Foreign investors fear worsening of investment climate in Moldova

The Foreign Investors Association (FIA) fears a considerable worsening of the investment climate that may occur in Moldova, following the recent adoption in the first reading of amendments to the Competition Law, as proposed by the National Agency for Competition Protection (NACP). In FIA’s view, the proposed amendments run against the principles of a democratic state and a market economy based on free competition, and that it will undoubtedly deteriorate the investment climate in the country. In particular, the adopted amendments infringe upon the basic principles for regulating the business activity that have been established by the Guillotine-II Law (no.235 of 21.07.2006). As such, they deprive businesses of the presumption of innocence, thereby giving NACP an unlimited authority and the right to set up huge fines and penalties. In addition, the draft amendments provide a vague definition to what should be considered a market, which is non-compliance with the international practice on one hand, while granting the NCAP the right to adopt its own methodology of determining a company “dominant” on the other. A significant number of Law provisions leave room for interpretation, thereby jeopardizing the transparency before civil society, while also supporting corrupt and arbitrary behaviour by the NACP officials with regards to business entities and related associations. FIA points out the fact that these amendments had been turned down three times by the National working group of the State Commission for regulating the business activity, including by representatives of state authorities. Moreover, the amendments were sent to the Parliament in a rush, without including the conclusions of an international expert who had been called within the World Bank’s Competitiveness Enhancement Project for the particular purpose of analyzing the proposed amendments. FIA calls attention of the MPs and the President of Moldova to the fact that a hasty adoption of the amendments to the Competition Law proposed by NACP will foster the creation of a very dangerous instrument that will suppress free competition and will seriously impair the investment climate in the country. FIA strongly recommends that before proceeding with the second reading of the Law, the lawmakers hold additional consultations with international experts, representatives of the business community and of the civil society.