Challenging Times for the Romanian Business
Published in Chambers Magazine, 2009
The Competition Council issued the first Leniency Guidelines in 2004.While late by Community standards, considering that the first EU Commission Leniency Notice was enacted in 1996, this proved to be too early for the Romanian business environment, as shown by their application, or rather lack of. Five and a half years after their publication, there is only one figure of relevance in quantifying their effect: zero, as in the number of leniency applications filed. At the same time, during this period, the Competition Council has found and sanctioned a number of cartel type agreements. The causes for this lack of applications range from the lack of precision drafting of the conditions for benefiting from leniency to the insufficient awareness of businesses, underscored by the general resistance of undertakings to blowing the whistle on their commercial partners, especially in the absence of any precedents.
The New Leniency Guidelines (the Guidelines) come within a period during which the Competition Council has served numerous reminders of its powers through the launching of numerous new investigations and sector inquiries, and precede the amending of the Competition Law and certain other regulations. Consequently, it is safe to anticipate challenging times for the Romanian businesses.
New Leniency Guidelines
Published in September 2009, the Guidelines catch up with the changes made in December 2006 to the EU Commission Leniency Notice, by including a clearer list of information and evidence required in order to qualify for immunity from fines or for reduction of fines, as well as introducing the marker system. The Guidelines also contain certain innovative provisions, as follows:
1 The scope of application of the leniency policy was extended to include vertical agreements and concerted practices. The Competition Council will further assess the efficiency of this extension, depending on the evolution of the economic conditions in which the undertakings active on the Romanian market operate. Whether or not the inclusion of vertical agreements in the scope of the Guidelines will increase the chances of the Guidelines being applied is debatable – it seems more likely that an undertaking would blow the whistle on a competitor rather than on a supplier or distributor, considering the perspective of future business relations.
2 The Guidelines contain no express reference to enabling the Competition Council to make “targeted” inspections, no requirement to make the employees and directors available for interviews and no express extension of the obligation not to destroy or conceal evidence to the time period when only contemplating making the leniency application. It is unclear if these are oversights on behalf of the Competition Council, or if they are the result of an overriding wish to simplify the procedure as much as possible.
3 The Guidelines provide for simplified applications for immunity: the undertaking, having filed or contemplating filing a leniency application with the EU Commission, can file a simplified application to the Competition Council when it considers that the Romanian competition authority could be better placed.
While it is clear that the original Leniency Guidelines had no success, a whole new race started in October 2009, with the publication of the Guidelines. When will we hear soon of the first leniency application? The Competition Council is confident. The business sector seems still circumspect. At this point, the only certain thing is that the real race will begin only after the first leniency application results in immunity, while the other cartelists are fined.
Proposed Competition Law reform
January 2010 could bring the adoption of significant amendments to the Competition Law. Currently in the form of proposed changes, the reform aims at clarifying certain aspects resulting from the case law, and at catching up with the EU rules.
The amendments to the Competition Law aim at filling the regulatory voids, as evidenced by existing case law, and, as such, propose an express definition of the concept of “undertaking”, the express regulation of the attorney client legal privilege, and an outline the procedure in case of contested documents during an inspection. Insofar as the harmonization with the EU competition rules is concerned, the Competition Law proposes to eliminate the individual exemption system, provide that in case of an economic concentration, the parties have the obligation to notify prior to implementing (and not in 30 days from signing, as is the case now) and eliminate the risk of private enforcement for the undertaking benefiting of immunity from fines.
The Competition Law also envisages the application of the EU block exemption regulations solely, or the possibility to accept commitments during an investigation regarding anti-competitive practices. Still under review, the proposed draft already indicates challenging times to come for the Romanian businesses, with the Competition Council starting more and more investigations on an almost daily basis.