Articles

Romanian Chapter in “Cartel Regulation 2012”

Published in “Getting the Deal Through – Cartel Regulation 2012”

Legislation and jurisdiction

1 Relevant legislation

What is the relevant legislation and who enforces it?

Competition is regulated under Competition Law No. 21/1996 (the Competition Law), as subsequently amended and supplemented, and under Competition Council Regulations and Guidelines. Romanian competition legislation generally follows the provisions of that of the EU, with certain specificities.

The Competition Council is an autonomous administrative authority that has regulatory as well as enforcement powers and which works, deliberates and takes decisions in plenary sessions or in commissions. Competition inspectors also play an important role in enforcing the Competition Law (eg, imposing fines, conducting investigations and dawn raids, handling cases).

2 Proposals for change

Have there been any recent changes or proposals for change to the regime?

The Competition Law has been recently amended by Law No. 149/2011 for the approval of the Government Emergency Ordinance No. 75 of 30 June 2010, in force from 15 July 2011.

The amendments to the Competition Law aim at, among other things, introducing provisions under which:

• it is presumed, until proven otherwise, that one or more undertakings are dominant where the share or the aggregated market shares exceed 40 per cent in the relevant market in the period under review;
• the appointment of the members of the Competition Council’s Plenum is made by the president of Romania, following the proposal of the Competition Council Advisory Board, with the government’s advice and after the hearings of the candidates in specialised Parliament committees;
• an advisory board is created within the Competition Council, as a non-permanent body, composed of 11 to 17 representatives of academic competition or business environment, consumer protection associations or prestigious people in the economic, legal or competition field. The advisory board issues non-binding opinions on the main aspects of competition policy;
• the authorisation fee for mergers is between e10,000 and 25,000;
• at the proposal of the Supreme Council of National Defence, where an operation of taking over control of undertakings or utility assets presents risks to national security, the government will issue a decision prohibiting such operation, subject to the European Commission’s jurisdiction in this area. The Competition Council has an obligation to inform the Supreme Council of National Defence about notified merger transactions, which may be analysed from the perspective of national security;
• a Competition Council decision to impose fines may be suspended by the Court of Appeal only on the condition of a bail payment according to the provisions of Law No. 571/2003 on fiscal code, as subsequently amended and supplemented;
• central and local authorities can be sanctioned with fines for failing to provide requested information and documents or for providing inaccurate or incomplete data;
• the fine imposed on an undertaking can be reduced by 10 to 30 per cent in the case of an acknowledgement of having committed an anti-competitive act;
• at the request of the Commission or other national competition authorities, the Competition Council would perform dawn raids on the national territory; and
• the economic concentration compatibility test changed from the ‘dominance test’ to the substantial impediment of effective competition test (the SIEC test).

Regarding the harmonisation with EU competition rules, the individual exemption system has been eliminated and replaced with the self-assessment rule, parties to an economic concentration have the obligation to notify prior to implementing (and not in 30 days from signing, as was the case in the past) and the risk of private enforcement for undertakings benefiting from immunity from fines has been removed.

The Competition Law also provides the sole application of the EU block exemption regulations and the possibility of accepting commitments during an investigation regarding anti-competitive practices.

3 Substantive law

What is the substantive law on cartels in the jurisdiction?

Pursuant to article 5(1) of the Competition Law, any agreements between undertakings, any decisions by associations of undertakings and any concerted practices that have as their object or effect the restriction, prevention or distortion of competition in the Romanian market or in a part thereof are prohibited, especially those aimed at:

• fixing prices and trading conditions;
• limiting or controlling production, marketing, technical development or investments;
• sharing markets or supplies;
• applying discriminatory terms for equivalent services;
• conditioning the conclusion of contracts upon the acceptance of additional services that are not related to these contracts;
• bid rigging;
• eliminating competitors from the market;
• limiting or preventing access to the market; and
• agreeing not to buy from or sell to certain undertakings without reasonable justification.

The above-mentioned prohibitions do not apply to agreements, decisions or concerted practices in cases where three conditions are cumulatively met:

• they contribute to improving production and distribution or promoting technical and economic progress, assuring a corresponding benefit for the consumers;
• they impose on the undertakings involved only those restrictions that are indispensable for achieving these goals; and
• they do not offer the possibility of eliminating competition in a substantial part of the respective product markets.

The same prohibitions also do not apply in the following situations:

• the cumulative market share of the undertakings involved does not exceed 10 per cent on any affected relevant markets in cases where the respective undertakings are competitors; and
• the market share of each undertaking party to the agreement does not exceed 15 per cent on any affected relevant markets, in case the respective undertakings are not competitors.

These ‘de minimis’ provisions do not apply to agreements between competitors that have as their object setting prices to customers, limiting production or sales and sharing markets or clients. Other restrictions that cannot be subject to exemptions are the agreements between competitors, each of which operating, for the purposes of the agreement, at a different level of the production or distribution chain, or between non-competitors that, directly or indirectly, in isolation or in combination with other factors under the control of the parties, have as their object:

• the restriction of the buyer’s ability to determine its sale price, without prejudice to the possibility of the supplier imposing a maximum sale price or recommending a sale price, provided that they do not amount to a fixed or minimum sale price as a result of pressure from, or incentives offered by, any of the parties;
• the restriction of the territory into which, or of the customers to whom, the buyer may sell the contract goods or services, except:
• the restriction of active sales into the exclusive territory or to an exclusive customer group reserved to the supplier or allocated by the supplier to another buyer, where such a restriction does not limit sales by the customers of the buyer;
• the restriction of sales to end users by a buyer operating at the wholesale level of trade;
• the restriction of sales to unauthorised distributors by the members of a selective distribution system; and
• the restriction of the buyer’s ability to sell components, supplied for the purposes of incorporation, to customers who would use them to manufacture the same type of goods as those produced by the supplier;
• the restriction of active or passive sales to end users by members of a selective distribution system operating at the retail level of trade, without prejudice to the possibility of prohibiting a member of the system from operating out of an unauthorised place of establishment;
• the restriction of cross-supplies between distributors within a selective distribution system, including between distributors operating at different levels of trade; or
• the restriction agreed between a supplier of components and a buyer who incorporates those components, which limits the supplier to selling the components as spare parts to end users or to repairers or other service providers not entrusted by the buyer with the repair or servicing of its goods.

The sanctions can be both of an administrative and a criminal nature, as detailed below.

4 Industry-specific offences and defences or antitrust exemptions

Are there any industry-specific offences and defences or antitrust exemptions?

There are no industry-specific offences or immunities expressly regulated. For certain sectors such as telecommunications and energy, the sector regulators also have certain competition-related duties and responsibilities and sometimes act in cooperation with the Competition Council (due to their specific legal provisions or based on cooperation protocols) to maintain a competitive environment. There are also no industry-specific antitrust exemptions.

5 Application of the law

Does the law apply to individuals or corporations or both?

The law applies to undertakings (individuals or legal persons) carrying out economic activity, associations of undertakings and to local or central public administration bodies (to the extent that they restrict, prevent or distort competition by limiting free trade and undertakings’ autonomy, exercised in compliance with legal provisions, or by setting up discriminatory business conditions for undertakings).

6 Extraterritoriality

Does the regime extend to conduct that takes place outside the jurisdiction? If so, on what legal basis does the authority claim jurisdiction?

Pursuant to article 2 of the Competition Law, the regime applies both to conduct that takes place on Romanian territory and to conduct that, although taking place outside the territory of Romania, produces effects on Romanian territory.

Investigation

7 Steps in an investigation

What are the typical steps in an investigation?

The Competition Council may order the initiation of investigations, if there is sufficient factual and legal basis:

• ex officio; or
• at the complaint of an individual or legal person actually and directly affected by the infringement of the provisions regarding anti-competitive agreements.

Following the initiation of the investigation, the competition inspectors can carry out the following activities:

• dawn raids at the headquarters of the undertakings involved or in any other areas where they operate;
• requesting necessary information and documents;
• applying sanctions for the undertakings that are not complying with their obligations correlative to the authority’s powers above;
• sending to the undertakings concerned the statement of objections and receiving statements of defence; and
• managing requests for access to the file.

If an investigation was triggered by a complaint, after the issuance of the statement of objections by the case handler, to which the parties are entitled to submit a written statement of defence, the undertakings involved are invited to support their comments during hearings before the Competition Council’s Plenum (composed of seven members).

After the hearings, the Competition Council’s Plenum will deliberate and issue the decision. There are no legal provisions regarding certain time limits from the initiation of the investigation until the final decision.

8 Investigative powers of the authorities

What investigative powers do the authorities have?

To investigate infringements of the Competition Law, competition inspectors are empowered to conduct inspections at the premises of an undertaking. The power to inspect includes the right to:

• enter premises, grounds or vehicles legally owned by the undertaking or association of undertakings;
• examine any documents, account books, financial, accounting or commercial documents and other evidence related to the business of the undertaking or association of undertakings, regardless of their physical or electronic media that are kept;
• request explanations from representatives and employees of the undertaking or association of undertakings pertaining to facts or documents related to the object and purpose of inspection, and to register or record their answers;
• take statements from any natural or undertaking’s legal representative who agrees to give such statements;
• take or obtain, in any form, copies or excerpts from any documents, account books, financial, accounting or commercial documents and other evidence related to the business of the undertaking or association of undertakings; and
• apply seals on business locations of the undertaking or association of undertakings and on documents, account books, financial accounting and commercial documents or other evidence related to the business of the undertakings or association of undertakings, for the period and to the extent necessary for the inspection.

Competition inspectors will carry out the aforementioned acts only if there are indications that documents may be found or information may be obtained that is deemed necessary to fulfil their task, and the result will be recorded in inspection minutes. Competition inspectors are vested with inspection powers through an order of the president of the Competition Council. They can request any kind of information or justification related to accomplishing their mission, both onsite and on call at the Competition Council’s premises. The Romanian competition authority can also carry out inspections at the request of the European Commission or another competition authority from a member state.

Based on a judicial authorisation granted through a decision from the president of the Bucharest Court of Appeal, or by a judge delegated by him, competition inspectors may perform inspections on any premises, including domiciles, land or means of transportation belonging to managers, directors, executives and other employees of undertakings or associations of undertakings under investigation.

The judiciary authorisation may be appealed before the High Court of Cassation and Justice within 48 hours; the appeal does not, however, stay enforcement.

International cooperation

9 Inter-agency cooperation

Is there inter-agency cooperation? If so, what is the legal basis for, and extent of, cooperation?

Following Romania’s accession to the EU on 1 January 2007, the Competition Council is a full member of the ECN and is able to exchange information with other European competition authorities under article 12 of Council Regulation (EC) No. 1/2003 on the implementation of the rules on competition provided in articles 101 and 102 of the Treaty on the Functioning of the European Union (ex articles 81 and 82 of the EC Treaty). The inspections carried out at the request of the European Commission or another competition authority from a member state are based on the provisions of article 22 of Council Regulation (EC) No. 1/2003 and article 12 of Council Regulation (EC) No. 139/2004.

There are no legal assistance treaties on competition in place, but cooperation agreements are concluded with other competition authorities on a bilateral basis (eg, Hungary, Italy, Croatia, Portugal, Bulgaria, Slovakia and Turkey).

The content of the Competition Council’s cooperation agreements with other domestic sector-specific regulators (such as telecom) have not been made public.

10 Interplay between jurisdictions

How does the interplay between jurisdictions affect the investigation, prosecution and punishment of cartel activity in the jurisdiction?

From the point of view of foreign laws, the Romanian Competition Council, as a full member of the ECN, shall cooperate with the other competition authorities upon the investigation, prosecution and punishment of a cartel activity, in accordance with the provisions of articles 12 and 22 of Regulation No. 1/2003. The cooperation process, as detailed in the Commission Notice on cooperation within the Network of Competition Authorities, affects the Competition Council in relation to the scope of investigation and the exchange and use of confidential information. The Competition Council must exchange and use information and cooperate during the investigation procedure regarding the actions and facts that took place in Romania or, even if the conduct takes place outside the territory of Romania, if the effects occur within Romania. Where the Competition Council acts on behalf of another national competition authority, it shall respect the Romanian procedural rules.

11 Adjudication

How is a cartel matter adjudicated?

The Competition Council is competent to investigate and sanction cartels. Any infringement of a competition law provision relating to cartels is adjudicated by the Competition Council, through a decision.

12 Appeal process

What is the appeal process?

The Competition Council’s decisions are subject to appeal, which may be filed with the Bucharest Court of Appeal within 30 days of communication. The mere challenge of the decisions of the Competition Council does not stay their enforcement. A separate request for such stay may be filed by the claimant and the Court may dispose suspension of the referred decision. For fines, the suspension may be granted only with the condition of a bail payment according to the provisions of Law No. 571/2003 on the fiscal code. While the Competition Law makes reference to the fiscal code, the bail is regulated under the fiscal procedure code, in an amount to be decided by the court in each specific case, without exceeding 20 per cent of the fine.

The decision of the Bucharest Court of Appeal may be further challenged before the High Court of Cassation and Justice. The Competition Council’s order through which the investigation was initiated can be challenged only together with the decision that finalises the investigation.

13 Burden of proof

With which party is the burden of proof?

The burden of proof is on the authority alleging the infringements, which needs to produce sufficiently precise and coherent proof to issue a sanctioning decision. Accordingly, in assessing cartel behaviour, the Competition Council needs to prove fulfilment of all the requirements under article 5 of the Competition Law: the existence of an agreement or decisions of an association of undertakings or concerted practice, the quality of ‘undertaking’ and the object or effect of prevention, restriction or distortion of competition on a defined relevant market.