Romania: FDI and antitrust regimes receive welcome clarifications under new law

The Romanian FDI regime in a nutshell

The Romanian FDI regime, implementing the EU FDI Regulation, officially came into force almost two years ago, as discussed here. It has already been subject to several rounds of refinement and further clarifications by subsequent legislation. The most significant amendments, brought about by Law No. 164 of 31 May 2023 and Government Emergency Ordinance No. 108 of 29 November 2023, significantly broadened the scope of the regime, formally extending the screening process to EU investors. This formal change has not come as a surprise to practitioners, as it merely reflected the authority's interpretation and real-life practice.

On 17 July 2024, the President of Romania formally promulgated a new law ("Law 231/2024"), whose consequences are nowhere as far-reaching as the prior legal amendments. Nevertheless, Law 231/2004 is a welcome and expected update, as it clarifies key concepts surrounding gun-jumping by EU investors, ensuring a level playing field for investors of all nationalities.

Strengthening FDI gun-jumping sanctions

Arguably, the most important clarification set forth by Law 231/2024 pertains to the applicability of gun-jumping sanctions (which include fines of up to 10 % of the investor's worldwide turnover) to both non-EU and EU investors. This clarification is more of a legal technicality, as Law 231/2024 essentially approves the previous Government Emergency Ordinance issued at the end of last year. It further confirms the non-discriminatory approach of the FDI authority since the regime's inception, regardless of the investor's nationality.

Other noteworthy aspects, either explicitly clarified or just brought about by Law 231/2024, include the following:

• Gun-jumping resulting from negligent and not only intentional conduct is sanctionable. The same applies to providing inaccurate, incomplete or misleading information, which is punishable not only when done intentionally, as was previously the case, but also when done
• Investments implemented without clearance and underlying contracts are null and void ab initio, if the transaction was notifiable. The FDI Screening Commission (Comisia pentru Examinarea Investițiilor Străine Directe – CEISD) may also advise on either structural or behavioural measures, with an aim to unwind the transaction as pre-implemented.

Dawn raids and client-attorney privilege

A more than welcome amendment concerns legal professional privilege ("LPP"). Under the restated rules set out by Law 231/2024, when calling in LPP during a dawn raid, the undertaking concerned is no longer required to disclose the actual content of the correspondence allegedly subject to LPP. It is sufficient for that undertaking to present an adequate justification and relevant elements as regards the arguments being invoked.

Conclusion and what may come next

The amendments set out by Law 231/2024 are aimed at creating a level playing field and at standardising the application of the FDI regime in Romania. This is also one of the objectives pursued by the new EU security package. It is expected to bring more predictability and to eliminate potential misinterpretation of rules applicable to EU investors.

In addition, Law 231/2024 explicitly bestows the Romanian Competition Council ("RCC") with the responsibility of establishing, through its guidelines, the conditions, timeline and procedure for reviewing foreign direct investments, as well as the methods for determining the value of the investment. This last point is especially relevant in multijurisdictional deals. Practitioners and investors are eagerly awaiting the RCC to issue secondary legislation aimed at providing more clarity and predictability on how the investment value relevant for a Romanian FDI filing should be calculated.

In 2023, 105 clearances were issued, with likely twice this number of filings having been submitted. Only one case was finalised with commitments being imposed on the acquirer, while all other cases were unproblematic, finalised with unconditional clearances. The number of filings and clearances is expected to increase in 2024. The Romanian authorities may be reasonably expected to delve into more sophisticated reviews and freeride more on the EU Cooperation Mechanism.