Competition Law amendments (Law no. 149/2011)

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Note: Law no. 149/2011 (Official Gazette no. 490 of 11 July 2011) approves GEO no. 75/2010 amending and supplementing Competition law no. 21/1996

1. Reduction of the bail which the companies have to pay so that the court can award the suspension of a Competition Council’s decision imposing fines

While during the past year the companies paid 30% of the challenged fine, the fiscal provisions will apply in the future. According to the Fiscal Procedure Code, the court sets the bail at a value of up to 20% of the fine.

Comment: The reduction of the maximum percent of the bail and the setting of its exact value by the court for each case ensures better access to justice for the sanctioned companies which challenge the Council’s fines and wish to obtain the suspension of the decision.

The law makes reference to the Fiscal Code; we expect this provision to be corrected, the bail being established by the Fiscal Procedure Code.

2. Reduction of the economic concentrations’ authorization tariff

While in case of acquisitions submitted to the Competition Council’s control, the companies used to pay 0.04% of the total turnovers of the undertakings concerned, maximum EUR 100,000, from now on they will pay an authorization tariff with a value between EUR 10,000 and 25,000.

Comment: The reduction of the authorization tariff encourages acquisitions and simplifies the procedure by eliminating the reference to the turnovers of the undertakings concerned. The Council will soon issue guidelines for the calculation of the tariff.

3. Increase of the maximum reduction of the fine for acknowledgement of the breach, while at the same time imposing additional obligations

The reduction of the fine for acknowledgement of the breach of the law after having received the investigation report and having exercised the right of access to the file, in the written defense or during the hearings, may amount to 30% of the basic level of the fine (including where this level is already established at the minimum level provided by the law).

At the same time however, the law now provides for the obligation of the undertaking investigated to propose remedies eliminating the causes of the breach (where applicable) in order to benefit of the reduction of the fine.

Comment: This additional condition may render more difficult the application of the reduction, especially considering the absence of evaluation criteria for the remedies. From the Competition Council’s statements, higher reductions will be considered in case of abuse of dominant position, where the leniency policy does not apply, whereas for cartels the reductions will be lower, the intent being to encourage leniency applications.

4. Undertakings with a market share of over 40% are presumed to hold a dominant position until proven otherwise

Until now, the Competition law provided only that a market share below 40% is a presumption of the non-existence of a dominant position (the European Commission assessing as unlikely the finding of dominance for a market share below 40%).

Comment: This amendment contravenes to the approach at European Union level, according to which a high market share is just a preliminary indication, even if important, in finding dominance. An indication does not have the value of a presumption, the Commission only reaching a conclusion after the examination of all the factors determining the competitive constraints that the company is facing.

Thus, the Council should have proven on the basis of all the relevant factors the existence of a dominant position, without relying upon a presumption against which the companies have the burden of proof.

5. The Competition Council may use the information obtained in the course of an investigation or inspection also beyond that investigation

While until now the information obtained by the Competition Council in the course of an investigation or inspection could have been used only for the purpose for which it was obtained, following the amendment of the law it can be used “for the purpose of the application of the competition legislation” (covering, for example, situations where elements which are not connected to the investigation are discovered).

In addition, the Competition Council may refer the company to other institutions or authorities on the basis of information collected during the course of its own activities.

Comment: It is possible that these amendments will generate in practice a series of challenges on procedural grounds, taking into account the fact that in the European Union the regulation is the same as the one from the previous version of the law (the use only for the purpose for which they were obtained).

6. Hearings are not held anymore in all cases in investigations regarding potential breaches of the law

After receiving the investigation reports and at the time of the submission of the written defense, the companies will be able to request that hearings are held.

Moreover, the Council may hold hearings also in case the investigated undertakings do not request them, when it deems them useful for establishing the truth in the investigated case.

Comment: The law does not provide for the conditions under which the Council may approve or reject such requests, or what happens when not all the investigated companies request that hearings are held in an investigation. A rejection of a company’s request that hearings are held may however contravene to the right of defense of the investigated companies. 

7. Serious restrictions of competition

The law expressly details the serious restrictions of competition, to which art. 5 (1) applies regardless of the market share (they already existed in the law, in a synthetic form).

8. Legal privilege: lawyer-client communications

Although the final part of the provision, respectively “even if they were not sent to the lawyer or were not created with the purpose of being physically sent to a lawyer” was eliminated, the law still provides that “the preparatory documents drafted by the investigated undertaking or association of undertakings with the sole purpose of the exercise of the right of defence cannot be taken or used as evidence”.

Comment: Even if it seems that the intention was to limit the category of documents which cannot be used as evidence to those sent to the lawyers, due to the manner in which it was amended, the provision does not affect the companies’ rights regarding the preparatory documents. 

9. The Competition Council may also decide through a Commission to which the Plenum delegates its attributions

The sanctions for the infringements of articles 5 and 6 of the law / 101 and 102 of the Treaty on the Functioning of the European Union (agreements and abuse of dominant position) or for the implementation of economic concentrations prior to their approval will not be necessarily decided by the Plenum (which consists of 7 members), but may be imposed by a Commission (consisting of 3 members) to which the Plenum delegates this attribution.

10. The Competition Council acquires competence in the field of unfair competition (Law 11/1991)

The Unfair Practices’ Department within the Ministry of Public Finances was competent in this field until now.

Comment: In the context of gaining competence in this field, corresponding procedures have to be elaborated. At the same time, we can also anticipate the amendment of the provisions of Law 11, already envisaged by the Competition Council. 

11. The Competition Council does not issue anymore an “avis conforme” for the draft normative acts

Although the public administration authorities and institutions are still obliged to request the Council’s “avis” for the draft normative acts that may have anticompetitive impact, the “avis” are not “conformes” anymore, the Council being able only to recommend their amendment.

Comment: Thus, there can only be subsequent remedies, if the institutions obliged to request the avis do not follow the Council’s recommendations and a breach of art. 9 of the law (which prohibits the actions of the authorities and institutions that restrict competition) occurs. Respectively, the Competition Council can issue a decision declaring the breach, impose measures, and refer to the Bucharest Appeal Court within 6 months of the expiry of the period provided in the decision, if they do not comply, requesting that the act is annulled / issued / operation is performed (the acts which breach art. 9 being de jure void according to the new amendments). 

12. Claims for damages

The law clarifies the fact that claims for damages caused by an anticompetitive practice may be submitted by the consumer protection associations on behalf of the consumers and by the trade associations on behalf of their members.

13. The Government may prohibit certain acquisitions upon proposal from CSAT, if there are risks for national security

The Competition Council has the duty to inform CSAT (the Supreme Council of Defense) regarding such operations of acquisition of control which are notified to it.

Comment: This provision is usual and may refer in practice to any economic sectors to the extent an acquisition would represent a risk. 

14. Advisory Committee

The Advisory Committee is set up, being composed of representatives of the academia, of the business, of the consumer protection associations or other persons having reputation in the legal, economic or competition field.

The Committee issues non-compulsory opinions regarding the main aspects of the competition policy and (starting July 2012) will forward proposals of appointment of the members of the Plenum of the Competition Council.

15. Reduction of the fines for authorities and institutions of public administration and for newly set up companies

The fines for public administration authorities and institutions will be of minimum RON 1,000, maximum RON 20,000 (compared to RON 5,000-40,000).

The fines for the newly set up companies, which did not have turnover in the year preceding the sanctioning and for which the fine cannot be established as a percentage of the turnover, are reduced to half (thus, the maximum fine cannot exceed RON 2.5 millions).

16. Reduction of the maximum duration of the imprisonment sanction for natural persons

The maximum imprisonment sanction is reduced from 4 to 3 years for the natural persons who participate with fraudulent intent and decisively to the conception, organization and performance of the practices prohibited by art. 5 of the law (cartels).

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