Romania – Law and Practice
Published in Legal Practice Guides – Competition – Cartels: Romania – Law & Practice, Chambers and Partners, 2015
1. Legislative Framework
1.1 Legal Basis
Article 5(1) of the Competition Law no 21/1996 (the “Competition Law”), mirroring Article 101(1) of the Treaty on the Functioning of the European Union (“TFEU”), provides for the general prohibition of anti-competitive agreements, of which cartels are singled out as being the most serious infringements (as detailed in Article 7(4) letter a) of the Competition Law).
In addition, the procedural aspects of the enforcement of cartel rules by the Romanian Competition Council (the “RCC”) are covered by the Competition Law (investigative powers and other procedural matters in Articles 25, 32-44, 48-49).
The RCC Organisation, Functioning and Procedure Regulation, the Access to File Guidelines, the Regulation on the analysis and solving of complaints and the Interim Measures Guidelines, as well as the Leniency Guidelines, are of relevance for cartel enforcement.
Furthermore, the penalties for cartel conduct are set by Articles 53 and 63 of the Competition Law, while the method for setting the level of fines is provided by the RCC Guidelines on the individualisation of sanctions.
1.2.1 Cartel Conduct
The Competition Law provides for a broad definition of what is considered to amount to an anti-competitive agreement (and then sets some examples of cartels). All agreements between undertakings, decisions by associations of undertakings and concerted practices which have as their object or effect the prevention, restriction or distortion of competition on the Romanian market or on a part of it are thereby prohibited. Amongst these, cartels are considered to be the most harmful type of infringement.
Article 5(1) corroborated with Article 7(4) letter a) of the Competition Law identifies several types of prohibited practices which may amount to cartel conduct:
(a) fixing purchase or selling prices or any other trading conditions;
(b) limiting or controlling production, markets, technical development, or investment;
(c) sharing markets or sources of supply;
Following the principles established at the EU level, in order to ascertain the existence of any of the above practices, the RCC does not need a formal written agreement between the parties, and no express sanctions or enforcement measures have to be involved either. What is essential is that the parties explicitly or implicitly express their joint intention to conduct themselves in the market in a specific way, contrary to normal competitive conditions.
In principle, the aforementioned interdiction does not apply to agreements, decisions or concerted practices which cumulatively: (i) contribute to improving the production or distribution of goods or to promoting technical or economic progress, whilst allowing consumers a fair share of the resulting benefit; (ii) only impose restrictions which are indispensable to the attainment of these objectives; and (iii) do not afford the possibility of eliminating competition in respect of a substantial part of the products in question. These individual exemption criteria correspond to those set by Article 101(3) of the TFEU. However, cartels are unlikely to fulfill these conditions.
Moreover, cartels are not allowed to benefit from the ‘de minimis‘ exemption, applicable to agreements and practices of minor importance, either (thus being sanctioned irrespective of the size of the parties).
1.2.2 Limitation Periods
The RCC’s right to apply sanctions for a cartel is not unlimited in time, being subject to a limitation period of five years (starting from the end of the last anti-competitive act) (Article 61 of the Competition Law).
However, in cases where the RCC has taken steps to investigate the alleged anti-competitive behaviour, the five-year term may be interrupted. For example, a written request for information addressed by the RCC to a company or an order issued by the RCC President launching an investigation will interrupt the statute of limitation. Procedurally, the interruption has an effect on all the participants in the alleged anti-competitive practice, even if the measure targeted only one of them.
Cartel rules are generally applicable, regardless of the sector or industry in which the relevant companies operate.
1.2.4 Geographic Reach
In terms of geographical scope, cartel enforcement applies to acts committed on Romanian territory or even outside it, insofar as the latter have effects on competition within the Romanian territory.
1.2.5 The Principle of Comity
In line with the EU principles of co-operation amongst the national competition authorities, if the RCC initiates an investigation and the alleged infringement substantially affects competition in Romania, it remains responsible for solving the case. However, if the alleged infringement also has substantial effects on competition in territories other than Romania, and the action of the RCC alone would not be sufficient, the RCC may act in common with the other competition authorities concerned.
In terms of decision-making, should the same case be dealt with by the RCC in co-operation with other competition authorities, the RCC may take a formal decision (if designated as the lead institution), whilst the others stay their proceedings. Alternatively, all the national competition authorities will deal with the case in close co-operation if it is not possible to entrust only one of them with the decision-making power.
2. Collecting Evidence
2.1 Standard of Proof
Whilst under the Competition Law the burden of proving an infringement rests with the RCC, there are no further legislative details on the standard of proof that the competition authority must satisfy.
In this context, the RCC follows (or at least should follow) the principles established at EU level, according to which the requisite legal standard is met when the competition authority presents “sufficiently precise and consistent evidence to support the firm conviction that the alleged infringement took place” (JFE Engineering). Whilst this standard can be seen as very close to “beyond reasonable doubt”, ultimately it is the judge who needs to be convinced whether or not the evidence supports the conclusion of an infringement. Whereas the RCC often argues that evidence of cartels can be difficult to find, and that not every piece of evidence but the body of evidence as a whole needs to satisfy the requirement, the authority held in its recent practice that failure to prove the existence of an infringement beyond any reasonable doubt prevents it from ascertaining a breach of competition rules and sanctioning the companies involved.
2.2 Investigative Powers
The RCC collects evidence through use of investigative powers, of which the most important are unannounced inspections (dawn raids) and requests for information. Therefore, companies need to know their rights and obligations and act accordingly, in the context in which all moments are important before, during and after a dawn raid.
Before a dawn raid, companies need to be prepared, taking into account that they are obliged to submit to legally-conducted dawn raids and to co-operate actively, and may be subject to fines ranging between 0.1% and 1% of the total turnover achieved in the preceding business year, even for accidental or unintentional dawn raid obstructions.
Thus, all company’s employees and representatives should be properly trained. Such training involves providing staff with practical information and concrete examples, so that they know how to deal correctly with dawn raids. In addition, companies should have clear procedures applicable in the event of a dawn raid (tailored dawn raid guidelines – DOs/DON’Ts, covering all the relevant stages of a dawn raid, starting from the front desk and the persons entrusted with meeting the inspectors to the verification of documents and signing the dawn raid minutes).
During the dawn raid, companies need to ensure that their rights are effectively observed, and that they comply with their obligations, thus avoiding the risk of fines. In these respects, they should be aware of and apply the rules in relation to the circumstances in which dawn raids may be conducted, the persons empowered to perform them and the necessary authorisation documents, the conditions in which the inspection order may be contested, the locations that may be inspected, how to achieve the fulfilment of the obligation to co-operate by granting access to documents and information, whilst making sure that the company’s rights are not breached and the inspection is not obstructed, what kind of questions may be addressed by the inspectors and what the limitations of the answers may be.
In brief, companies should carefully check that the dawn raid is legally authorised (the conditions in which a dawn raid may be performed are met and the competition inspectors hold the necessary authorisation documents). Then, full access should be granted to locations (rooms/cabinets/computers) and necessary keys and passwords should be provided. No attempt should be made to destroy or hide documents, e-mails or other electronic communication, and the integrity of seals applied must be maintained. Attention should at the same time be paid so as not to allow the inspectors to review and/or copy documents outside the scope of the investigation, or documents covered by legal professional privilege. Employees’ answers to the inspectors’ questions should be made in a complete and honest manner, whilst at the same time being concise, and in the presence of the legal advisers. Given that all questioning is subject to the privilege against self-incrimination, no answers should be provided which would constitute the acknowledgement of a suspected infringement.
After a dawn raid, the company should carefully assess any risks, together with the lawyers, and decide on optimum next steps during the investigation.
2.2.1 Surprise Visits
The RCC may carry out surprise visits (“dawn raids”), as they have broad powers to inspect both companies’ premises and private homes. Dawn raids may be conducted by the RCC on its own initiative or upon the request of the European Commission or of a competition authority from another Member State. Should the RCC act on behalf of another competition authority, it will apply its own rules of procedure and will use its own powers of investigation.
Frequently used for gathering evidence on competition law infringements, dawn raids may be conducted only if: (i) there is an ongoing investigation; and (ii) there are clues that documents can be found or information deemed necessary for the investigation can be obtained. In addition, a judicial authorisation issued by the President of the Bucharest Court of Appeal is required prior to conducting any type of dawn raid, either at the company’s premises or at private homes.
2.2.2 The Seizure of Evidence
The powers of the competition inspectors cover, amongst other things, the right to examine, take or obtain copies or excerpts of any documents, books, financial, accounting or commercial documents or other evidence related to the business of the inspected companies (Article 36 of the Competition Law).
Although there is a general obligation for any company to co-operate during a dawn raid, which also includes the obligation to provide the requested documents in a complete form (without opposing their confidentiality), the collection of documents is subject to certain limits. Whilst the documents’ examination may be performed regardless of the media on which they are stored (physical or electronic), their seizure does not extend to original documents, but only to copies.
In addition, the nature of documents and also the scope of the inspection order impact on the inspectors’ right to access documents: only documents which are useful for the investigation and whose subject matter falls within the scope indicated in the inspection order may be inspected and collected, to the extent that they are not legally privileged.
Given that the inspectors also have the right to search the entire IT environment and storage media, the documents in electronic format, including e-mails, may be seized. In this case, such documents are usually previewed in electronic format and then the selected ones are printed or copied.
Data can also be copied using forensic equipments and procedures, without previewing the electronic documents, in situations such as: (i) high volume and/or complexity of the data and/or large number/dispersion of equipment on which the data is stored; (ii) ascertaining the existence of altered data or of the risks of alteration of electronic data; (iii) the possibility of significant disruption of the company’s activity by interrupting the functioning of the equipment on which the data is stored; (iv) a lack of personnel who may ensure access to the equipment; and (v) the challenge of the fact that a document selected and printed as mentioned above would come from the company’s equipment.
Following the inspection, the copy obtained forensically and sealed will be processed at the headquarters of the RCC by a team of inspectors, in the presence of the company’s representatives.
2.2.3 Legal Privilege
Documents classified as legally privileged are protected from disclosure and thus cannot be seized or used as evidence in the RCC proceedings. The legally privileged status is granted to the extent that certain conditions are fulfilled (Article 36(8) of the Competition Law). Any communications between a lawyer and a client made for the exclusive purpose and interest of the client’s rights of defence in the proceedings (be they either before or after the initiation of the investigation) are privileged. Also included are preparatory documents drafted by the company for the exclusive purpose of exercising its rights of defence.
In line with EU rules, it is necessary that such communications originate from an independent lawyer (ie an external lawyer), given that the advice from in-house lawyers (who are bound to the client by an employment relationship) does not have the benefit of protection. However, in the event that the advice from the external lawyer is reproduced in an internal document distributed within the company, this may still be protected by legal professional privilege provided that it is confined to summarising the content of the external lawyer’s advice.
The burden of proving the legally privileged character of a document rests with the company. In addition, a specific procedure needs to be followed in case of disagreement between the RCC and the company as to whether a certain document is covered by legal professional privilege. This procedure implies the sealing and seizure by the competition inspectors of the sealed envelope containing the document whose protected nature is being challenged. At the end of the inspection, the dawn raid minutes will establish a term within which the company must provide arguments capable of demonstrating the legally privileged status of the document. On the basis of such explanations, the RCC President will decide whether the document is eligible for the claimed status and the corresponding protection.
2.2.4 Interviews with Company Employees
For the purpose of collecting information relating to the subject matter of the investigation, the competition inspectors are empowered to carry out interviews with any natural person or legal representative of the company.
These interviews are not compulsory and can only be carried out on condition that the person in question consents in this respect. The interview will be recorded in writing or registered and, if they wish to do so, the person who was interviewed may communicate any amendments to the declaration within a specified time limit set by the inspectors (Article 45 of the RCC Organisation, Functioning and Procedure Regulation).
2.2.5 Requests for Information
The RCC is empowered to address requests for companies to provide data and information deemed necessary in the context of an investigation regarding a competition law infringement (Article 34 of the Competition Law).
In order to make use of this procedural tool, the RCC has to comply with certain formal requirements. Thus, besides specifying the information (or documents) required, the RCC also needs to state the legal basis and purpose of the request, the time limit within which the company must submit its answers and the sanctions for non-compliance (ie fines imposed for supplying inaccurate, incomplete or incorrect information).
Requests for information can also be sent in the context of a preliminary examination procedure, or for the purpose of conducting a sector inquiry (Article 34(2) of the Competition Law).
2.2.6 Privilege Against Self-Incrimination
Although the Competition Law does not include specific provisions in this respect, the RCC recognises the privilege against self-incrimination, in accordance with EU rules.
Thus, although companies are obliged to supply complete and correct information to the RCC requests, the competition authority’s power to ask for information must take account of the companies’ rights of defence. This implies that the RCC cannot oblige a company to provide answers which would constitute an admission of an infringement that the authority has the task to prove. Therefore, requests for information related to purely factual information and requests aimed at determining an admission of an infringement need to be treated differently. On the one hand, the company is obliged to provide factual information (eg data, places, names of the participants in a meeting) and pre-existing documents, even if the latter may incriminate the company (eg meeting minutes). On the other hand, the company can oppose the disclosure of the purpose or conclusions of meetings.
At the same time, should the company decide to waive its privilege and provide such information, the RCC may use it in the investigation and decision-making process.
2.2.7 Companies Located Outside the Jurisdiction
Since the companies’ obligation to answer to the RCC requests for information is not influenced by their geographical location, companies located outside Romania are also under an obligation to reply to these requests, should they be concerned.
2.2.8 Additional Elements of Proof
Besides the investigative powers established by the Competition Law, the RCC is not allowed to make use of other procedural instruments for gathering evidence.
3. Evidence Collected Through the Leniency Programme
In spite of the fact that the RCC launched the leniency programme in 2009, the practice in this field has been extremely narrow. More precisely, there has been only one case to date solved by the RCC in which a company applied for and benefited from leniency.
The leniency policy’s lack of success in the Romanian market may be attributed to several factors, amongst which is its lack of transparency and predictability. In practice, there is a practical difficulty in assessing in a given case the real chances of meeting the conditions for benefiting from leniency, making its outcome rather unpredictable.
For example, obtaining a reduction of the fine depends on the company’s ability to provide the RCC with evidence of “significant added value” as compared to the information that it already holds. This requirement is vague and certainly makes it difficult to predict its fulfilment, the more so as the RCC retains the ultimate authority in deciding whether a certain piece of evidence is of “significant added value” or not.
3.2.1 Immunity from Fines
A company may qualify for full immunity from fines provided that it meets certain criteria and conditions.
There are two possible scenarios in which a company may be eligible for full immunity. Firstly, the company may be eligible if it is the first one to submit information and evidence that, in the RCC’s view, allows it to initiate an investigation and carry out unannounced inspections (the so-called “Type A immunity”). Secondly, in cases where the RCC already has some information in connection with the alleged anti-competitive conduct (which allows it to initiate an investigation and carry out unannounced inspections), the company may be eligible if it is the first one to submit information and evidence that enables the RCC to prove an infringement of Article 5(1) of the Competition Law or of Article 101(1) of the TFEU (the so-called “Type B immunity”).
In addition, in each of the two cases, the company must fulfil the general conditions:
The first condition is the genuine, full, continuous and prompt co-operation with the RCC throughout the entire procedure. The leniency applicant should provide the RCC with all the relevant information and evidence in its possession and should remain at the RCC’s disposal to answer any requests deemed necessary in order to establish the facts. At the same time, the applicant should not destroy, conceal or hide relevant information or evidence or disclose the existence of the leniency request or its content before the RCC transmits the statement of objections to the parties.
The second condition is the termination of the participation in the alleged anti-competitive conduct upon the RCC request.
The third condition implies no disclosure of the intention to submit a request for leniency or of any of the elements of the application (except to other competition authorities, where that is the case).
No immunity can be granted if the company initiated the anti-competitive practice or made use of coercion measures to constrain companies to participate (or remain) in the anti-competitive practice (although a reduction may possibly be available).
Considering that several companies may apply for leniency, it is important that an applicant is able to protect its priority in the queue by using the marker system.
In order to be eligible to secure a marker, the applicant must provide the RCC with certain specific information (ie its name and address, the parties to the alleged infringement, the affected product(s) and territory(ies), the estimated duration of the alleged infringement, the nature of the alleged infringement and a short description of the functioning of the alleged infringement).
In cases where a marker is granted, the RCC determines the period within which the applicant has to perfect the marker by submitting the information and evidence required to meet the standard for immunity. If the applicant complies and perfects the marker within the period set by the RCC, it will be considered that the information and evidence were provided on the date when the marker was granted. Otherwise, if the application is not fully completed within the term established, the RCC will reject it.
3.3.1 Reduction of Fines
Companies which do not qualify for full immunity from fines still have the possibility to benefit from partial immunity and thus obtain a reduction of the fine. In cases of partial immunity, there is no limitation as regards the number of potential beneficiaries.
In order to be eligible for the reduction, the company must provide the RCC with evidence of the alleged anti-competitive conduct which represents “significant added value” by reference to that already in the RCC’s possession. The concept of “significant added value” covers the evidence which was unknown to the RCC at the time of the leniency application and which strengthens its ability to prove the alleged anti-competitive practice.
In the assessment of the evidence’s value, the RCC will generally consider that written evidence corresponding to the period in which the facts occurred has a greater value than subsequent evidence. In addition, direct incriminating evidence will generally be considered to have a greater value than indirect evidence. Similarly, the degree of corroboration with other sources of evidence is to be taken into consideration (ie compelling evidence has a greater value than evidence which needs to be corroborated if challenged, such as statements).
Although in theory all subsequent leniency applicants may benefit from a reduction of the fine, the applicants’ positions in the leniency queue plays a very important role, directly influencing the amount of the reduction for each of them.
Thus, the first company to provide the RCC with evidence of significant added value is entitled to the highest reduction, ranging between 30% and 50%. The second company may receive a reduction ranging between 20% and 30%, while all the other subsequent applicants may only benefit from a reduction of up to 20%. Nevertheless, although the percentages significantly differ even inside each of the three categories, the Guidelines on the conditions and criteria for the application of leniency policy do not provide any further details on the RCC’s method of determining the precise reduction within the range.
3.3.2 Partial Immunity
As shown above, companies may obtain full or partial immunity, depending on several factors, including the timing of their leniency application, the probative value of the evidence submitted and the fulfilment of the general conditions.
Thus, given that only one company (the first company) may benefit from full immunity, the subsequent leniency applications are only entitled to receive partial immunity. This is conditioned by the submission to the RCC of evidence in relation to the alleged anti-competitive conduct which represents “significant added value” as compared to the evidence already in the RCC’s possession. If the general conditions for benefiting from leniency are also met, the RCC will set the amount of the reduction of the fine by taking account of the chronological order of the leniency applications.
In contrast, the Romanian leniency policy does not provide for an “amnesty-plus” option. Anyway, in practice a company’s possibility to obtain a higher reduction of the fine if it enabled the RCC to uncover another cartel should not be excluded, the more so as the list of mitigating circumstances is not exhaustive, and this could be included in the category of co-operation with the authority beyond its legal obligation, for example.
3.4.1 Corporate Oral Statements
The RCC accepts both written and oral corporate statements (the latter being audio recorded), being equal in terms of their probative value and confidentiality treatment during access to the file.
Procedurally, the oral statement will include a detailed description of the following information (to the extent that it is known to the applicant):
Firstly, the manner of organisation of the alleged infringement (its purposes, activities and functioning mechanism, the products/services concerned, geographical area, duration, estimated market volumes affected by the alleged infringement, specific meeting data and places, contents of discussions and participants in meetings, any other relevant explanations).
Secondly, the identity of the applicant in addition to the identity of all companies participating in the alleged anti-competitive conduct.
Thirdly, the identity, functions, premises and, if relevant, home addresses of persons alleged to have participated in the anti-competitive conduct.
Fourthly, information with regard to other competition authorities which were contacted or which are to be contacted in relation to the alleged infringement.
During access to the file, only the parties to the proceedings are granted full access to the oral corporate statements. As in the case of written statements, such access is permitted only on condition that no copies are made.
The application submitted to the RCC within the context of the leniency policy is regarded as part of the case file and cannot be used or disclosed for any other purposes than the enforcement of competition rules.
As regards the parties in the proceedings, a leniency application remains confidential until the issuance of the statement of objections. Then, during the access to the file, the parties are granted access to leniency applications on condition that they, together with the legal representatives getting access on their behalf, undertake not to make any copies by mechanical or electronic means of any information in the statement to which access is being granted.
Other persons, such as the authors of the complaint, are not granted access at all to leniency applications. Moreover, as regards third parties, the existence of the leniency application will only remain confidential until the issuance of the decision, whereby the RCC will reveal who collaborated and to what extent, so that it can justify the immunity or reduction of fine granted.
4. Disclosure of Evidence in Private Damage Actions
4.1 Investigative Powers
In the context of the court proceedings against the RCC’s sanctioning decisions, the judge is to have access to the information in the entire case file collected through the use of investigative powers and on the basis of which the RCC made the sanctioning decision.
However, the access of the other parties in the proceedings is not that wide. Thus, if one party wants to have access to a certain piece of evidence which is held by the RCC and was used to prove the alleged harm, it may address the court in this respect. Should the party show the necessity, relevance and usefulness of that evidence for its defence, the court is empowered to order the RCC to permit its disclosure.
Nevertheless, the court will decide by taking account of the necessity to protect business secrets and other confidential information belonging to other parties. Thus, the information regarding the activity of a company whose disclosure may seriously harm its interests is not to be disclosed (eg market shares, sales strategy, marketing plans, lists of clients/distributors).
4.1.1 Leniency Programme
To date, the disclosure or protection of the documents gathered in the context of the leniency programme (the leniency application itself or its supporting documents) has not been the subject of an assessment before the national judiciary courts.
However, it is likely that the Romanian courts’ disclosure regime will be in line with the rules established by the EU Directive on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the European Union.
In this respect, as leniency statements fall within the category of evidence which may never be disclosed, national courts would not allow a party or a third party their disclosure.
4.2.1 Extent of Co-operation
The RCC has not yet been involved in cartel cases with a multi-jurisdictional element and its co-operation with other competition authorities has been limited to exchanges in relation to general market information.
However, in light of its membership to the ECN, the RCC would co-operate with other EU competition agencies upon the investigation and sanctioning of anti-competitive practices affecting a number of Member States. This would imply the RCC’s participation in an exchange and use of information with other competition authorities and also the power to carry out dawn raids upon the request of other competition authorities.
In addition, there are specific provisions in the Competition Law which allow for co-operation in competition cases. These establish that the RCC promotes exchange of information and of experience in relation to specialised international organisations and institutions, and that it is responsible for the relationship with the EU institutions and co-operates with other competition authorities.
4.2.2 Impact of Co-operation
In the investigation phase, the co-operation between the RCC and other competition authorities in building up a case may influence the conduct of the proceedings, both in terms of their timing and exercise of the investigative powers.
As the competition authorities involved would have to co-ordinate on the steps in the investigation and on the investigative powers and measures applied (ie co-ordination of dawn raids, requests for information, interviews), the process related to the evidence gathering might prove to be more complex and take longer.
5. Decision Making
5.1 Settlement/Plea Bargaining
Since 2011, a company’s express acknowledgment of having participated in an anti-competitive practice (and, if that is the case, accompanied by proposed remedies leading to the removal of the causes of the breach) is considered by the RCC a mitigating circumstance (in the form of co-operation with the competition authority during the proceedings).
In return for the acknowledgment, the company may obtain a reduction of the basic level of the fine with a percentage ranging between 10% and 30%.
Before acknowledging, the company may request to have a meeting with the RCC’s representatives, in order to discuss the terms of acknowledgement.
In terms of timing, the company may acknowledge the incriminating practice after the receipt of the statement of objections, but no later than during the hearings.
The acknowledgement must be direct and unequivocal and must refer to the anti-competitive practice described in the statement of objections. In addition, not only are the companies which fully agree with the statement of objections’ conclusions (full acknowledgement) eligible to qualify for a reduction, but also those admitting to only some of the acts and deeds or claiming a different duration of the alleged anti-competitive conduct as compared to the one mentioned in the statement of objections (partial acknowledgment). However, in the case of partial acknowledgment, the RCC may refuse to grant the reduction if it considers the acknowledgment as being insufficient or as not showing the real intention to acknowledge the conduct.
The reduction will be determined by the RCC on a case-by-case basis, depending on the nature of the conduct, the total or partial character of the acknowledgment or the company’s possibility to benefit from leniency.
Thus, in case of an alleged anti-competitive agreement or concerted practice for which the company could have applied for leniency, but has not done so, the reduction of the basic level for acknowledgement may not exceed 20%. Where one of the companies participating in the anti-competitive practice benefits from leniency, the basic level reduction that may be granted for acknowledgement by another company under investigation cannot exceed 20%. If the company benefits from a reduction of fine as part of the leniency policy, the basic level of the reduction that may be granted will be 10%.
In consideration of the different timelines in the US and EU, the Romanian acknowledgment is comparable to the EU settlement rather than the US plea-bargaining. In contrast to the US plea-bargaining which can take place at any time in a procedure, the acknowledgment and the EU settlement can be performed after the statement of objections is issued and the settler must wait until the end of the proceedings in order to find out the actual reduction granted.
Another similarity between the acknowledgment and the EU settlement procedure is the impact of making use of such an instrument during the course of proceedings and the parties’ rights of defence. Unlike in the case of US plea-bargaining, once the company admits its participation in an infringement (through the acknowledgment or EU settlement), the authority follows its ordinary procedure and issues the decision, while the company maintains its right to appeal the sanctioning decision in court.
At the end of an investigation, the RCC is itself empowered to apply sanctions for competition law infringements, without the need to bring a suit against the companies in court (Article 44 of the Competition Law).
The companies breaching competition rules face the risk of being imposed with significant administrative fines.
Thus, the infringement of the provisions of Article 5(1) of the Competition Law (prohibiting cartels and other restrictive agreements) may result in fines ranging between 0.5% and 10% of the total turnover obtained in the preceding business year. Providing the RCC with inaccurate, incomplete or incorrect information may also result in procedural fines, ranging between 0.1% and 1% of the total turnover. In addition, the RCC may apply time-based penalties of up to 5% of the average daily turnover from the year prior to the sanctioning, for each day of delay, in order to oblige the companies to cease the infringement.
The RCC determines the level of the pecuniary penalties in accordance with the Guidelines on the method of setting fines.
The amount of the fine is determined by reference to the value of the total turnover achieved by the company during the business year prior to the sanctioning decision. In determining the basic amount of the fine, the RCC takes into account two criteria: the gravity and the duration of the infringement.
In order to establish the gravity, a set of factors is taken account of, including, amongst others, the nature of the incriminating conduct, the dimension and importance of the relevant market, the market shares held by all the companies involved, and the concrete impact of the infringement on the market. Following the assessment of these elements, the infringements may be of minor, medium or serious gravity.
Cartels are usually considered to fall within the category infringements of serious gravity, which are determined at a basic level of 4%-8% of the turnover.
The basic level of a fine is also directly influenced by the duration of the alleged anti-competitive practices, which divides them into short, medium or long duration infringements. Whereas in the case of short duration infringements (less than one year), no increase of the basic level determined for gravity is possible, medium duration infringements (between one and five years) and long duration infringements (more than five years) may result in an increase of up to 50% and 10% per year respectively of the amount determined for gravity. The basic amount determined by reference to gravity and duration may then be adjusted, depending on the applicable aggravating/mitigating circumstances.
The RCC will increase the basic amount of the fine for aggravating circumstances, such as committing an identical or similar infringement to an infringement assessed by a previous RCC decision, continuing the infringement after the RCC has initiated the proceedings, refusing to co-operate with or obstructing the RCC in carrying out its investigations, or taking the role of leader or instigator in relation to the infringement.
In contrast, the basic amount of the fine will be reduced for mitigating circumstances, for instance in the case where the company provides evidence that it terminated the infringement as soon as the RCC intervened, or that its involvement in the infringement was substantially limited and during the period in which it was party to the alleged infringement, it actually avoided applying it by adopting a competitive conduct.
In addition, also considered to represent mitigating circumstances are cases where the turnover on the market in which the infringement occurred is relatively reduced, up to 20% of the company’s total turnover, where the company effectively co-operated with the RCC outside the scope of the Leniency Notice and beyond its legal obligation to do so, or where its anti-competitive conduct was authorised or encouraged by public authorities or by legislation. Furthermore, the existence and effective implementation within the company of a competition law compliance programme is also considered to represent a mitigating circumstance.
5.2.3 Joint and Several Liability
The Competition Law does not contain explicit provisions in relation to the parent liability principle and the RCC has not yet made a wide application of this rule.
It can, however, be expected that the RCC may hold both the parent company and the subsidiary jointly and severally liable for the payment of the fine, except for any case in which the subsidiary is able to prove that it acted independently and determined its own commercial behaviour. If it cannot provide evidence of such proof, the RCC may apply the fine to the consolidated turnover of the parent company.
5.2.4 Other Sanctions
Besides the imposition of pecuniary sanctions, the infringement of competition rules also impacts on the anti-competitive agreements’ validity and on the company’s behaviour.
Firstly, all agreements in breach of Article 5 of the Competition Law or Article 101 of the TFEU are automatically null and void.
Secondly, the RCC may order the cessation of the infringement and also apply time-based penalties in order to persuade the company to comply. These amount to 5% of the average daily turnover from the year prior to the sanctioning and are applied for each day of delay. In addition, in order to induce the company to cease the anti-competitive conduct, the RCC may also impose any behavioural or structural coercive measures which are considered proportional to the infringement and necessary for its effective cessation.
5.2.5 Sanctions Against Company Employees
Under the Competition Law, whilst there are no potential administrative sanctions against company employees who have breached competition rules, certain persons holding management positions within the company may face criminal sanctions.
Thus, any person acting as administrator, legal representative or exercising in any other way a management position in a company who intentionally conceives or organises a cartel may be subject to criminal sanctions. These consist of imprisonment from six months up to five years or of a criminal fine and the prohibition of certain rights (Article 63 of the Competition Law).
However, individuals may be totally exempted from criminal liability, or at least obtain a reduction of the sanction, if they denounce the criminal offence. The exemption from punishment is granted to the person who, before the criminal prosecution is initiated, confesses to the criminal prosecution bodies its participation in the commission of the criminal offence (thus enabling the identification and prosecution of the other participants). Notwithstanding, if the confession is made during the criminal prosecution, the punishment will only be reduced by half of the limits provided by law.
6. Damage Claims
6.1.1 Collective Redress
Romania also offers means of collective redress. Thus, claims for damages caused by an anti-competitive practice may be submitted by consumer protection associations on behalf of consumers and by trade associations on behalf of their members (Article 64(6) of the Competition Law).
As regards trade associations, the representation of their members in court should be based either on the existence of such rights within the associations’ statutes or on the express mandate from their members.
In addition, the Civil Procedure Code provides that several individuals may act together as plaintiffs or defendants in litigation, provided that the object of the litigation is represented by a common right or obligation, or if their rights or obligations derive from the same cause, or if there is a strong connection between them.
6.1.2 Indirect Purchasers
If a product or service is purchased at an excessive price, the nonexistence of any injury cannot be ascertained on the basis of the fact that the product or service was resold, so an indirect purchaser can bring a damage claim (Article 64(2) of the Competition Law).
This clarifies that the author of an infringement sued by a direct co-contractor may argue in their turn that the plaintiff transmitted the harm to their clients (passing-on). However, there is no legal presumption in this respect and the court must perform a case-by-case analysis.
6.2.1 Types of Compensation
Pursuant to the general tort law regime, the persons harmed by an anti-competitive practice are entitled to receive full compensation for the damages incurred. This implies the recovery of the actual value of the loss suffered, but compensation is not limited to it. In order to ensure full compensation for the victims, the recovery also extends to the unearned benefit which could have been obtained by the victim under normal circumstances and to the expenses that person made for the avoidance or limitation of the damage. Moreover, the author of the anti-competitive conduct may be also liable for future damages, in cases where their occurrence is unequivocal.
In addition, should the anti-competitive conduct also determine the loss of the possibility to obtain an advantage or avoid damage, the compensation shall be proportional with the probability to obtain that advantage or avoid that damage. The assessment in this case is to be performed by taking account of the circumstances and concrete situation of the injured person.
However, punitive or other types of damages are excluded.
6.2.2 Quantifying Damages
Under Romanian legislation, there is currently no specific guidance in connection with the methodology for quantifying the harm incurred as a result of an anti-competitive practice. At the same time, the RCC does not usually proceed to quantify the harm caused by competition law infringements (especially in case of infringements by object, which appear to be the focus of the Romanian competition authority).
According to the general rules governing the judicial practice (ie whoever makes a claim in court must bring evidence to prove it), the burden to prove the amount of the damages and the causal link between the anti-competitive conduct and the resulting damages rests with the claimant.
However, the national courts retain broad discretion to make their own assessment when evaluating the amount of the harm to be awarded, on the basis of the available evidence. Thus, the courts are empowered to reduce the amount claimed or even reject the damages claim in its entirety. In addition, in private damages cases where there is a decision by the RCC sanctioning the anti-competitive conduct, the national courts are permitted to request the RCC to provide them with the documents in the case file.
In any case, the national courts will act in compliance with the rules established by the recent EU Directive on antitrust damages actions, instituting a rebuttable presumption that cartel infringements result in harm. The EU Directive grants the courts the right to estimate the amount of the harm caused by the competition law infringement if it has been established that it is practically impossible or excessively difficult to quantify the harm suffered on the basis of the evidence available. The estimation may be made by reference to the evolution of the market in question in the absence of the infringement. In addition, the RCC should provide guidance on determination of the quantity, if requested by the court.
7. Judicial Review
7.1 The Appeal Process
Once issued, the RCC decisions may be subject to review by the Bucharest Court of Appeal (first appeal court) and subsequently the Bucharest Court of Appeal’s decision may be appealed before the High Court of Cassation and Justice (second appeal court) (Article 19(7) of the Competition Law). Together with the sanctioning decision, the parties may also challenge the RCC order initiating the investigation and the RCC President’s order issued in the context of a request for access to the file during the investigation.
The court proceedings are carried out in accordance with the provisions of the Civil Procedure Code.
The term within which the parties may challenge the RCC decision, by submitting a request for annulment before the Bucharest Court of Appeal, is of 30 days from the communication of the decision. The RCC has an obligation to submit a reply to the request for annulment within a maximum of 15 days (from the communication of the request for annulment); the party should then submit its answer to the RCC reply within a term not exceeding ten days.
As regards the evidence, this should be proposed by the party along with the request for annulment, subject to the loss of the right to introduce it in court. As an exception, the evidence may also be proposed during the court proceedings in certain limited situations, such as when the parties jointly agree in this respect or when the necessity of the evidence emerges from the court proceedings and the party could not have foreseen it.
In any case, the mere challenge of an RCC decision does not stay its enforcement and therefore, the fine needs to be paid within 30 days from the communication of the RCC decision imposing it, irrespective of requesting its annulment in court. However, the possibility exists for the addressee of the decision to obtain its suspension, until the court decides on the merits, provided that they pay a bail of up to 20% of the fine. In order to obtain the suspension, the party must prove the fulfilment of two cumulative conditions: the existence of a well-grounded case (prima facie illegality, without requiring an analysis of the case on the merits) and the occurrence of imminent damage in case the fine were to be paid.
As regards the second appeal before the High Court of Cassation and Justice, the same 30-day term applies for its filing, which starts to run from the date of communication of the Bucharest Court of Appeal’s decision. As a difference, at this stage new pieces of evidence are not accepted, with the exception of new written documents to be proposed along with the second appeal/reply to the second appeal. The period of time permitted for replying to the second appeal is 30 days (double that set for the first appeal stage) and the answer to the reply is subject to the same maximum ten-day term.
7.2 Extent of Review
Depending on the instance of appeal, the review of the RCC’s decisions may be more extensive or, on the contrary, more limited.
The first instance appeal court (Bucharest Court of Appeal) is empowered to review the RCC decisions from the perspective of their legality in all aspects, including the alleged deeds and their legal assessment, evidence and proportionality of the sanctioning measures imposed. As the court will perform its own assessment both on points of facts and law, it may quash, in whole or in part, the RCC decision. As regards the review of the level of fines, the Bucharest Court of Appeal has jurisdiction to cancel or reduce the fine. Moreover, the principle of “non reformatio in peius” (the appellant cannot be put in a worse position than if he had not appealed the decision) is applicable, preventing the court from imposing more severe fines than those applied by the RCC.
In contrast, the review performed by the High Court of Cassation and Justice during the second appeal proceedings is only possible on points of law (eg the Bucharest Court of Appeal’s decision does not comprise the reasoning for the solution or comprises contradictory arguments). As regards the review of the amount of fines, taking into account the principle of “non reformatio in peius,” the High Court will not be allowed to increase the amount of the fine established by the Bucharest Court of Appeal in cases where the second appeal is filed by the party.