Cartels & Leniency 2011 – A Practical Cross-Border Insight Into Cartels and Leniency

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Published in “The International Comparative Legal Guide to: Cartels & Leniency 2011”

1 The Legislative Framework of the Cartel Prohibition

1.1 What is the legal basis and general nature of the cartel prohibition, e.g. is it civil and/or criminal?
The legal basis for cartel prohibition is to be found in Article 5(1) of the Romanian Competition Law No 21/1996, as amended (the “Law”).
According to the Law, the violation of the interdiction regarding anti-competitive agreements or practices constitutes an administrative offence committed by the undertaking, punishable by fines. Also, a criminal offence could be held on behalf of the individual(s) contributing significantly to the anti-competitive agreements or practices, punishable by fine or imprisonment. Finally, the violation of the interdiction may be treated as a tort, with any party harmed by the anti-competitive agreements or practices having access to private actions for damages.

1.2 What are the specific substantive provisions for the cartel prohibition?

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

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

As a rule, the above mentioned interdictions do not apply to those agreements, decisions or concerted practices which cumulatively:

  • contribute to improving production/distribution or promoting technical/economical progress assuring a corresponding benefit for the consumers;
  • do not impose restrictions that are not indispensable for achieving these goals; or
  • do not offer the possibility of eliminating competition in a substantial part of the respective product markets.

However, in case of cartels it is unlikely that these conditions are met.
Moreover, the ‘de minimis’ rule (exempting from the interdiction those
agreements and practices of minor importance) does not apply to agreements which have as their object setting prices to customers, limiting production or sales and sharing markets or clients (which actually constitute the subject-matter of most cartel agreement or practices).

1.3. Who enforces the cartel prohibition?
The Law empowers the Competition Council (“CC”) to enforce its provisions, including the cartel prohibition. The CC is an autonomous administrative authority, with regulatory and enforcement powers. The CC’s decisions are taken in its Plenum by majority. There are seven members of the Plenum, appointed by the President of Romania of the Government’s proposal for a five-year term; they may be reappointed for one term. The independence of the members of the Plenum is guaranteed by law. The investigations are conducted by civil servants, called ‘competition inspectors’.

1.4 What are the basic procedural steps between the opening of an investigation and the imposition of sanctions?
The CC may order the initiation of investigations, if there is sufficient factual and legal basis:

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

Following the opening of the investigation, supplementary information is gathered by means of:

  • formal request of information and documents; or
  • dawn raids at the headquarters of the undertakings involved or in any other areas where they operate.

In case the undertakings are not complying with their obligations correlative to the CC’s powers above, the CC may apply administrative fines for not providing information as requested/not submitting to the dawn raid.
Following the gathering of information, the following procedural steps ensue:

  • the statement of objections is sent to the undertakings concerned and their statement of defence are expected;
  • access to the file is granted;
  • hearings in front of the CC’s Plenum are held;
  • deliberation of the Plenum; and
  • issuance of the decision sanctioning the undertakings concerned (and/or imposing other obligations) or closing the investigation without finding an infringement.
    There are no legal provisions regarding the maximum time period from the initiation of the investigation until the final decision.

1.5 Are there any sector-specific offences or exemptions?
There are no sector-specific offences.
As to the sector-specific exemptions, they are the same as those regulated by the European Commission through its block exemption regulations, namely motor-vehicles, insurance and maritime transport. Actually, the last modification of the Law (in 2010) abolished all of the CC’s block exemption regulations and made an explicit referral to the categories and conditions of eligibility provided for in the European Commission’s block exemption regulations (comprising also those covering certain types of agreements).

1.6. Is cartel conduct outside Romania covered by the prohibition ?
The cartel prohibition covers the conduct outside Romania as long as it has effects on the Romanian market.

2 Investigative Powers

2.1. Summary of general investigatory powers.
Table of General Investigatory Powers

Investigatory power Civil / administrative Criminal
Order the production of specific documents or information Yes No
Carry out compulsory interviews with individuals No No
Carry out an unannounced search of business premises Yes No
Carry out an unannounced search of residential premises Yes* No
Right to ‘image’ computer hard drives using forensic IT tools Yes No
Right to retain original documents No No
Right to require an explanation of documents or information supplied Yes No
Right to secure premises overnight Yes No

Please Note: * indicates that the investigatory measure requires the authorisation by a Court or another body independent of the competition authority.

2.2 Please list specific or unusual features of the investigatory powers referred to in the summary table.
There are none.

2.3. Are there general surveillance powers (e.g. bugging)?
General surveillance powers such as room bugging or telephone tapping are available only in the context of criminal investigations (not administrative, such as those performed by the CC).

2.4 Are there any other significant powers of investigation?
According to its legal powers of investigation, the CC has the right to:

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

Based on a judicial authorisation granted through a decision from the President of Bucharest Court of Appeal, or by a judge delegated by him, the CC may perform inspections on any premises, including domiciles, land or means of transportation belonging to managers, directors, executives and other employees of undertakings or associations of undertakings under investigation. The judiciary authorisation may be appealed before the High Court of Cassation and Justice, within 48 hours; the appeal does not, however, stay enforcement.
The CC will carry out the aforementioned acts only if there are indications that documents may be found or information may be obtained that is deemed necessary to fulfil their task, and the result will be recorded in an inspection minutes.
The CC can also carry out inspections at the request of the European Commission or another competition authority from a Member State.

2.5 Who will carry out searches of business and/or residential premises and will they wait for legal advisors to arrive?
The searches are performed by the competition inspectors, based on an inspection order issued by the President of the CC, a judicial authorisation being also needed for searches of residential premises.
Since they constitute administrative (and not criminal) proceedings, searches performed by the CC may be carried out in the absence of the legal advisors. However, in practice the competition inspectors usually wait for a reasonable period of time in order to allow the legal advisors to arrive.

2.6 Is in-house legal advice protected by the rules of privilege?
According to the recent amendments brought to the Competition Law (2010), 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 and their lawyers belonging to a Bar Association (“avocat”), accomplished in the context and for the exclusive purpose of exercising the rights of defence (either before or after the initiation of the investigation).
b. Preparatory documents drafted by the undertaking for the exclusive purpose of exercising the rights of defence, even if they have not been sent or were not meant to be sent to the said lawyer (“avocat”).

It follows that the rules of privilege clearly do not cover the communications between the undertaking and its pure in-house lawyer, i.e. employed under the labour law (“consilier juridic”).
As to the communications with the formally independent lawyers belonging to a Bar Association (“avocat”) but which act as de facto in-house lawyers, they appear to be covered too, should the Law be interpreted literally (contrary to the judgment of Court of Justice of the European Union in Akzo). However, one should wait for future case-law to clarify the issue.

2.7 Please list other material limitations of the investigatory powers to safeguard the rights of defence of companies and/or individuals under investigation.
There are no other expressly provided material limitations of the investigatory powers of the CC. However, the general limitations are available, such as the obligation to limit the exercise of the investigatory powers to the scope of the investigation and inspection orders.

2.8 Are there sanctions for the obstruction of investigations? If so, have these ever been used? Has the authorities’ approach to this changed, e.g. become stricter, recently?
The obstruction of the CC’s investigation, either by providing incomplete/inaccurate information, or by not responding to the CC’s request for information or by not submitting to a CC dawn-raid, is punishable by an administrative fine between 0.1% and 1% from the total turnover obtained in the financial year preceding the sanctioning decision.
These sanctions have been used in the past. For example, in September 2008 three undertakings were fined for supplying incorrect information in the context of a sector inquiry regarding food products commercialisation. Also, in April 2010 one undertaking was fined for supplying incorrect information in the context of an investigation on the market for banking and inter-banking services.

3 Sanctions on Companies and Individuals

3.1 What are the sanctions for companies?
The infringement of article 5 of the Law (as well as of Article 101 of the TFEU) determines the nullity of the respective agreements or decisions. Such infringement constitutes an administrative offence and is punishable with a fine between 0.5% and 10% of the total turnover obtained in the financial year preceding the sanctioning decision. The actual fine will take into account the gravity, duration and consequences of the breach.
In case the undertaking does not comply, within 45 days, with the structural or behavioral measures imposed by the CC through a decision with a view to restore the competitive environment, the maximum fine of 10% of the total turnover may be applied.
The Law provides for the confiscation of the supplementary revenues, obtained as a result of the administrative offenses once established and sanctioned by the CC; however, this provision was never applied.
As mentioned in response to question 2.8, the obstruction of the CC’s investigation, either by providing incomplete/inaccurate information, or by not responding to the CC’s request for information or by not complying with a CC dawn-raid, is punishable by an administrative fine between 0.1% and 1% from the total turnover obtained in the financial year preceding the sanctioning decision.
The undertakings also face the risk of periodic penalty payments up to 5% of the average daily turnover obtained in the financial year preceding the sanctioning decision, in case they do not comply with a previous CC decision imposing various obligations such as: the termination of the infringement; interim measures; or a binding commitment. Periodic penalty payments may also be imposed with a view to determine the undertaking to supply complete and correct information and to submit to an inspection.
Irrespective of the administrative sanctions applied, any party harmed by the anti-competitive agreements or practices has access to private actions for damages.

3.2. What are the sanctions for individuals?
According to the Law, participation of individuals with fraudulent intent and in a decisive way to the conception, organisation or performance of the practices prohibited by article 5 represents a criminal offence, punished by imprisonment for a period from six months to four years or with a criminal fine and with the prohibition of the right to hold a function or exercise a profession or to carry out an activity which was similar to that used for breaking the law.

3.3 Can fines be reduced on the basis of ‘financial hardship’ or ‘inability to pay’ grounds? If so, by how much?
According to recently introduced regulations regarding the method of setting fines, they may exceptionally be reduced at the request of the undertaking proving beyond any doubt that the payment of the whole amount would endanger its existence on the market due to insolvency or an extremely difficult financial situation. The reduction of the fine and the resulting amount is totally at the CC’s discretion.

3.4. What are the applicable limitation periods?
The limitation period for the infringement of the substantive prohibition of the Law (cartel prohibition included) is 5 years and starts from the date when the continuous infringement ended.
As to the obstruction of the CC’s investigation, the limitation period is 3 years.
Any investigatory act or action by the CC interrupts the limitation period.

3.5 Can a company pay the legal costs and/or financial penalties imposed on a former or current employee?
In case an employee is found criminally liable for the infringement of cartel prohibition, criminal fines may be imposed on him/her. There is no express competition law provision preventing a corporation from paying the legal costs and the financial penalties in such situations, but there are other legal factors that must be taken into account (best interests of the company, minority shareholders, tax aspects etc.).

3.6 Can an implicated employee be held liable by his/her employer for the legal costs and/or financial penalties imposed on the employer?
According to the general applicable rules, an undertaking may hold liable any of its employees for the legal costs and financial penalties incurred because of the infringement of the cartel prohibition. In practice, however, there are other factors that must be taken into account, such as the undertaking’s by-laws and policy.

4 Leniency for Companies

4.1 Is there a leniency programme for companies? If so, please provide brief details.
The CC issued, in September 2009, revised Leniency Guidelines, with a scope of application also covering vertical agreements and concerted practices (the scope is to be further assessed, depending on the evolution of the economic conditions in which the undertakings active on the Romanian market operate).
Under the leniency programme, an undertaking may be granted immunity or a reduction of the fine.
To be granted immunity, an undertaking must be the first one to submit information and evidence that, in the CC’s view, allows it either: (i) to initiate an investigation procedure and perform unannounced inspections (“Type A Immunity”); or (ii) to prove an infringement of article 5(1) of the Law or of article 101(1) TFEU (“Type B Immunity”).
In each of the two cases, Type A Immunity and respectively Type B Immunity will only be granted if the undertaking is the first one to submit information and evidence allowing the CC (i) to initiate an investigation procedure and perform unannounced inspections, at a moment when the CC did not have sufficient elements to initiate an investigation or perform an unannounced inspection, respectively (ii) to prove the breach of article 5 of the Law or of article 101 TFEU, at a moment when the CC did not have sufficient evidence to establish the infringement (and in addition, no other undertaking must have obtained conditional immunity in relation to the same cartel).
An undertaking seeking to benefit from immunity must also meet the general conditions:

a. cooperating genuinely, fully, on a continuous basis and promptly with the CC throughout the entire procedure (submitting all the evidence relating to the alleged cartel; remaining at the disposal of the CC for any request that might contribute to establishing the facts; not destroying or concealing relevant information or evidentiary documents; not disclosing the existence or content of the leniency application before the competition authority sends the statement of objections to the parties);
b. ending the involvement in the alleged illegal activity at the request of the CC;
c. not having disclosed the intention to submit a request for leniency/elements of the leniency application; and
d. not having acted as ringleader.

If an undertaking does not qualify for immunity (because, for example, it was not the first or because it has acted as a ringleader), it can benefit from a reduction of fine (between 30% and 50% / or between 20% and 30% /or of up to 20%), provided that:

a. it provides the CC with evidence representing “significant added value”; and
b. it meets the above general conditions (except for the ringleader prohibition).

An undertaking wishing to benefit of immunity can either (i) submit all information and evidence from the beginning or (ii) submit them in a hypothetical form (also including a list of the evidentiary elements to be disclosed at a later stage). The CC will acknowledge the eligibility of an undertaking to benefit of immunity by granting it in writing conditional immunity from fines.

4.2 Is there a ‘marker’ system and, if so, what is required to obtain a marker?
An undertaking may contact the CC, expressing its will to cooperate and to obtain a marker with a view to assure priority, and providing to the competition authority information regarding the name, address, the parties to the alleged agreement, the products and territories affected, the type of the agreement, the estimated duration of the breach, and a brief description of the manner in which the agreement functioned. The undertaking must also inform the authority with respect to the leniency applications addressed or intended to be addressed to other authorities.
The CC may grant the marker for a certain time period (to be specified depending on each case), in order to allow the collection of information and evidence. The undertaking cannot complete the application by submitting a hypothetical formal request, but if within the time period granted by the CC, the undertaking provides the respective information and evidence, it will be considered that they were submitted as of the date the marker was granted.
Should the applicant fail to complete the request within the deadline granted to it, the CC will reject it, and will only accept a formal application in which all information is provided, without the possibility for the undertaking to make use of the marker system or of a hypothetical request.

4.3 Can applications be made orally (to minimise any subsequent disclosure risks in the context of civil damages follow-on litigation)?
An immunity applicant’s statement can also be made orally, in which case it will be audio recorded.

4.4 To what extent will a leniency application be treated confidentially and for how long?
The leniency application is confidential, being part of the case file. When the CC sends the statement of objections and grants access to the case file, the existence of the leniency application will normally be disclosed to the other parties to the investigation (following which it is possible that some of the information continues to remain confidential).

4.5 At what point does the ‘continuous cooperation’ requirement cease to apply?
The leniency applicant has the obligation to continuously cooperate with the Council throughout the entire investigation procedure.

4.6 Is there a ‘leniency plus’ or ‘penalty plus’ policy?
There is neither a “leniency plus” nor a “penalty plus” policy.

5 Whistle-blowing Procedures for Individuals

5.1 Are there procedures for individuals to report cartel conduct independently of their employer? If so, please specify.
There are no specific procedures for individuals to report cartel conduct independently of their employer.

6 Plea Bargaining Arrangements

6.1 Are there any early resolution, settlement or plea bargaining procedures (other than leniency)? Has the competition authorities’ approach to settlements changed in recent years?
There are no early resolution, settlement or plea bargaining procedures (other than leniency).

7 Appeal Process

7.1. What is the appeal process?
An undertaking may file an appeal with the Bucharest Court of Appeal against a CC decision within 30 days of communication. The Bucharest Court of Appeal decision may be further challenged before the High Court of Cassation and Justice.
The CC order initiating the investigation can only be challenged together with the decision finalising the investigation.

7.2 Does an appeal suspend a company’s requirement to pay the fine?

The mere challenge of the CC decision does not stay the enforcement, this can be granted by the court upon request, provided that a bail amounting of 30% of the fine established by the decision appealed is paid.

7.3 Does the appeal process allow for the cross-examination of witnesses?
Cross-examination of witnesses is allowed during the appeal process, under the general procedural rules.

8 Damages Actions

8.1 What are the procedures for civil damages actions for loss suffered as a result of cartel conduct? Is the position different (e.g. easier) for ‘follow on’ actions as opposed to ‘stand alone’ actions?
Judiciary courts are entitled to grant full compensation for damages in case of cartels. While both “follow on” and “stand alone” actions are available, the latter category raises additional difficulties, because the plaintiff has the burden of proof and is obliged to provide evidence in front of the court regarding all four elements that are to be cumulatively satisfied: the illicit action; the damage; the connection between damage and the illicit action; and the guilt of the author’s infringement. In a “follow on” action, the illicit action (and sometimes also the damage and the connection with the illicit action) are already established by the competition authority.

8.2 Do your procedural rules allow for class-action or representative claims?
Class actions have a limited application under Romanian law practice – several statutes have allowed actions by an association, either for the defence of individual interests, or for the defence of a collective interest. Furthermore, the Civil Procedure Code provides that in cases and under the terms provided exclusively by law, organisations, institutions or authorities may file complaints or defences, without justifying a personal interest, but acting for the defence of a group or general interest. However, there have not yet been any cases of class-actions or representative claims for antitrust damages actions.

8.3. What are the applicable limitation periods?
Individuals or undertakings who consider themselves harmed by an anticompetitive practice prohibited by the Law may claim compensation within two years from the date on which the CC decision remains final and irrevocable.
Should it be the case of a “stand-alone” action, the general 3-year statute of limitation (from the moment the claimant was aware or should have been aware of the author) applies.

8.4 Does the law recognise a “passing on” defence in civil damages claims?

Under the Law, in case a product or service is purchased at an excessive price, it cannot be stated that no injury has occurred because the product or service was resold. This recently enacted provision seems to have been intended to clarify the existence of the possibility to claim damages even if the claimant has resold the product, limiting an “absolute” “passing on” defence, without however eliminating the possibility to invoke it, depending on the circumstances.

8.5 What are the cost rules for civil damages follow-on claims in cartel cases?
Legal costs (judicial stamp fees, judicial stamps, attorneys’ and experts’ fees, amounts due to witnesses, transport and accommodation expenses as well as any other costs necessary for the due conduct of the process) requested by the successful party are incumbent on the losing party.
The court may decrease lawyers’ fees or expert fees to be recovered, if deemed unreasonable by reference to the volume and complexity of the case and lawyer’s activity (without affecting the relationships between the lawyer and his client). Should a defendant acknowledge the claims until the first court hearing, when the parties are duly summoned, it cannot be obliged to pay the plaintiff’s legal costs.
Where several plaintiffs or defendants are involved, they could be compelled to pay the legal costs either on an equal, proportionate or jointly basis, depending on the position held by each of them or on the nature of the relationship between them.

8.6 Have there been any successful follow-on or stand alone civil damages claims for cartel conduct? If there have not been many cases decided in court, have there been any substantial out of court settlements?
No civil damages claims for cartel conduct have been decided in court or out of court yet.

9 Miscellaneous

9.1 Please provide brief details of significant recent or imminent statutory or other developments in the field of cartels, leniency and/or cartel damages claims.
Recent important amendments of the Law (in force as of 5 August 2010): (i) the introduction of the commitments procedure; (ii) the fine imposed on an undertaking can be reduced by 10-25% in case of acknowledgment of being part of a cartel; (iii) participation of individuals with fraudulent intent and in a decisive way to setting up a cartel is punished also with the prohibition of the right to hold a function / exercise a profession / carry out an activity which was similar to that used for breaking the law; (iv) the undertaking benefiting from immunity from a fine will not be held jointly liable for the damages caused through its participation to a cartel; and (v) the CC can also carry out inspections at the request of the European Commission or another competition authority from a Member State and, at the request of the CC, assuming that there may be opposition to the deployment of inspection, the police are obliged to provide necessary support and accompany the inspections teams, in exercise of their powers of inspection. The CC issued in September 2010 the first decision finding a breach of Art 101 TFEU (market sharing ).

9.2 Please mention any other issues of particular interest in Romania not covered by the above.

Romania introduced the self-assessment regime as of 5 August 2010.

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