On 25.05.2022, the Competition Council issued a decision finding an infringement of Article 12 of the Competition Law by the “Centrul de Metrologie Aplicată și Certificare” SE (State Enterprise “Centre for Applied Metrology and Certification”) (the legal successor of the “Institutul Național de Standardizare și Metrologie” SE (State Enterprise “National Institute of Standardization and Metrology”)). The infringement consisted in the granting of a privilege not provided for by law to enterprises “JLC”JSC, “Incomlac”, JSC ,”Lactis” JSC and “Fabrica de unt din Florești” JSC (Butter Factory of Floresti), by wrongly allocating tariff headings for dairy products with foreign fat content.

During the investigation, the Competition Council found that the “National Institute of Standardization and Metrology” unjustifiably attributed to the enterprises “JLC”JSC, “Incomlac”,JSC, “Lactis” JSC and “Fabrica de unt din Florești” JSC the tariff headings 040390690 and 040610200 (which refer to some dairy products and fresh cheese) for cheese and cream products containing foreign fats. Therefore, for about 8 years, until 2019, these enterprises marketed cheese and cream products with foreign fats at the reduced VAT rate of 8% instead of 20%.

 

This had the effect of creating discriminatory business conditions both for other producers of cheese and cream products containing foreign fats – who placed those products on the market at the standard VAT rate of 20% – and for businesses producing dairy products containing only milk fats – who had higher costs related to the purchase of milk fats and, respectively, either were not able to place dairy products on the market at a sufficient profitability or dairy products were not price-competitive compared to dairy products containing foreign fats.

Also, the effects of the actions of the State Enterprise “National Institute of Standardization and Metrology” were reflected negatively on the State budget. The letters of the State Enterprise “National Institute of Standardization and Metrology” concerning the establishment of tariff headings served as a ground for the unjustified application of the reduced VAT rate of 8% to the placing on the market of cheese and cream products with foreign fat content contrary to the provisions of Article 96 of the Tax Code. As a consequence, the amount of VAT collected on the value of cheese and cream products containing foreign fats was 12% lower. In total, about 99 million MDL less was paid into the State budget than would have been paid if the standard VAT rate of 20% had been applied. In this regard, the Competition Council has informed the State Tax Service of its findings, which will take further steps to verify the correctness of tax payments by the enterprises concerned.

The Decision of the Competition Council can be accessed in non-confidential form on the institution’s website: Decision of the Plenum of the Competition Council No. APD -13/19-26 of 25.05.2022