Romania: Cartels

In Romania, cartels can be investigated and punished based on (i) Article 101 of the Treaty on the Functioning of the European Union (“TFUE”) and related EU competition legislation and/or (ii) Article 5 of the Romanian Law no. 21/1996 on competition (the “Competition Law”) and various secondary legislation issued by the Romanian Competition Council (“RCC”), such as for instance: Regulation concerning the finding of administrative offences and the enforcement of sanctions by the RCC, approved by Order 407/2019 of the President of the RCC; Regulation on RCC procedures, approved by Order no. 377/2017 of the President of the RCC; Instructions on the individualization of sanctions for administrative offences provided at Article 55 of the Competition Law no. 21/1996, approved by Order no. 1037/2019 of the President of the RCC; Regulation on the assessment and settlement of the complaints concerning infringements of Articles 5, 6 and 9 of the Competition Law no. 21/1996 and of Articles 101 and 102 of the Treaty on the Functioning of the European Union, approved by Order no. 499/2010 of the President of the RCC; Instructions on the definition of the relevant market, approved by Order no. 388/2010 of the President of the RCC; Instructions on the conditions and criteria for the application of a leniency policy, approved by Order no. 642/2019 of the President of the RCC; Regulation on organising hearings and adoption of decisions by the RCC, approved by Order no. 509/2015 of the President of the RCC; Instructions on the rules of access to the file of the RCC, approved by Order no. 438/2016 of the President of the RCC, etc. Romanian competition law mirrors EU competition law while the practice of the RCC and the case-law of the relevant courts follows the practice of the European Commission and of the Court of Justice of the European Union. In that sense, article 5 of the Competition Law mirrors article 101 of the Treaty on the Functioning of the European Union (“TFEU”). As a rule, cartels are defined as agreements between competitors concerning price-fixing, production restraints, customers and market sharing. However, other forms of agreements between competitors, (termed “horizontal agreements”), may equally infringe EU and Romanian competition laws. Romanian law as well as the practice of the RCC usually makes reference to horizontal agreements rather than to the term cartel. Cartels can only be exempted from sanctions based on the leniency policy of the RCC as the current block exemptions based on market shares do not apply to the types of horizontal agreements that are normally part of the definition of cartel. In theory, the cartel will not be sanctioned if it can be proven that the adverse effects thereof on competition are outweighed by the efficiencies and positive effects on consumers generated by the cartel. However, from the existing Romanian practice it follows that such attempts will most likely be unsuccessful in case of anticompetitive agreements that usually fall under the definition of the term cartel. There are no industry specific defenses under Romanian competition law.

The Competition Law prohibits any and all agreements between undertakings, decisions of associations of undertakings and concerted practices that have as an object or effect the prevention, restriction or distortion of competition on the Romanian market or a part thereof. Thus, in case of infringements by object, there is no need for the RCC to conduct a full assessment concerning potential effects on the relevant market. However, the RCC would in theory still need to show that the agreement in question is very likely to affect competition due to its very nature and would normally do so based on previous practice that has shown same for similar agreements. The types of anticompetitive agreements that cannot be exempted from the application of the Competition Law pursuant to block exemption regulations (the so-called “hardcore restrictions”) are likely to be deemed as agreements by object.

The Competition Law applies to acts and deeds which take place in Romania, but also to those which take place outside Romania, when they give rise to effects on Romanian territory.

In Romania, cartels are investigated and sanctioned by the RCC. The Competition Law also provides criminal offences. For example, if the undertakings’ directors, statutory representatives or other managers have intentionally conceived and organized cartels, they may become criminally liable. Criminal cases are instrumented by criminal prosecution bodies and brought to court. Additionally, the EU and Romanian legislations against cartels are enforced by the Romanian courts of law, for instance: in case RCC decisions are challenged, where civil claims for compensation are filed by parties having incurred prejudices due to cartel behaviour, if the validity of clauses or agreements amounting to cartel behaviour is assessed, etc.

Cartel investigations are initiated either by the RCC at its own motion (usually after the conclusion of sector investigations, following leniency statements of undertakings involved in a cartel or information provided by whistle-blowers) or following complaints filed by aggrieved parties. Usually, a preliminary examination is conducted at this stage. The investigation commences by a formal decision of the RCC. If dawn raids are conducted, a court decision authorizing same is required. Formal requests for information addressed to the undertakings involved will also normally be sent by the RCC. Throughout the investigation, the parties under investigation may approach the RCC in view of finding out if they would be willing to initiate the settlement process. As a matter of practice, settlements have been rather frequent in Romania. After the RCC gathers all requisite information and forms an opinion of the case, an “investigation report” (a statement of objections) is circulated by the RCC so that the undertakings under investigation may provide their comments thereto within a timeframe of at least 30 days. Hearings may also take place, following which the RCC will either maintain the report and issue a decision or amend same. The decisions are made in secret meetings and are motivated in 120 days from the deliberation date. Finally, the decisions are circulated with the investigated parties which may choose to challenge same before the relevant courts. In any case, the right of the RCC to prosecute cartel behaviour becomes time-barred after five years as of the date when the infringement ceases. The five-year term is interrupted towards all undertakings involved, by any action taken by the RCC in view of a preliminary examination or investigation of the cartel with respect to any of the undertakings involved. In case of interruption, a new five-year term starts to run. Notwithstanding, irrespective of any interruption, the limitation period will lapse at the very latest within 10 years as of the date when it started to run.

The RCC may obtain evidence by (i) requests for information addressed to the undertakings under investigations, (ii) during dawn raids (which may also extend to any spaces, including the domiciles, land plots or means of transport of the managers, directors and other employees of the companies under investigation), (iii) information obtained from other market players as well as other public authorities, (iv) by leniency applications, (v) wilful cooperation of individuals involved, (vi) independent researches with publicly available sources, (vii) interviewing a natural person or company consenting to same, (viii) whistle-blowers or (viii) other competition authorities.

Legal privilege is limited to correspondence with lawyers, namely the members of the lawfully constituted bar associations, and covers only the documents exchanged in view of defending the subject matter making the object of the relevant investigation. Communications with in-house counsels are not recognized as privileged. If during a dawn raid the undertaking does not prove the privileged character of a communication, the inspectors may seize and seal the document. In such a case, the President of the RCC will decide with regard to the confidential nature of the document. Such decision may be challenged in 15 days from its communication.

Leniency may take the form of immunity from the administrative fine applied by the RCC at the end of the investigation or a considerable reduction of such fine. Immunity is granted to undertakings providing information that enables the RCC to commence an investigation (Type A leniency) or to establish an infringement (Type B leniency). Type A immunity can be granted if: the applicant is the first to provide information and evidence enabling the RCC to commence an investigation or to conduct a dawn raid; and at the time, the RCC did not have enough information to commence an investigation or to conduct a dawn raid; and the general conditions for obtaining leniency are fulfilled (e.g, the applicant fully and continuously cooperated with the RCC, the applicant has not coerced other parties to take part in the alleged infringement, the applicant has ceased its participation in the alleged agreement etc.). Type B immunity can be granted if: the applicant is the first to provide information and evidence that enable the RCC to establish an infringement; at the time the RCC did not have sufficient information in order to establish an infringement; no other applicant had obtained type A immunity with regard to the potential infringement; the general conditions for obtaining leniency are fulfilled. The applicants for type A or type B immunity should submit a statement containing certain elements such as: a detailed description of the potential agreement (its purposes, activities and functioning manner), the products/services, the geographic area, the duration, the market volumes potentially affected, the meeting dates and places as well as all other relevant explanations and relevant evidence (in particular, from the time of the infringement).

Immunity works on a first come, first served basis. Fine reductions decrease by chronological order of the leniency applications (the first to apply is granted a higher discount than the following). In all its decisions the RCC establishes the level of the reduction from which the undertaking will benefit: for the first applicant, a reduction between 30% and 50%; for the second applicant, a reduction between 20% and 30%; for the subsequent applicants a reduction of maximum 20%. For the determination of the reduction level within each category listed above, the RCC will weigh the date of the application and the value of the additional contribution brought by each.

A participant to an agreement may contact the RCC expressing their willingness to cooperate. To this end, the applicant may request a marker in order to ensure its priority and it should justify such request. The applicant should provide the RCC with certain information such as its name and address, participants to the agreement, the affected products and territories, type of agreement, the estimated duration as well as a short description of the functioning manner and it should indicate any other leniency applications previously submitted or to be submitted to other competition authorities. The marker may be granted for a period of time in order to enable the collection of information and evidence. If the relevant information and evidence are provided within the timeframe established by the RCC, it will be considered that same were submitted at the date of the initial application. Conversely, if the request is not supplemented within the given timeframe, the RCC will reject it. The same applicant cannot make use of the marker system if it decides to submit a leniency request at a later moment (it will only be able to submit a formal request).

One of the general conditions for the award of leniency is that the applicant cooperates truly, fully, continuously and promptly with the RCC, namely by: providing all the relevant information and evidence in its possession; remaining at the disposal of the RCC for responding to any relevant request; ensuring the availability of the managers, directors and other personnel for interviews with the RCC and making reasonable efforts to contact former management for the same purpose; not destroying, falsifying or concealing relevant information or evidence; not disclosing the existence of the leniency application or its content before the circulation of the investigation report.

The company can apply for leniency for itself. However, the leniency cannot extend to the deeds of the company’s manager and employees, as they are deemed to be individuals with management positions who intentionally conceive or organize anticompetitive agreements or practices. In such case, leniency procedures governed by the criminal law may apply to individuals.

An undertaking wishing to benefit from a fine reduction should submit a formal request with the RCC and should include sufficient evidence of the alleged agreement. Any voluntary submission of sufficient evidence should be clearly identified as a formal request for a fine reduction in order to be able to benefit from such a measure. The RCC will solve such request only after analysing any requests for immunity. Also, when the conditions for fine immunity are not fulfilled, the applicants may benefit from a fine reduction if the evidence submitted brings an additional significant contribution in relation to the evidence already in the possession of the RCC and if it meets the general conditions for granting leniency.

Under Romanian competition law, there is a settlement procedure available which can lead to a reduction of the basic fine applied by the RCC with a percentage ranging between 10% – 30%. The settlement procedure can be initiated both before or after the investigation report is circulated with the parties (but in the latter case, the maximum fine reduction available would be lower) and it can be total or partial. In practice, the interested applicants should approach the RCC before the hearings and can only resort to this procedure once during the investigation. The applicant may request the RCC the arrangement of maximum 2 meetings with regard to the conditions of the settlement. The first one takes place in 20 days from the receipt of the request and it is aimed at describing the deeds which make the object of the settlement as well as the maximum level of the fine. In 20 days from the meeting the RCC informs the applicant whether the continuation of the procedure is possible and issues an ”in principle” agreement. In 10 days thereafter the undertaking may request access to the file. In 7 days from the date of the “in principle” agreement the RCC will inform the other parties under investigation with regard to a settlement agreement and the other undertakings may request the initiation of the procedure in their respect. In 20 days from the communication of the “in principle” agreement, the applicant will request in writing the organization of the second meeting. If during the second meeting the RCC and the applicant have a common vision with regard material, geographic and temporal dimensions of the anti-competitive deed, as well as remedies to be undertaken by the applicant, the RCC may grant the applicant the possibility to submit a proposal for the admission of the deeds and shall subsequently inform the applicant with regard to the conditions and the timeframe (maximum 15 days) for the submission of same. Thereafter, the interested parties are to submit in writing an express, clear and unequivocal admission of liability in line with the RCC’s findings. If the investigation report has been communicated, the interested undertaking may admit having committed an anticompetitive deed in 15 days from the communication of the report. In case that no undertaking approaches the RCC in 12 months from the commencement of the procedure, the RCC may initiate the settlement procedure, in such case the amount of the fine being reduced with maximum 12%.

The main advantage is the potential reduction of the fine as well as lower costs for defending the case before the competition authority and subsequently before the court. The major deterrent is however the risk of follow-on damages actions for infringements established via the decision of the competition authority following the settlement. This risk is somewhat (but not sufficiently) reduced by the fact that the court cannot request that a party involved in the proceedings or a third party disclose leniency applications and settlement proposals. Likewise, leniency applications and settlement proposals obtained by individuals or undertakings exclusively through access to the file of a competition authority cannot be used in damages claims, being deemed as inadmissible. However, the court may in certain conditions request the disclosure of settlement proposals which were later withdrawn.

At national level, the RCC is in close contact with several agencies, such as the National Agency for Public Procurement, with the Directorate for Investigating Organized Crime and Terrorism, the National Anticorruption Directorate, the National Authority for Consumer Protection, National Authority for Management and Regulation in Communications of Romania, etc. As a member of the EU, the RCC is part of the European Competition Network (“ECN”) and as such is in close contact with both the European Commission and the other national competition authorities within the EU. As a rule, the RCC is required to inform the European Commission with regard to any investigations encompassing infringements of Article 101 TFUE. Also, within the ECN cooperation framework, consultations often occur between national competition authorities with regard to cartel cases. Cooperation with national competition authorities from countries outside the EU may take place within the International Competition Network framework or based on international treaties and conventions regulating cooperation on competition matters, as well as at the level of the relevant OECD working groups.

The RCC may impose fines for cartels between 0.5% of the total revenues obtained in Romania to 10% of the total global turnover obtained by the undertaking in the year preceding the sanctioning. In certain cases (such as reduction of the fine as a result of the settlement procedure) the minimum fine may be of 0.2% of the turnover obtained in the year preceding the sanctioning. Other fines may be applied by the RCC for procedural infringements, namely: (i) for providing inexact, incomplete or misleading information or the failure to provide information, (ii) the obstruction of a dawn raid, (iii) delaying dawn raids or delay in observing RCC requests, etc. Also, criminal liability may arise for individuals (especially management) who are found to have intentionally conceive or organize an anti-competitive practice.

The calculation of the base fine is made in relation to the gravity and the duration of the infringement. Then, the RCC determines and applies aggravating and mitigating circumstances, which increase and decrease respectively the amount arrived at pursuant to the computation of the base fine. The reductions pursuant to the settlement procedure and the leniency procedure are also taken into consideration.

The practice of the RCC reflects the EU trends. In that sense, it may be considered that when a parent company holds all (or almost all) of the capital in a subsidiary that infringed the Competition Law and/or TFEU, there is a rebuttable presumption that the parent company does in fact exercise decisive influence over the subsidiary. Otherwise, the liability of the parent company could be engaged if it can be proven that it has had a determinant influence over the subsidiary’s decision to behave anti-competitively. Thus, the subsidiary and the parent company are jointly liable for the infringement.

As per Emergency Government Ordinance 170/2020 on actions for damages in cases of competition law infringements as well as for the amendment and supplementation of the Competition Law, any person who has suffered harm caused by an infringement of competition law (the Competition Act and the TFEU) by an undertaking or by an association of undertakings can effectively exercise the right to claim full compensation for that harm before the Romanian courts. The action can be brought before the Bucharest Tribunal and is barred in 5 (five) years which shall not begin to run before the infringement of competition law has ceased and the claimant knows or should have known of (i) the anti-competitive conduct and the fact that it constitutes an infringement of competition law; (ii) the fact that the infringement caused harm to it; and (iii) the identity of the infringer. As per the Competition Law, class actions can be brought by consumer protection-focused nongovernmental organizations for consumers affected by breaches of competition rules; and professionals / employers’ associations for professionals / employers affected by infringements of competition rules.

The damages should place the persons which incurred such damage in the situation they would be in should the infringement not take place. Thus, the compensation covers the effective loss incurred, as well as loss of profit generated by the cartel and the due interest rate. The relevant courts are enabled to estimate the amount of damage, ensuring that neither the burden of proof nor the standard of proof necessary to quantify the damage makes it practically impossible or excessively difficult to exercise the right to full compensation. Furthermore, it is presumed that the infringements in the form of cartels cause damages consisting in increasing the price of the products or services covered by the cartel by 20%. The infringing company may rebut such a presumption. Also, in a procedure relating to an action for damages, the RCC may, at the request of the relevant court, provide assistance to same in order to determine the amount of compensation, if the RCC deems such assistance is adequate.

The decision of the RCC may be challenged by the sanctioning party either for factual aspects or for the incorrect application of the relevant legislation.

The decision of the RCC may be appealed at the Bucharest Court of Appeal in 30 (thirty) days from the communication or, as the case may be, the publication of the decision. The decision of the Bucharest Court of Appeal may be challenged at the High Court of Cassation and Justice.

A cartel case addressed by the RCC in 2021 involved five pharmaceutical companies, suppliers of immunoglobulins and other medicinal products derived from human plasma, as well as the representative association of the plasma protein therapy industry. The undertakings were found to have conducted a coordinated strategy aimed at limiting and even interrupting the supply of immunoglobulins to the Romanian market for the purpose of pressuring the authorities to suspend the clawback tax for medicinal products derived from human blood or human plasma. The sanctioning decision has not been made public yet, however the Council announced that the fines applied are totalling roughly EUR 71 million.

The year 2021 has brought a historic investigation launched by the RCC on the Romanian market for skilled/specialised labour force in the field of motor vehicle manufacturing (e.g., automotive components and systems, testing, design). The investigation targets alleged coordinated behaviour of competing employers aimed at sharing the market for such automotive engineering labour force and to impose minimum wage rights.

Another significant activity initiated by the RCC in 2021 and currently ongoing involves an analysis of four digital sectors in Romania (namely online delivery intermediation services, online accommodation intermediation services, online package tour marketing services and online advertising services). The purpose of the RCC is to assess the characteristics of these markets and their impact on competition, and more precisely to identify the conditions under which negotiations are conducted in each of these digital sectors. Nonetheless, the RCC will keep a keen eye on the trends in the provision of online intermediation services to ensure the avoidance of cartel practices.

The RCC may gain extended competencies in terms of conducting an investigation, as per a proposal for revising Competition Law currently under debate, aimed at implementing Directive (EU) 2019/1 of the European Parliament and of the Council of December 11, 2018 to empower the competition authorities of the Member States to be more effective enforcers and to ensure the proper functioning of the internal market. The extended powers of the RCC, which may have a considerable impact over cartel investigations, concern, among others:

• the possibility to interview any person, including natural persons, regardless of their status or their links with undertakings against which an investigation may subsequently be launched; the interview is deemed mandatory and certain sanctions are provided in the draft law for cases of refusal;
• the possibility to gather proof from any object containing information, in whatever form and on whatever medium the information is stored (implying also personal devices pertaining to natural persons employed by the undertaking under investigation);
• the possibility to carry out announced inspections at the premises of undertakings, with their consent.