Foreign Direct Investments in Romania: What Does the New Draft Guidance on Notifications, Soon to Be Adopted by the Competition Council, Clarify?

With some delay (but, we’d say, not too late), we have finally taken the time to review the draft of the new guidance set to be adopted by the Competition Council (“Draft Guidance”).[1] We went straight to the point and selected what seemed clear and immediately impactful. Here’s what we took from the document.

Determining the Investment Value in Acquisition Transactions

In the context of acquisition transactions, correctly determining the investment value is essential for the purpose of foreign direct investment notification. The Draft Guidance sets out criteria for this assessment, providing a comprehensive approach for various specific scenarios.

1. Acquisition of Participation Interests

When an investment is made by acquiring shares or equity interests, its value is determined based on the price paid for the securities and/or the capital provided by the investor. This is the basic rule under Article 4(1)(a) of the Draft Guidance.

2. Financing the Acquisition and Its Impact on Investment Value

If the investor obtains financing for the acquisition, either through a loan or a financing agreement, the investment value includes not only the transaction price but also the total loan amount and accrued interest (Article 4(4)). This aspect is crucial to avoid underestimating the investment and to reflect the full financial commitment involved.

3. Impact of Earn-Out Mechanisms on Investment Value

In many transactions, the final purchase price is not fixed but depends on certain performance conditions or future financial results. This mechanism, known as earn-out, must be taken into account when determining the investment value. According to Articles 4(7) and (8), if an investment is carried out in multiple stages or includes conditional financial commitments, the total investment value will also reflect these amounts.

4. Multi-Jurisdictional Transactions and Allocating Investment Value

For acquisitions involving multiple jurisdictions, determining the investment value for the Romanian component can be complex. Article 4(9) states that if the price allocated to the Romanian entity or assets is not separately specified, the valuations provided by the parties will be used. Otherwise, the total investment value will be considered the overall value of the multi-jurisdictional transaction.

Conclusion

Determining the investment value is a process that requires careful consideration of all financial components involved. Whether it concerns the acquisition of participation interests, the use of financing, the inclusion of earn-out mechanisms, or multi-jurisdictional transactions, the Draft Guidance provides a clear framework for assessing this value. A proper understanding of these aspects is essential for investors and their advisors in making informed decisions and ensuring compliance with regulatory requirements.

[1] Draft Guidelines issued in application of Art. (5) of Government Emergency Ordinance no. 46/2022 on measures implementing Regulation (EU) 2019/452 of the European Parliament and of the Council of March 19, 2019 establishing a framework for the examination of foreign direct investments in the Union and amending and supplementing Competition Law no. 21/1996, available here: https://www.consiliulconcurentei.ro/wp-content/uploads/2025/02/Instructiuni_CEISD_11.02.2025.pdf

EU’s Competitiveness Compass: A Strategy for Growth and Innovation

The European Commission has just unveiled its Competitiveness Compass, a strategic blueprint to bolster the EU’s economic strength over the next five years.[1] This initiative comes in response to mounting challenges, including lagging productivity, global technological competition, and high regulatory burdens on businesses.

Key Challenges Identified According to the Compass

Despite Europe’s robust Single Market and skilled workforce, it has fallen behind in key innovation sectors. The EU struggles to translate research into marketable technologies, while energy costs and regulatory complexity weigh heavily on businesses. Moreover, global players like China and the US have outpaced Europe in several advanced technologies, raising concerns about economic sovereignty.

The EU’s Proposed Solutions

To regain its competitive edge, the Commission sets out three transformational imperatives:

1. Closing the innovation gap – Enhancing research commercialization, scaling up startups, and fostering cutting-edge sectors like AI, clean energy, and biotech.

2. A roadmap for decarbonization and competitiveness – Aligning green policies with economic growth, reducing energy costs, and boosting industrial investment.

3. Reducing dependencies and enhancing economic security – Strengthening supply chains, expanding trade partnerships, and ensuring fair competition in global markets.

   
   

The Competitiveness Compass also emphasizes regulatory simplification, a refocused EU budget, and stronger policy coordination among Member States to foster investment and job creation.

What’s Next?

The new Commission aims to translate these proposals into concrete action, with legislative and financial initiatives planned throughout 2025-2026. Businesses operating in the EU should prepare for upcoming policy changes affecting digital transformation, competition law, and industrial support mechanisms.

Stay tuned as we analyze the legal and commercial implications of these reforms!

[1] The document has been published on 29 January 2025 and is available here: https://commission.europa.eu/document/download/10017eb1-4722-4333-add2-e0ed18105a34_en

General Product Safety Regulation 2024: New Standards for Safer Products

The General Product Safety Regulation[1] (GPSR), replacing the previous legal provisions on the topic of non-food products,[2] was adopted by the European Parliament in March 2023, and it officially came into force on 12 June 2023. However, businesses are given a transition period to adapt to the new rules. Hence, the provisions of the GPSR will start applying from 13 December 2024. This means that there is still time for manufacturers and distributors of products to factor the new rules in their operations. Time will soon run out though. Below we tried to summarize what there is to know on the topic in a nutshell.

The aim of the GPSR is to ensure the health and safety of consumers and the functioning of the internal market as regards products intended for consumers[3] in the context of the new challenges posed to product safety by the digitalisation of economies within the EU.[4]

In brief, the GPRS:

• broadens the scope of product safety legislation to include new product types or emerging technologies.

• enhances market surveillance imposing stricter measures for compliance and risk monitoring.

• focuses on online sales and the safety of digital goods.

The upcoming changes will have a direct impact on businesses and consumers. For businesses, the new provisions mean more obligations and stricter requirements, while for consumers, they (should) mean greater peace of mind and trust in product safety.

Key aspects to be considered by businesses are included in the table below.

Table on key considerations GPSR

Conclusion

As the General Product Safety Regulation 2024 takes effect, businesses and consumers alike will benefit from enhanced protections and stricter safety standards, fostering a safer market environment.

If you’re a business wondering what the GPSR means to you in practice, feel free to reach out to us. Happy to help!

[1] Regulation (EU) 2023/988 of the European Parliament and of the Council of 10 May 2023 on general product safety, amending Regulation (EU) No 1025/2012 of the European Parliament and of the Council and Directive (EU) 2020/1828 of the European Parliament and the Council, and repealing Directive 2001/95/EC of the European Parliament and of the Council and Council Directive 87/357/EEC.

[2] i.e. Directive 2001/95/EC of the European Parliament and of the Council of 3 December 2001 on general product safety (also known as the “General Product Safety Directive”) and the Council Directive 87/357/EEC of 25 June 1987 on the approximation of the laws of the Member States concerning products which, appearing to be other than they are, endanger the health or safety of consumers (also known as the “Food Imitating Product Directive”).

[3] GPSR, Preamble Para. (4).

[4] As mentioned in the explanatory note available on the EC website at https://commission.europa.eu/business-economy-euro/doing-business-eu/eu-product-safety-and-labelling/product-safety/general-product-safety-regulation_en (last accessed on 3 October 2024).