Loteria Romana Case

Gambling regime in Romania  organization and operation of gambling is state monopoly;  gambling operation can be done only under authorization and license issued by the Ministry of Public Finance.

The beneficiary - Loteria Romana  stock company owned by the State.  object of activity = gaming and bets.  exclusive nationwide rights to organize and exploit the following games: lotto, express, pronosport, envelope lottery ticket, “instant lottery”.  legal possibility to organize and exploit other games, outside exclusivity.

Market LR organizes and exploits, among other games, Pariloto (number betting games) and Videoloterie (slot machines). Other companies may organize similar activities (as Pariloto and Videoloterie) if they obtain a license from the Ministry of Public Finances.

LR’s claims LR organizes and exploits, among other games, Pariloto (number betting games) and Videoloterie (slot machines). Other companies may organize similar activities (as Pariloto and Videoloterie) if they obtain a license from the Ministry of Public Finances.

LR’s claims  Pariloto and Videoloterie are within the exclusive area;  The market where LR carries on its activity is a closed one.

 Pariloto and Videoloterie are within the exclusive area;  The market where LR carries on its activity is a closed one.

There is no distinction between the gaming activities for whom Loteria has exclusive rights and other types of gaming activities Loteria benefits from a preferential treatment for both the exclusive and non-exclusive gaming activities ANTITRUST ISSUES

Financial support measures Exclusive and non-exclusive rights License granted through legislative enactment Exemption from payment of the social stamp tax starting with 2002 Exemption from payment of taxes and contributions of any kind State aid issues

Possible solutions Compatible state aid Legal basis Incompatible state aid Recovery Legitimate expectations No state aid State aid issues

Several requests were sent to the Ministry of Public Finances and to the Romanian Government in order to:  modify the legislation to eliminate discriminating provisions ;  correctly define and classify gaming activities to separate the open and non-open segments of the market Actions taken by the Competition Council

 opening the investigation on the assessment of the support measures granted to LR ( );  request for information from the Ministry of Public Finances, Loteria Romana and its main competitors. Actions taken by the Competition Council

If it is proved that Loteria Romana has/has had exclusive rights for sport betting and number betting games, will Loteria Romana invoke its legitimate expectations as reason for receiving state aid? Does that represent a valid argument? Things to be clarified

If, during the investigation, it is proved that the profit obtained by Loteria Romana from those gaming activities is used for financing some objectives of national interest, can this aid still be granted? If so, on what regulation can the aid be assessed? Things to be clarified

The activities/games assessed  organization and exploitation of Pariloto and Videoloterie. Assessment in the investigation

The market  Other companies organize activities (licensed by the Ministry of Public Finances) that can be considered substitutable with Pariloto and Videoloterie.  There is an open market for each of this games organized and exploited by LR. Assessment in the investigation

The financial support measures:  No licensing procedure (no payment obligations for license tax);  Exemption from payment of social stamp tax;  Exemption from payment of other taxes and contributions. Assessment in the investigation

Existence of State Aid 1.Transfer of State resources: exemption from payment to the State Budget; 2.Selectivity of the measures: exemption is granted only to LR; Assessment in the investigation

Existence of State Aid 3.Economic advantage: by not paying taxes, LR had lower costs than in a normal situation. 4.Distortion of competition and effect on trade between Member States: the competitors of LR did not receive the same advantages. Assessment in the investigation

Stand-still obligations The grantor did not notify the intention to grant the aid. Assessment in the investigation

The compatibility of the measures with the internal market Taking in the consideration (i) the characteristics of the measure (instruments used, the lack of objective, no eligible cost imposed etc.) and (ii) the provisions of the state aid regulations, there is not compatibility of the measures with the internal market. Assessment in the investigation

 The measures granted to LR represent state aid, illegal and incompatible;  The grantor have the obligation to: stop the measures; recover the aid with interest from the date on which they were made available to LR.  Recommendations for the grantor: eliminate the legal provisions establishing a preferential treatment for LR; precise definition of the LR’s exclusive area. Decision

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