Romanian Regulatory Agency Finds IQOS Guilty of Price Monopoly

The Romanian Competition Commission has determined in its investigation that Philip Morris Trading Company and its distributors have a fixed price agreement regarding resale prices and promotional discounts for IQOS heated tobacco products, which constitutes a restriction on market competition. Three companies were fined a total of over 135 million lei (approximately 31.15 million US dollars) as a result. The competition agency stated that this behavior restricts the pricing freedom of business partners and ultimately harms consumer interests.

What are key points of Romanian regulatory agency finds IQOS guilty of price monopoly

1. The Romanian Competition Commission has determined that there is a fixed price agreement for IQOS products;
2. The parties involved include Philip Morris Trading Company and two distributors;
3. The illegal content involves retail prices, discount levels, and promotion approvals;
4. Three companies were fined a total of over 135 million lei (approximately 31.15 million US dollars).

According to Revistaprogressiv, the Romanian Competition Commission has released information stating that after an investigation, regulatory authorities have determined that there is an agreement between Philip Morris Trading SRL (a subsidiary of Philip Morris International) and its distributors Interbrands Orbico SRL and Mediaposte Hit Mail SA to sell IQOS heated tobacco products at a fixed price.

The Competition Commission hereby imposes the following penalties on the relevant enterprises:

1. Philip Morris Trading SRL was fined 78.68 million lei (approximately $18 million);
2. Interbrands Orbico SRL was fined 52.11 million lei (approximately $12 million);
3. Mediapost Hit Mail SA was fined 4.45 million lei (approximately $1.02 million).
A total of 135 million lei (approximately 31.15 million US dollars). Among them, Interbrands Orbico SRL was granted a reduction in fines for admitting to violating the Competition Law.

Bogdan Chiri ț oiu, Chairman of the Romanian Competition Commission, stated that companies should independently formulate business policies and not determine prices through agreements with partners. By fixing resale prices and discount levels, the freedom of business partners to set prices independently is restricted, ultimately harming consumer interests.

According to the Romanian Competition Law, any enterprise agreement or collaborative behavior that hinders, restricts or distorts market competition is prohibited, especially the direct or indirect fixing of buying and selling prices or other transaction conditions. The decisions of the Competition Commission have enforceability, and fines will be collected as national fiscal revenue and executed by the National Taxation Administration (ANAF).

Reference: Amenzi de 135 de milioane de lei pentru practici anticoncurențiale pe piața tutunului încălzit | Progresiv

IQOS is a brand of heated tobacco products, primarily developed by Philip Morris International

Unlike traditional cigarettes, which burn tobacco, IQOS uses a different technology called heat-not-burn to heat tobacco to a temperature that releases a nicotine-containing aerosol without combustion. This process is designed to reduce the harmful chemicals that are typically produced when tobacco is burned.

In the early years of vapes, they were designed to have the same appearance as traditional cigarettes. The taste also imitates the taste of traditional cigarettes. However, due to the immaturity of the initial technology. There are not enough resources invested in research and development. So until 2012, vapes did not recognized by consumers.
To 2012, vapes began to branch out and develop. Engineers and R&D departments have discovered that this e-cigarette, which generates heat, can not only atomize liquids, but also heat and burn solids. So, heated non combustible electronic cigarettes entered the public eye. IQOS, as one of the earliest non combustible vapes, stood out and became the most popular vape brand.