com [1] Indirect sales may occur in supply chains, for example when a producer sells gas to a wholesaler, who in turn sells the entire quantity of gas to the national wholesaler serving various customers. This situation is considered an indirect sale by the producer/exporter to the national wholesaler and is part of the definition of the upstream supply market. [2] The percentages are applicable for the period 2004-2013. [3] C-319/82, Societe de vente de ciments v. Kerpen & Kerpen [4] C-19/77, Miller v Commission [5] Case C-27/76, United Brands v Commission [6] Idem [7] For example, in British Sugar v. Napier Brown, the dominant company made the sale of sugar conditional on the use of its transport services to deliver the sugar to its final destination. [8] Case C-209/10, Post Danmark [9] Case C-95/04, British Airways v Commission [10] Case C-322/81, Michelin v Commission

How Can a Stock Exchange Lawyer in Romania Assist You in the Financial Recovery of Companies Listed on the Stock Exchange in Romania? Listed companies in Romania have a significant impact on the economic environment, as through the sale of shares, capital is attracted to finance large-scale projects that can contribute to economic growth and attract investments in Romania in the stock market in Romania (stock exchange in Romania). However, in a dynamic economic context, listed companies in Romania may face financial difficulties during the course of their business activity. The procedure of agreement with creditors in Romania represents a method of financial recovery and restructuring in Romania provided by the insolvency law, offering the possibility for listed companies in Romania to negotiate a restructuring plan with creditors who seek debt recovery in Romania. 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As mentioned earlier, the agreement with creditors in Romania and insolvency proceedings in Romania can directly impact operational stability and reputation involves negotiating a restructuring plan with creditors who are seeking debt recovery in Romania. This procedure represents a benefit, as it is a faster, more discreet, and financially advantageous solution, achievable only with the creditors’ support. On the other hand, insolvency in Romania represents a longer and more restrictive procedure in terms of operational control. Although insolvency in Romania is also a financial recovery tool (and a tool for debt collection in Romania for creditors), it can generate uncertainties among individuals who wish to make investments in Romania in the stock market in Romania, contributing to reduced investor confidence and negatively influencing commercial relations. 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This solution allows a company in Romania to restructure their debts while maintaining commercial relationships without losing their position in the stock market in Romania. The Romanian law firm Pavel, Mărgărit, and Associates is internationally recognized for its legal expertise in restructuring in Romania and judicial reorganizations, and a stock market lawyer can offer quality legal expertise to ensure compliance with market regulations, negotiate with creditors who seek debt collection in Romania, and protect interests. The Romanian law firm Pavel, Mărgărit, and Associates is one of the top law firms in Romania, providing the highest quality legal services. Among the firm’s clients are large multinational and domestic companies. In 2024, the firm’s success stories earned it international recognition from the most prestigious legal directories and publications. Thus, Pavel, Mărgărit, and Associates ranked third in Romania in the Legal 500 business law firm ranking. The firm is also recognized by the IFLR 1000 Financial and Corporate 2024 guide. Furthermore, Pavel, Mărgărit, and Associates is the only law firm in Romania recommended by the international director Global Law Experts in London in the area of Dispute Resolution. All relevant information regarding Pavel, Mărgărit, and Associates can be found on the website www.avocatpavel.com.

Conditions and Essential Steps for Listing on the Capital Market At the Bucharest Stock Exchange listed companies (BVB), the number of listed companies has varied over the years. Currently, in 2025, there are 83 listed companies, both private and state-owned, operating in a regulated and transparent environment. In this context, listing on the stock exchange can be a strategic opportunity for any company looking to develop and attract capital. The listing process requires compliance with strict regulations but offers, in return, access to a broad investor market and greater visibility. The Romanian Law Firm Pavel, Mărgărit and Associates provides legal assistance and representation in corporate law, investments in Romania, stock exchange transactions and all stages of the listing process on BVB. A Stock exchange lawyer in Romania and a business lawyer in Romania provide specialized legal consultancy for registering as a company in Romania, transforming from an LLC into a joint stock company and opening businesses thus facilitating access to the capital market in Romania and contributing to meeting the conditions for stock exchange listing and ensuring long-term success. Conditions for Stock Exchange Listing and Essential Steps for Listing on the Capital Market To be part of the Bucharest Stock Exchange listed companies, a company must be a joint stock company (SA), have equity or a capitalization of at least 1 million euros, have at least 25% of shares available for trading, and have been active on the market for at least three years. There are two ways to issue shares on the stock exchange: selling new shares to raise funding or selling an existing share package by shareholders. In both cases, the decision must be approved by the Board of Directors and the General Meeting of Shareholders. For listing, there are three methods, namely initial Public Offering (IPO), which involves issuing new shares and requires a prospectus approved by authorities, private placement, addressed to a limited number of investors and does not require an approved prospectus, technical listing, which does not involve a share offering and only requires admission to trading, still needing a prospectus. The listing process involves a detailed analysis of the company’s legal and tax structure. In this regard, The Romanian Law Firm Pavel, Mărgărit and Associates, with the support of a Stock exchange lawyer in Romania, corporate lawyer in Romania and business lawyer in Romania from Corporate, Commercial and M&A Department, can provide legal assistance to guide company representatives throughout the listing process and ensure compliance with companies law. Transforming an LLC into a Joint Stock Company If, during the start a business in Romania, register as a company in Romania and launching a business in Romania, companies were established as LLCs, an important step for listing on the Bucharest Stock Exchange listed companies is their transformation from a limited liability company (LLC) into a joint stock company. The transformation process involves several stages. First, the company must amend its articles of incorporation to reflect the new legal requirements specific to a joint stock company, including changing the capital structure and company organization method. For example, under companies law, an LLC has share capital divided into shares, whereas in the case of a joint stock company, the capital is divided into shares that can be traded on the stock market in Romania. Another important stage is choosing an appropriate management system. In the case of an LLC, management is usually ensured by one or more shareholders or directors, whereas, in the case of a joint stock company, it must be handled by a Board of Directors, in accordance with the legal regulations under companies law. Additionally, the transformation involves adjusting the capital structure, considering that a joint stock company can issue shares distributed to shareholders and traded on the stock exchange. Furthermore, the company must establish an appropriate corporate governance system and ensure compliance with all regulations imposed by the Financial Supervisory Authority and the Bucharest Stock Exchange listed companies. These steps are essential to transition from an LLC to a joint stock company and prepare the company for stock exchange listing, providing access to capital from the capital market in Romania and the opportunity to attract investors. Investments in Romania and opportunities for starting a business in Romania Romania offers a favorable environment for starting a business in Romania and investments in Romania. In this context, companies looking to list on the Bucharest Stock Exchange listed companies can benefit from numerous opportunities to attract capital and expand in the local and international markets. The process of register as a company in Romania, starting a business in Romania and launching a business in Romania is simplified by business-friendly regulations and support from financial and governmental institutions. The Romanian Law Firm Pavel, Mărgărit and Associates provides legal services for register as a company in Romania, assisting clients in company formation in Romania, preparing necessary documentation, and offering specialized legal assistance in commercial law. Additionally, for companies looking to diversify their investment portfolios and participate in stock market in Romania transactions, investments in Romania can be a profitable opportunity. Listed companies in Romania are attractive to investors due to financial transparency and strict regulations that ensure their protection. The Romanian Law Firm Pavel, Mărgărit and Associates offers a wide range of legal services, including consultancy in stock market in Romania transactions, assisting companies in the stock exchange listing process, transforming from an LLC into a joint stock company, as well as all legal aspects of launching a business in Romania, starting a business in Romania and register as a company in Romania. A Stock exchange lawyer in Romania, corporate lawyer in Romania, or business lawyer in Romania provides innovative and effective legal solutions for any company looking to expand its business and invest in stock. Do not hesitate to contact us by accessing the contact form on our website https://avocatpavel.com/contact/. Don’t navigate these challenges alone. Contact us today for expert assistance tailored to your needs. Contact Us “Transforming a company from an LLC to a joint stock company is an essential step for accessing the capital market in Romania and attracting financing. This process involves amending the articles of incorporation, adjusting the capital structure, and adopting a management system in accordance with current regulations. Additionally, it is essential for the company to comply with the requirements imposed by law to ensure transparency and investor protection,” said Dr. Radu Pavel, the Managing Partner of The Romanian Law Firm Pavel, Mărgărit and Associates. In conclusion, stock exchange listing on the Bucharest Stock Exchange listed companies represents a strategic opportunity for companies looking to attract capital, increase visibility, and benefit from a regulated and transparent framework. The process involves compliance with strict companies law requirements, but companies that choose stock exchange listing can enjoy multiple financial and strategic advantages. The Romanian Law Firm Pavel, Mărgărit and Associates supports companies at all stages of this process, providing specialized legal consultancy in Corporate Law, Commercial law and invest in stock transactions for listed companies in Romania.Pavel, Margarit and Associates Law Firm is one of the top law firms in Romania, providing high-quality legal services. The firm’s clients include multinational and domestic companies of great magnitude. In 2024, the law firm’s success stories brought it international recognition from the most prestigious international guides and publications in the field. As a result, Pavel, Margarit and Associates Law Firm ranked 3rd in Romania in the Legal 500’s ranking of business law firms with the most relevant expertise. The law firm is internationally recognized by the IFLR 1000 Financial and Corporate 2024 guide. Additionally, Pavel, Margarit and Associates Law Firm is the only law firm in Romania recommended by the international director of Global Law Experts in London in the Dispute Resolution practice area. All relevant information about Pavel, Margarit and Associates Law Firm can be found on the website www.avocatpavel.com.

What legal solutions can be adopted in case of a dispute with ANAF? Recently, the National Agency for Fiscal Administration (ANAF in Romania) has intensified controls regarding money transfers between individuals, including transfers between relatives. The purpose of ANAF’s inspections is to sanction illicit transactions and combat tax evasion related to incomes whose source cannot be justified. According to Law No. 296/2023 on certain fiscal-budgetary measures to ensure Romania’s long-term financial sustainability, a 70% tax is applied to incomes that ANAF in Romania cannot identify, and the tax authority issues a tax notice of assessment in Romania for individuals in this regard. This article analyzes the legal ways to conduct money transfers, types of disputes taxpayers may have with ANAF regarding tax liabilities, and legal solutions available to taxpayers in case of an abusive notice of assessment in Romania. The Romanian law firm Pavel, Mărgărit & Associates recommends consulting a tax lawyer in Romania or an administrative attorney in Romania who can provide legal assistance and representation in any type of dispute of tax law in Romania with tax authorities and advise on conducting transactions legally to avoid unjustified taxation. Tax lawyer in Romania. How to transfer money between relatives without facing tax issues? A tax assessment in Romania for individuals represents a document issued by the National Agency for Fiscal Administration (ANAF in Romania) that establishes a payment obligation. Most often, a tax assessment in Romania is issued after the tax authority verifies certain transactions and determines that they cannot be justified. The Fiscal Code defines taxable and non-taxable income categories, and upon reviewing the relevant articles, it becomes evident that donations are not subject to taxation. Thus, money transfers between relatives can be considered donations, and to justify them, it is advisable to conclude a donation contract in an authentic form. Furthermore, for monetary transfers, it is recommended to use precise notations to clearly indicate the nature of the payments. The absence of supporting documents may lead to the issuance of a notice of assessment in Romania for individuals and the application of a 70% tax on funds whose origin cannot be justified. A lawyer for taxes in Romania can provide legal advice on carrying out transactions, including drafting a donation contract to outline the nature and purpose of the transfer. This ensures that, in the event of a tax audit, ANAF does not misinterpret the transfer and issue a tax notice of assessment in Romania. Administrative lawyer in Romania. Types of disputes with ANAF In practice, various disputes may arise between ANAF and taxpayers, particularly in cases of contesting a decision of tax assessment in Romania for incomes with an unjustified origin. Often, the tax authority may consider certain sums as taxable income if there are no documents proving their source, applying a 70% tax. However, there are situations where these incomes are not taxable, leading taxpayers to contest ANAF’s decision of tax assessment in Romania. Another common type of dispute involves forced execution for tax debts. If a taxpayer opposes this, they can file an objection to enforcement. Another example of disputes with tax authorities relates to the statute of limitations for establishing tax liabilities. It may happen that the tax authority issues a tax notice of assessment in Romania, and the taxpayer contests it based on the five-year statute of limitations as stipulated in the Fiscal Procedure Code in Romania. An administrative law lawyer in Romania or an administrative attorney in Romania can provide top-quality legal representation in disputes of tax law in Romania by drafting a tax appeal in Romania and representing taxpayers in court. Fiscal lawyer in Romania. How can a lawyer assist in administrative litigation issues? When a taxpayer faces tax-related issues regarding legal money transfers between relatives and the risk of a 70% tax being applied, consulting a lawyer for taxes in Romania is crucial for protecting their rights and avoiding penalties. The verification process relies on supporting documents such as a donation contract or payment proofs that include detailed transaction descriptions. An administrative law lawyer in Romania can assist in drafting a donation contract and provide legal support in case of disputes with ANAF in Romania by contesting the tax assessment decision and representing the taxpayer in both administrative procedures and court proceedings. An administrative attorney in Romania plays a key role in managing tax litigation, acting as a crucial partner in handling tax disputes and offering taxpayers effective defense strategies. Lawyer for taxes in Romania. Legal solutions for abusive tax assessment decisions An abusive decision of tax assessment in Romania can significantly impact taxpayers, which is why the Fiscal Procedure Code in Romania allows to appeal a decision in Romania within 45 days from the date of notification, under penalty of forfeiture. According to the provisions of the Fiscal Procedure Code in Romania, a tax appeal in Romania objection may be fully or partially admitted or rejected. If a favorable outcome is not obtained, a taxpayer can take the case to an administrative court to request annulment of the imposed tax liability. An administrative lawyer in Romania can provide specialized legal assistance and representation before the administrative court to challenge the decision of tax assessment in Romania. The Romanian law firm Pavel, Mărgărit & Associates has extensive experience in tax law in Romania, particularly to appeal a decision in Romania. A fiscal lawyer in Romania can assist in any legal action aimed at protecting taxpayers’ interests. For legal consultation, contact a tax attorney in Romania from our firm by accessing the contact form on our website: https://www.avocatpavel.com/contact-us/ to benefit from the best legal solutions. Don’t navigate these challenges alone. Contact us today for expert assistance tailored to your needs. Contact Us “Taxpayers have the right to challenge any decision of tax assessment in Romania that unjustifiably affects their financial interests. A specialized approach by an administrative lawyer in Romania is recommended to protect taxpayers’ rights and interests,” stated Dr. Av. Radu Pavel, Managing Partner of the Romanian Law Firm Pavel, Mărgărit & Associates. In conclusion, for abusive tax assessment decisions, taxpayers have multiple legal solutions available, from tax appeal in Romania to taking legal action in court. The recent application of a 70% tax on money transfers between relatives has sparked controversy, which is why the Romanian law firm Pavel, Mărgărit & Associates recommends consulting a tax attorney in Romania who can provide specialized advice on properly documenting transactions and complying with legal requirements. Pavel, Margarit and Associates Law Firm is one of the top law firms in Romania, providing high-quality legal services. The firm’s clients include multinational and domestic companies of great magnitude. In 2024, the law firm’s success stories brought it international recognition from the most prestigious international guides and publications in the field. As a result, Pavel, Margarit and Associates Law Firm ranked 3rd in Romania in the Legal 500’s ranking of business law firms with the most relevant expertise. The law firm is internationally recognized by the IFLR 1000 Financial and Corporate 2024 guide. Additionally, Pavel, Margarit and Associates Law Firm is the only law firm in Romania recommended by the international director of Global Law Experts in London in the Dispute Resolution practice area. All relevant information about Pavel, Margarit and Associates Law Firm can be found on the website www.avocatpavel.com.