Ecommerce in Romania

I. E-commerce sector – fact and figures

Romania has seen a tremendous growth in e-commerce sector since 2019. Among the determining factors are expansion in internet connectivity across the country as well as an increase in digital awareness for a significant portion of the population.

The growth trend that began in 2019 continued in 2020 driven by the Covid-19 pandemic. In this environment, in 2020 the volume of online sales accounts for approximately 10% of all retail trade in Romania, compared to 7% in 2019. 

According to recent statistics, the Romanian e-commerce market increased by over 30% in 2020, exceeding EUR 5bn. According to Euromonitor International, Romania is expected to have the fastest dynamics in online retail in Eastern Europe countries over the next five years.

This accelerated growth in online retail positions Romania as one of the largest e-commerce industries in South-Eastern Europe. This is supported by figures showing that Romania started from an e-commerce market value of EUR 600m in 2013, almost doubled to EUR 1.1bn in 2014 and around EUR 1.4bn in 2015. These figures further doubled in 2017 to EUR 2.8bn only to double again in 2020 to over EUR 5bn.

Romanian online shoppers increased by 13% in 2020 compared to 2019, and the average value spent online increased significantly by 41% compared to 2019. In addition to online purchases from Romanian stores, a third of Romanians prefer to shop online from stores in China (27%), EU member states (23%) and the USA (4%).

The growth trend in e-commerce shopping among consumers has triggered increased attention from the Romanian authorities as well as enhanced legal measures aimed at adapting to the rapidly shifting retail landscape. For example, the Competition Council has launched the Food Price Monitor, an online platform that allows consumers to find out the prices charged by the main food retailers and which displays information about approximately 30,000 products sold in over 1,700 stores. In 2020, 15 October was declared National E-commerce Day.

 

II. Setting-up e-commerce business

1. Is the established local presence of a foreign company required to start selling online?

Foreign companies can sell their products or services online without setting up a legal entity in Romania. However, if a foreign company carries out certain activities in Romania which are connected to online sales, this could trigger tax obligations such as the registration of a permanent establishment in Romania, as defined under relevant law. A case-by-case analysis should be conducted to determine if the activities to be carried out in Romania would lead to tax obligations for the foreign legal entity engaged in online sales. 

However, if the foreign company decided to have a local presence in Romania, the most common type of entity would be a limited liability company.

Even if e-commerce retailers are not obliged to have a local presence, selling online would still require that they comply with local consumer protection legislation, in particular when online sales target Romanian consumers directly, e.g. the online retailer has a Romanian domain webpage. 

2. Are there any licence/permit requirements applicable to e-commerce businesses?

As a rule, distant sales of products or services are allowed without a dedicated licence, authorisation or permit, so selling online in Romania is not subject to such conditions.

Nonetheless, Romanian regulations provide special requirements for the sale of particular types of products such as foods, supplements, medicinal products etc., in which case the online selling entities should obtain the relevant authorisations/registrations from the competent Romanian authorities in advance of carrying out sales of the respective types of products. Those requirements are not specific to online sales and apply to all sales channels

3. What e-commerce specific contracts must be concluded before starting an e-business?

Even if e-commerce is only an extension of the brick-and-mortar activity and the business already has various supply and logistic contracts in place, there are some specifics for setting up an e-commerce business. Please see an outline below. 

  • Domain name: A wide choice of domain extensions are available, both national (.ro), and international, potentially more suitable for cross-border activity (such as .eu or .com). It is also possible to offer goods via marketplaces. Depending on the domain name, specific formalities might be required (such as in the case of .ro, where certain formalities for registration, management etc. are mandatory).  
  • Hosting services: Sourcing hosting services is a more complex process as there are various options to choose from. Hosting services may be acquired in particular as cloud servers, shared webhosting, virtual private servers and dedicated servers. 
  • IT-related services: A smooth ordering process is one of the key elements of creating a good customer experience. To achieve this, the e-commerce business has to ensure an appropriate level of IT services, including strict data privacy standards.
  • Creative services: Sourcing creative services is required to set up a website, including both the design and technical aspects of various applications and functionalities, such as invoicing, accounting, marketing tools and customer relationship management.
  • Logistics: Logistics may be seen as the backbone of a successful e-commerce business. The logistics processes include product sourcing, stock (inventory) management, order management, packaging and delivery, as well as management of (and sometimes picking up) product returns. E-commerce logistics can be sourced in-house or outsourced to a logistics provider. 
    An alternative to the traditional logistics chain is dropshipping. In this model, the e-commerce entity forwards customers’ orders to another company, which fulfils the orders by shipping the items directly to the customer on behalf of the e-commerce entity. 
  • Payments: Cash on delivery remains a popular payment method, however a wide array of electronic and non-cash payments are also available to e-commerce businesses. These include payments by various types of credit and debit cards, online transfers, electronic wallets, mobile money, and alternative currency payment processors. 

III. Key considerations for running e-commerce

1. Defining the audience: does the business need to decide upfront if the e-commerce website addresses consumers and/or professionals?

If the e-commerce website is available to consumers for B2C sales, all consumer rights provided under local legislation must be observed. This translates into significant differences compared to business-to-business (B2B) relations, in particular regarding the T&Cs applicable to the B2C relation, e.g. so that they do not contain abusive clauses as defined under consumer legislation, and all mandatory information is made available to the customer in advance of placing the order, both in terms of contractual information and data privacy rules. In addition, all mandatory post-contractual consumer rights under local law should be observed, e.g. regarding product returns and liability for defective goods. 

On the other hand, if a website is dedicated to businesses only, e.g. equipment sales to professionals, consumer regulations will not apply, but distinct legal issues should be considered such as the avoidance of unfair trading practices. In addition, the business operator should ensure that the online store is actually accessible only to those professionals.

To conclude, the decision regarding the audience of the website impacts the type of legal obligations that the business should comply with. This decision may also impact the technical setup of the website. For those reasons, this matter should be considered and decided at an early stage

2. What are the mandatory elements of an e-commerce business website?

Romanian law does not regulate a certain look or layout for an e-commerce website. However, the law imposes certain obligations that translate into mandatory elements of an e-commerce website. To some extent, such mandatory elements would differ depending on whether a website is available to consumers or to businesses only. 

ObligationWhat is required?How to comply?
Providing services by electronic meansEach e-commerce website needs to stipulate T&Cs for electronically supplied services. Such services not only make it possible to make purchases via the website, but also display the website’s content, enabling the customer to create and use an account and all the other features of the website.Creating T&Cs for providing services by electronic means. These may be part of the T&Cs for online sales.
Information obligation

In B2C contracts, the seller is obliged to fulfil various consumer information obligations before the consumer can be bound by a contract.  

Moreover, certain specific information must be displayed just before consumer clicks the ‘buy’ button. 

In B2B contracts, certain information must also be provided, but its scope is significantly less.

Creating T&Cs is the most common way to provide legally mandatory information. Such T&Cs should be made available to the customer (either a consumer or a professional) in advance of concluding the contract, for a valid consent regarding the terms of the contract. The higher information standards specific to consumer contracts should be observed.  

Cookies
 
If an e-commerce website uses cookies or similar technologies, it must fulfil information obligations and obtain prior consent for the use of cookies or similar technologies that are not necessary for the transmission of communication or provision of a telecommunications service or a customer-requested service supplied electronically.Creating a cookie policy is the most common way to provide all required information.
Opt-in for non-necessary cookies or similar technologies is commonly obtained through cookie banners.
 
Privacy E-commerce business operators must fulfil their information obligation under the GDPR and ensure that processing of personal data complies with GDPR rules, e.g. that processing is based on a relevant legal basis.Creating a privacy policy is the most common way to provide all required information. It should be easily available and visible on the website, in advance of customer personal data being collected.
Product informationThe law provides for certain requirements as to what information must be provided (displayed) before the customer makes a purchase. The scope of information may vary depending on the product category.The product page should be construed in a way that reflects the legal requirements applicable to a specific product type. For example, for food products a mandatory list of ingredients is required (among others), whereas for electronics it is required to display the energy efficiency class (among others).

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3. Is it mandatory that the website information be provided in the local language?

Under Romanian law, all information concerning the products provided to consumers in Romania must be provided (also) in Romanian, therefore a Romanian translation should be provided whenever the information concerning the products is provided in a foreign language. The obligation to make available the information in Romanian does not distinguish between mandatory information (the main features of the products) and voluntary information (information that is provided for marketing proposes). 

The law does not distinguish between information provided on hard copies or via online channels, therefore the above applies to all sales channels, including online sales. 

The above will apply in particular if the e-store is operated by a Romanian entity, or by a foreign entity whose business targets Romanian consumers, e.g. advertises the products on the Romanian market.

The local language requirements apply only to B2C sales as B2B sales do not fall under this obligation as long as they are clearly separated from B2C sales, from the legal and operational perspectives.

4. Are there specific restrictions that impact on the selection of products offered for online purchase?

Product selection may be limited by various types of restrictions, such as legal/regulatory restrictions, e.g. a specific local licence is required to sell medicinal products in Romania, or operational, e.g. supply chain limitations to ship heavy or bulky items.

Regarding legal restrictions, these may consist of product-specific restrictions that apply to all sales channels, such as the obligation to obtain a relevant authorisation in the case of distributing foodstuffs, or restrictions specific to online sales channels, such as the prohibition of distance sales for certain medicines.

It is crucial to properly check all requirements in place applicable to online sales of the relevant products. Complying with those requirements which apply to brick-and-mortar stores could prove insufficient.

5. Do special rules apply to product returns and defective goods?

Special rules do apply to product returns and defective goods in the context of online sales. The consumer may withdraw from the contract within 14 days from the takeover (in the case of products) or from the conclusion of the contract (if services are purchased). If the consumer was not informed before the conclusion of the contract about his/her right to withdraw, such right will be extended for another 12 months after the expiration of the initial period of 14 days. 

The consumer should return the products within 14 days from the date the withdrawal was notified to the seller. Within the same timeframe, seller should return the price received and other expenses borne by the consumer (e.g. delivery costs). 

Regarding the (minimum) legal warranty which covers the seller’s liability for defective products, similar rules apply to traditional sales and online sales. The rule is that consumers have a legal right to a two-year guarantee, free of charge, for products that are faulty or not as advertised. An extended warranty period may be offered by the seller/manufacturer through a commercial warranty, which, once granted, becomes legally binding. 

Yes, Romanian law provides the obligation to obtain an explicit consent for “commercial communications” such as marketing communications. For online channels, the requirement of explicit consent would be satisfied by methods such as opt-in (e.g. ticking a box when visiting an internet website) or double opt-in (e.g. after ticking the box, the user is required by email to confirm his/her interest again). 

In addition, the legal entity collecting the consents should comply with the legal requirements resulting from personal data protection legislation, e.g. under GDPR, the consent must be freely given by a clear affirmative act and must be specific, informed and unambiguous. In addition, the method for obtaining the consent should enable the entity to demonstrate the existence of the explicit consent, who consented, how and when the consent was obtained (e.g. using identifiers such as ID addresses, time stamp, etc.), and the information provided to the user at the time (e.g. the privacy notice containing the mandatory information under GDPR). 

7. What are the main competition risks regarding online selling?

Online selling relates to specific competition risks, both from the viewpoint of anti-competitive agreements as well as potential abuse of dominance. As a rule, Romanian competition law on anti-competitive agreements and abuse of dominance is consistent with EU competition law. The Romanian Competition Council (the “RCC”) enforces national competition law in a manner consistent with the practice of the European Commission and the EU courts. For example, EU Regulation 330/2010 and the correspondent guidelines on vertical restraints and online sales are applied also at national level.

The current legal framework on competition law is expected to change, both in the context of the EU legal framework on vertical restraints (currently pending evaluation), as well as due to the rapid development of the digital economy in Romania. 
In a recent study on Big Data in Romania, dated November 2020, the RCC concluded that although the Romanian data market increased significantly, there is room for further improvement. At present, Big Data technology favours linear prices and higher prices, data access is restricted by platform operators regarding their competitors, or is subject to cumbersome conditions, and there are objective economic and technological barriers to Big Data solutions. Among the situations which raise competition concerns, the RCC mentioned:

  1. creating new market entry barriers;
  2. actions favouring dominant companies;
  3. restricting/refusing access to data;
  4. imposing tied sales (conditional access to data);
  5. tacit coordination/collusion practices (by using the same algorithms or a common database).  

In 2018, the RCC’s findings following a sectoral investigation on e-commerce in Romania that focused on retail sales of electric and electronic household appliances and IT products showed that the e-commerce market in Romania is an oligopoly, with barriers to entry for the development of electronic infrastructure (which favours dominant companies with market power). The RCC concluded there were significant breaches of consumer protection laws (particularly during promotional campaigns for online sales). More recently, the RCC imposed a fine of EUR 6.7m on a Romania-based online marketplace operator for abuse of dominance as it acted to position and display its own products more favourably than (and to the detriment of) the products of its partners who were selling on the platform and with whom it was directly competing. 

The RCC vowed to refine and adapt its enforcement policies and instruments to enable the assessment of anti-competitive conduct in the context of the new digital economy.

Legislation was passed in Romania in 2019 in the field of payment services (the “Payment Services Law”), which transposed and complemented EU Directive 2015/2366 on payment services in the internal market (the “Payment Services Directive 2”). The Payment Services Law imposes specific requirements to payment services providers and regulates the processing of customers payments through electronic means, which is particularly relevant in the context of e-commerce. 

When using the same payment services provider as one operating in another European Union jurisdictions, passporting of the providers’ services is required in accordance with the Payment Services Directive 2. 

The main authority with competence for legal enforcement regarding e-commerce businesses in Romania is the National Authority for Management and Regulation in Communications (the “ANCOM”). However, specific sanctions regarding e-commerce activities may also be applied by other state authorities, in principal the National Authority for Consumer Protection, the National Supervisory Authority for the Processing of Personal Data, National Police, and the National Authority for Tax Administration. The sanctioning activity or the lack of it by such authorities may be subject to scrutiny by the local Courts of Law, which therefore can also play a role in the legal enforcement relating to e-commerce.

10. What is the landscape for private enforcement of consumer rights in the context of e-commerce?

Private enforcement of consumer rights, i.e. individually initiated litigation, is possible in Romania for harnessing consumer rights stemming from e-commerce. Under Romanian law, consumers are free to raise claims before local Courts regarding e-commerce, such as requesting the performance of or refraining from certain acts, or the payment of damages by the e-commerce operator acting in breach of the law. Such consumer claims are exempted from any Court fees. Private enforcement of consumer rights includes the right to claim interim measures. Though consumer class actions are not regulated as such in Romania, consumer protection associations and ANCOM may petition Romanian Courts to a similar effect. The out-of-court settlement of e-commerce disputes is also possible.

  • Debates are ongoing in Romania on amending the Romanian Competition Law and implementing Regulation (EU) 2019/1150 regarding promoting fairness and transparency for business users of online intermediation services. The draft bill was submitted for public debate by the Competition Council in 2020 and should be forwarded to the Parliament for adoption this year. The main purpose of such platform-to-business (P2B) EU Regulation is to ensure transparency of commercial relationships between platforms and business users, by regulating matters such as accessibility to clear terms and conditions for providing the platform services, transparent and predictable amendment to the terms and conditions, as well as severe sanctions in the event of a breach.
  • The National Authority for Consumer Protection submitted for public debate a draft bill implementing Directive (EU) 2019/771 on certain aspects concerning contracts for the sale of goods which is expected to be forwarded to the Parliament for adoption this year. Directive (EU) 2019/771 provides a two-year minimum guarantee of remedy for defects discovered after the delivery of goods. If the contract is for goods with digital elements, then the guarantee must extend to cover defects discovered during the period in which the digital content or services are supplied under the sale contract. 
  • As a Member State of the European Union, the legal developments relevant for e-commerce business in Romania mostly derive from related legal developments at the EU level. There are several EU initiatives at the moment relevant to online sales businesses which are expected to impact the Romanian market as well, such as:
  • Omnibus Directive: This is a piece of EU legislation introducing several amendments to consumer-related EU Directives. For example, it includes new rules concerning price reductions and restricts the marketing of “dual quality” products (items marketed as being identical, where in fact their quality is different between the respective Member States). The Directive is to be implemented by Member States by November 2021 (enforceable by May 2022). In Romania, a draft bill was proposed in 2019 on the subject of sanctioning “dual quality”, however this was not adopted and there have been no recent developments on the topic. Both the Government and an NGO representing business organisations (Coaliția pentru Dezvoltarea României) proposed that this draft be rejected and a new, comprehensive act drafted in accordance with the Directive. Parliament proposed to have a draft bill on the implementation of the Omnibus Directive ready by November 2021.
  • Digital Services Act and Digital Markets Act. These are EU initiatives which are intended to provide new rules regulating online platforms. These are at an early stage of development and should be monitored as particularly relevant to the e-commerce sector.
  • Revision of VBER (regulation providing for a competition framework on vertical aspects of trade, including online trade). The EC is currently evaluating the EU legal framework on competition, which will be revised to meet the requirements and challenges of rapidly growing online trading. The outcome of such debates at the EU level is expected to be reflected in Romanian legislation as well and should be closely monitored by interested businesses.
Ana-Maria Nistor