Margin caps are the “smart” intervention that selectively strikes and can become a selection mechanism, because they strengthen big players and eliminate small competition, believes the president of the Smart Energy Association (AEI), Dumitru Chisăliță.

“A third solution, presented as more balanced, is capping commercial margins. You no longer directly control the final price and you don’t give up tax revenues. Instead, you limit how much companies can earn on the distribution chain. At the level of discourse, it is the perfect measure, the state does not ‘brutally intervene’, but only ‘corrects excesses’. In reality, however, it does not correct the market – but rearranges it in favor of the most powerful”, commented Chisăliță in an analysis quoted by Agerpres.

According to him, the argument in favor of this measure is an apparent fairness and control of ‘excessive profits’, as it limits speculative increases in the distribution chain, preserves the functioning of the market (unlike price caps) and does not directly affect budget revenues (unlike excise tax reductions).

“In addition, it is easy to sell politically: you are not hitting the market, you are hitting ‘greed'”, Chisăliță pointed out.

He emphasized that the argument against is the illusion that margins can be ‘frozen’ without consequences.

“The problem is that the margin is not a simple arbitrary addition. It covers logistics costs, risks, supply variations, investments. When you cap margins, you do not eliminate these realities – you artificially compress them. And the market reaction is not delayed”, the AEI president emphasized.

Thus, he explained, large, integrated companies with market power have multiple ways to compensate: they shift costs to other products; optimizes accounting margins between subsidiaries; negotiates more aggressively with smaller suppliers; reduces costs in less visible areas (quality, services, investments).

In contrast, small companies do not have these options, because they have relatively higher fixed costs, have no bargaining power and cannot redistribute losses to other segments.

“The result? Margin caps become a selection mechanism: they strengthen large players and eliminate small competition. Imagine two companies: a large, integrated one, with refining, distribution and retail; a small, independent one, which buys and resells. When the margin is capped, the large company moves its profit to other links in the chain, the small company remains stuck exactly in the segment where the margin is limited. One adapts. The other disappears”, explained Chisăliță.

Thus, in his opinion, the long-term consequence is less competition and higher prices.

“The paradox is that a measure introduced to protect the consumer can lead to exactly the opposite: fewer players on the market; greater concentration; increased bargaining power for those who remain. And when the intervention disappears, the market is less competitive than before. And then prices increase – but without being able to blame the ‘crisis'”, Dumitru Chisăliță pointed out.

According to the data presented by the president of AEI, the current commercial margin for diesel is about 9%, the share of the cost of diesel additives is 2-3%, and halving them would mean a 5% price decrease.

“That is, today we will have an average price for standard diesel of 9.41 lei/l with VAT included, not 9.91 lei/l. At the end of next week, we will have today’s price for diesel instead”, the president of AEI also explained.

The Government will adopt, on Tuesday, an emergency ordinance declaring a crisis situation on the crude oil and/or petroleum products market and establishing measures to protect the economy and the population during this crisis.

“Following the discussions, it was decided that the Government will adopt, tomorrow, an emergency ordinance declaring a crisis situation on the crude oil and/or petroleum products market and establishing measures to protect the economy and the population during this crisis. During the crisis situation, protective measures will be established applicable for a period of 6 months, with the possibility of successive extensions for intervals of no more than 3 months, as long as the circumstances that determined the establishment of the crisis situation persist. The commercial markup for gasoline, diesel and the raw materials used to obtain them will be limited throughout the entire economic activity chain,” a statement from the Executive reads.

At the same time, the export and/or intra-community deliveries of gasoline and diesel will be possible by economic operators exclusively with the prior written consent of the Ministry of Economy, Digitalization, Entrepreneurship and Tourism and the Ministry of Energy.

“During the crisis situation, the amount of biofuel in gasoline is reduced to lower the final price,” according to the press release.