Competition Newsletter – Special Issue Amendment of the Competition Law

EGO 75/2010 (published in the Official Gazette no 459/06 July 2010) which will enter into force within 30 days from its publication brings certain amendments to the Competition Law.
1. Scope of the Competition Law
The following sectors, previously excluded from the scope of application of the Competition Law, are brought within the ambit of competition rules: a. labour market and employment-related relations;
b. money and securities market,
in so far as the free competition on these markets was subject to special law provisions.

2. The application of the Treaty on the Functioning of the EU (TFEU)
EGO 75/2010 expressly provides for the direct application by the Competition Council of Articles 101 and 102 TFEU (as per Regulation 1/2003) in case the conduct may affect trade between Member States. Each time the Competition Council applies Articles 5(1) and 6 of the Romanian Competition Law, it also applies Articles 101 and 102 TFEU.

3. Block exemption of certain categories of agreements – the application of the conditions and criteria provided under the EU Block Exemption Regulations
The categories of agreements benefiting of a block exemption and the conditions and criteria for block exemption are those established by the Block Exemption Regulations issued by the European Council or the European Commission.

4. Individual exemption of certain agreements – the elimination of the notification system and its replacement with the self-assessment procedure
In case a certain agreement does not meet the conditions for benefiting of a block exemption, the parties themselves will need to assess whether the conditions required for an individual exemption are met, given that under the amended Competition Law, the notification of the agreement to the Competition Council will no longer be mandatory or possible in view of benefiting of an exemption.

5. Agreements of minor importance which do not restrict competition (“de minimis”) – the amendment of the conditions
EGO 75/2010 amended the conditions required for the classification of an agreement within the category of agreements of minor importance, which are outside the scope of the prohibition provided under competition rules. In this respect, the condition regarding turnover is abolished and only the condition regarding market shares remains applicable, the thresholds being increased compared to the previous version of the competition law, as detailed below:
a. for the agreements between competitors (as well as for those for which it is difficult to establish whether they are concluded between competitors or non-competitors): the cumulated market shares of parties should not exceed 10%;
b. for the agreements between non-competitors: the market share held by each of the parties concerned should not exceed 15% on any of the affected relevant markets;
c. where on a relevant market, competition is restrained by the cumulative effect of certain agreements between suppliers or distributors, the market share thresholds mentioned above under a. and b. are diminished by 5%, regardless of whether the parties are competitors or not.The “de minimis rule” also applies in case the market shares do not exceed the thresholds mentioned above by more than 2% in the course of two successive calendar years.

6. Abuse of dominant position
EGO 75/2010 sets the relative presumption according to which one or several undertakings do not hold a dominant position where the market share or the cumulated market shares held on the relevant market do not exceed 40%.

7. Rules applicable to the activity of public authorities and institutions
EGO 75/2010 expressly provides for the measures that the Competition Council may request the Bucharest Court of Appeal to impose, in case public administration bodies do not comply with the measures adopted by decision of the Competition Council for the purpose of restoring the normal competitive environment, as described below:
a. The annulment of the act which determined the restriction, or distortion of competition;
b. Compelling the public authority at stake to issue the administrative act or to perform a certain administrative operation. In addition, the Competition Council has a 6-month period to address the Bucharest Court of Appeal in order to dispose one of the measures mentioned above; the 6 months term runs from the expiration date of the period provided under the Competition Council decision.

8. Merger control
(a) Substantive test for the assessment of the compatibility of an economic concentration with a normal competitive environment:
The effect of creating or enhancing a dominant position does no longer serve as the criterion for the assessment of the compatibility of an economic concentration with a normal competitive environment: are prohibited economic concentrations “which would raise significant impediments against effective competition”, in particular as a consequence of creating or strengthening a dominant position.
(b) The obligation to notify a concentration
The obligation to notify the concentration does no longer apply within 30 days from the
signing of the deed on the basis of which control is acquired, but prior to the implementation and after the conclusion of the agreement/ after the announcement of the public offer/ or after taking over a controlling stake. EGO 75/2010 also expressly provides the possibility to notify the concentration on the basis of a good-faith intention to conclude an agreement or public announcement of the intention to make a public offering.
(c) Authorization fee
The authorization fee amounts to 0,04% of the total turnover reported by the undertakings on the Romanian territory, without exceeding 100,000 Euros.
(d) Deadlines for issuing a decision by the Competition Council
The Competition Council has the obligation to issue a non-opposition decision (the concentration falls within the scope of competition law, but is compatible with a competitive environment) in 45 days from the effective date of the notification. The same term also applies in respect of the decision made by the Competition Council to initiate an investigation.
(e) Further clarifications
EGO 75/2010 defines/provides explanations in relation to the concepts of “control”, “concentrative joint venture”, the criteria allowing to assess whether a joint venture has as object or effect the coordination of the competition conduct of mother companies (in which case they are to be assessed according to the criteria provided under article 5 (1) and (3) / 101 (1) and (3) TFEU – (i.e, the criteria for self-assessment required for an individual exemption).

9. Commitments that may put an end to an investigation
Parties may propose commitments and the Competition Council can make them binding in case they are deemed sufficient to protect competition and provided that their accomplishment may eliminate the factors which led to the initiation of the investigation, allowing to conclude as to the absence of the need to take any further action.

10. Dawn raids
a. For the purpose of applying articles 101 and 102 TFEU, the Competition Council may perform inspections upon the request of the European Commission or of that of national competition authority of an EU Member State, based on the inspection order issued by the president of the Competition Council.
b. The Competition Council may interview any natural or legal person, who agrees to be interviewed, for the purpose of collecting information regarding the scope of the investigation.
c. Undertakings may challenge the inspection order before the Bucharest Court of Appeal, administrative claims section, within 15 days from the communication of the decision; the decision of the Bucharest Court of Appeal may be challenged with a final appeal within 5 days from the communication of the decision.
d. Upon the Competition Council’s request, in case of an opposition to the performance of the investigation, police officers have the obligation to accompany and provide the necessary support to the inspection teams.
e. The performance of inspections outside the premises of an undertaking (e.g. managers’ domicile) is possible only with the judiciary authorisation given by the president of the Bucharest Court of Appeal; the court resolution may be challenged within 48 hours with a final appeal before the High Court of Cassation and Justice (the final appeal does not stay the enforcement of the resolution).

11. The express regulation of Professional Legal Privilege
The following two categories of documents may not be collected or used as evidence during the investigation procedures performed by the Competition Council:
a. Communications between the undertaking / association of undertakings and their lawyer, accomplished within and for the exclusive purpose of exercising the rights of defense (either before or after the initiation of the investigation);
b. Preparatory documents drafted by the undertaking or the association of undertakings for the exclusive purpose of exercising the rights of defense, even if they have not been sent to the lawyer or have not been created with the purpose of being physically sent to a lawyer.
Should undertakings fail to prove the protected nature of a certain communication, competition inspectors shall seal and collect the respective communication, a decision being subsequently issued in this respect by the President of the Competition Council. Should the latter also reject the protected nature of the communication, the removal of the seals may only occur after the expiry of the term allowed for challenging the decision or after the decision of the court becomes final and binding.The decision of the President of the Competition Council regarding the protected nature of a certain communication may be challenged by the undertaking concerned before the Bucharest Court of Appeal within 15 days from the communication; the decision of the Court of Appeal is subject to a final appeal, within 5 days from the communication.

12. Complaints
Deadlines for issuing a decision in relation to a complaint:
a. 30 days as of the registration of the complaint in case it is rejected on grounds that it does not fall within the scope of the competition law;
b. 60 days as of the date at which the complainant receives confirmation of his complaint being complete, in case it is rejected on grounds that it does not show sufficient grounds to justify the initiation of an investigation.

13. Sanctioning regime
Overview of administrative offences, fines, enforcement of sanctions and challenge before courts:

Fine ranging from 0,1% to 1% of the total turnover of the financial year prior to sanctioning

Conduct
Article 50 letter a): providing inaccurate, incomplete or misleading information in relation to an application, a confirmation, a notification form or a letter bringing additions to a notification (regarding a merger control notification);
Article 50 letter b): providing inaccurate, incomplete or misleading information or incomplete documents or failure to provide the information and documents requested by the Competition Council in order to exercise its powers when analysing complaints, economic concentration notifications as well as other powers
Article 50 letter c): providing inaccurate or misleading information, in reply to a request for information in the course of an investigation (including those referring to a specific economic sector or a certain type of agreement in several sectors)
Enforcement and challenge of the fine
Sanctions are applied by the committees of the Competition Council by way of the same decision finding the administrative offence.The sanctioning decision may be challenged before the Bucharest Court of Appeal, administrative claims section, within 30 days as of the communication of the decision.

Conduct
Article 50 letter d): the act of providing incomplete information, documents, registrations and records during inspections
Article 50 letter e): the refusal to submit to an inspection
Enforcement and challenge of the fine
Sanctions are applied by competition inspectors.
The sanctioning decision may be challenged before the first instance court (Bucharest, First District) within 15 days as of its communication date.
The decision issued by the Court of First Instance may be challenged with a final appeal before the Bucharest Tribunal (administrative claims department) within 15 days as of its communication.

Fine ranging from 0,5% to 10% of the total turnover of the financial year prior to sanctioning

Conduct
Article 51 letter a): breach of articles 5 and 6 of the Romanian Competition Law, as well as breach of articles 101 and 102 TFEU;
Article 51 letter b): failure to notify an economic concentration, prior to its implementation;
Article 51 letter c): performance of an economic concentration in breach of the competition rules;
Enforcement and challenge of the fine
Sanctions are applied by the Plenum of the Competition Council through the same decision finding the administrative offence.
Decisions may be challenged before the Bucharest Court of Appeal, administrative claims section, within 30 days as of communication.

Conduct
Article 51 letter d): initiation of an economic concentration declared incompatible through a decision of the Competition Council;
Article 51 letter e): failure to comply with an obligation, condition or measure imposed through a decision.
Enforcement and challenge of the fine
Sanctions are applied by the committees of the Competition Council through the same decision finding the administrative offence.
Decisions may be challenged before the Bucharest Court of Appeal, administrative claims section, within 30 days as of communication.

14. Fines for public administration authorities (both at central and local levels)
From 5.000 to 40.000 lei for providing inaccurate, incomplete or misleading information, and providing incomplete documents or failure to provide information or documents; a fine of up to 5.000 lei per day of delay also applies.

15. Sanctions if no turnover during the year prior to sanctioning was derived:
a. Fine ranging from 20,000 to 2,000,000 lei, for administrative offences for which the maximum level of the fine is set at 1%;
b. Fine ranging from 30,000 to 5,000,000 lei for administrative offences for which the maximum level of the fine is set at 10%.

16. Reduction of the fine for acknowledgment of the breach
Acknowledgment of the breach (after receiving the statement of objections and the exercise of the access to the file) is provided as a mitigating circumstance, leading to a reduction of the fine with a percentage ranging between 10% - 25% of the base amount.

17. 30% bail for stay of the enforcement.
The court may decide to grant the stay of the enforcement of the Competition Council sanctioning decision, subject to the payment of a bail amounting to 30% of the fine set through the challenged decision.

18. Challenge of the order initiating an investigation
It is confirmed the courts’ solution that the order initiating an investigation may be challenged only together with the decision finalising the investigation.

19. Prohibition to hold certain position or to fulfill a profession or an activity of the nature of that used by the offender
The above mentioned sanction applies in addition to imprisonment or fine in case a natural person commits a criminal offence by participating with a fraudulent intent and in a decisive way to the conception, organisation and performance of the practices prohibited by article 5 of the Competition Law.

20. Requests for the award of damages
Individuals who claim to be harmed by way of an anti-competitive practice are entitled to file a request for damages within 2 years as of the date the decision of the Competition Council on which the claim is based in subsidiary becomes final and binding.
The undertaking benefiting of immunity from fine is not jointly liable for the damages caused by its participation to the anti-competitive practice.