Comparative Guides

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4. Results: Answers
Investigations – step by step
What initial steps do the enforcement authorities take to commence a cartel investigation?

Answer ... Investigations can be commenced either ex officio or following a complaint or a leniency filing. In either case, the investigation is officially commenced by order of the Romanian Competition Council chairman. Historically, the council has predominantly opened investigations following complaints or ex officio; only a handful of investigations have been opened as a result of a leniency filing.

Ahead of opening an investigation ex officio, the council may carry out a preliminary review to identify the questionable market conduct. To this end, it may send requests for information to relevant undertakings.

Another warning of a potential investigation is the commencement of a sectoral investigation. During these broad investigations, the council collects a vast volume of market information, which often reveals dysfunctions that subsequently lead to the commencement of targeted investigations. This was the case in recent years with the sectoral investigations of the food retail, insurance, medical services, movie distribution, cement and drugs distribution markets: all spawned subsequent targeted investigations that in some cases ended with the imposition of multimillion-euro fines.

For more information about this answer please contact: Gelu Goran from Biris Goran SPARL
Are dawn raids commonly conducted in your jurisdiction? If so, what are the pre-conditions for conducting a dawn raid? When, where and by whom are they conducted? Do the enforcement authorities have the power to search private as well as company premises?

Answer ... Dawn raids are a common occurrence in Romanian Competition Council investigations, as the council fully appreciates that this is often the most efficient way to collect information. In 2018, 62 dawn raids were conducted as part of 15 investigations.

Before February 2014, dawn raids were conducted solely on the order of the council’s chairman and often were mere fishing expeditions. Since then, in addition to the order of the chairman of the council, the approval of the Bucharest Court of Appeals is required. In practice, however, this presents no hurdles for the council, as the Bucharest Court of Appeals usually simply rubber-stamps its dawn raid requests without questioning whether the council has sufficient indicia to request a dawn raid. For instance, dawn raids have received court approval even in merger control cases involving gun jumping, where there was clearly no risk of evidence being tampered with or destroyed.

Dawn raids are conducted by competition inspectors and IT or forensics specialists, and must take place between 8:00am and 6:00pm. The duration of a dawn raid can be extended past 6:00pm only with the consent of the target undertaking; if such consent is not given, the inspectors may seal the rooms, cabinets and computers containing information that still needs to be reviewed and resume their inspection the following day. Their search powers mimic those of European Commission dawn raid teams, but council dawn raids are significantly less disruptive:

  • They are usually completed in one day;
  • Copies of the undertaking’s hardware are rarely made for a subsequent forensics review; and
  • In most cases only a small number of documents are copied and taken by the inspectors.

As part of a dawn raid, the inspectors must be granted access to all premises, land and means of transportation belonging to or used by the target undertaking. Pursuant to the court approval through which the dawn raid is authorised, inspectors can also investigate the residence, land and means of transportation of executives, directors, managers and other employees of the target undertaking.

For more information about this answer please contact: Gelu Goran from Biris Goran SPARL
What powers do officers have during the dawn raid? Are there any limitations on these powers?

Answer ... The Competition Law gives inspectors a wide array of investigative powers during a dawn raid. Inspectors may enter any premises, land or means of transport of target undertakings and associations of undertakings. All rooms within the premises of the target undertaking can be entered; inspectors need not restrict themselves to waiting in a conference room and having the requested documents brought to them by employees.

Inspectors are empowered to examine and obtain copies of any documents relating to the target undertaking’s activities, whether in hard copy or digital form. Digitally stored documents may also be seized in bulk by transferring them to an electronic storage medium and applying a seal thereto in the presence of a representative of the investigated undertaking; relevant documents can then be selected at a later date. All searched data should relate to the subject matter of the investigation; however, given the general wording of investigations, an argument that the requested information lies outside the subject matter of the investigation may not necessarily succeed. Council inspectors are legally bound to keep all information gathered during their inspection confidential (professional secrecy obligation); for this reason, all records containing business secrets must be disclosed by the target undertaking.

The Competition Law protects the privacy of communications between an undertaking and its external counsel. As a consequence, information that passes between external counsel and the undertaking need not be disclosed to the inspectors.

Aside from their extensive powers regarding document examination and seizure, inspectors are also empowered to request oral explanations of facts or documents relating to the subject matter and purpose of the inspection. Where such information is sought, the right against self-incrimination must be taken into account. However, although an undertaking cannot be forced to admit infringements, it is nevertheless obliged to answer factual questions and to provide documents, even if these might be used to establish the existence of an infringement.

For more information about this answer please contact: Gelu Goran from Biris Goran SPARL
What are the rights and obligations of the target company and any individuals targeted during a dawn raid?

Answer ... The target undertaking has an active duty to cooperate with the inspection team. It must ensure that inspectors can access all rooms at the raided premises and provide access to documentation and electronic systems. The Romanian Competition Council’s recent focus on IT systems confirms that undertakings should pay special attention in this regard, providing quick access to all parts of these systems as necessary (eg, email accounts; specialised software used on a username/password clearance basis) and ensuring that relevant information can be extracted in a useable format. Failure to comply with the inspectors’ requests due to IT issues might add unnecessary tension to the proceedings.

The rights of the target undertaking are mostly safeguarded by:

  • the privileged status of communications with external counsel;
  • the right to avoid self-incrimination; and
  • the right to refuse to submit information that is clearly outside the subject matter and purpose of the investigation, or to respond to questions on facts or documents that do not relate to the subject matter and purpose of the inspection.

The undertaking is entitled to legal assistance during the dawn raid. Inspectors cannot object to the presence of external counsel during the dawn raid and, in practice, will generally postpone commencement of the dawn raid for a very brief period to allow external counsel time to arrive.

For more information about this answer please contact: Gelu Goran from Biris Goran SPARL
What evidence can be seized during a dawn raid? Do the enforcement authorities have the power to interview witnesses and take statements during a dawn raid?

Answer ... Council inspectors can make copies of any types of documents, whether in hard copy or digital format. Formal documents (eg, executed agreements, memoranda, letters and internal guidelines) and informal documents (eg, notebooks, agendas and annotated supporting documentation) can also be copied.

Statements can be taken from employees and representatives of the target undertaking, to the extent needed for the inspectors to understand and contextualise the information contained in the documentation. If broader or more complicated questions are asked, the target undertaking is within its rights to request that it provide its reply in writing.

For more information about this answer please contact: Gelu Goran from Biris Goran SPARL
How can a company best prepare itself for dawn raids? What best practices should it follow in the event of a dawn raid?

Answer ... As the number of dawn raids increases and the Romanian Competition Council makes better use of this investigative tool, undertakings would be well advised to draw up dawn raid guidelines in order to prepare employees for this eventuality. Other best practices include regular training of the management and legal teams, and the conduct of mock dawn raids, whose results may inform the ongoing adaptation of the guidelines and training.

During a dawn raid, the target undertaking should:

  • cooperate fully, noting every step that the council takes;
  • restrict the answers of factual questions asked by inspectors and not volunteer information;
  • seek assistance from external and in-house counsel; and
  • shadow the inspectors at all stages of the dawn raid.

All members of staff should be informed, by means of a senior management announcement, that:

  • an inspection is taking place;
  • the inspection must not be revealed to any third parties;
  • the document retention policy must be suspended;
  • documents and data must not be deleted, destroyed or concealed; and
  • staff must cooperate with the inspection team.

Another useful preparatory measure is to ensure that all legally privileged documents are marked accordingly and stored separately.

For more information about this answer please contact: Gelu Goran from Biris Goran SPARL
What are the next steps in the cartel investigation following a dawn raid? What timeframe do these typically follow?

Answer ... The post-dawn raid phase begins with the resolution of any procedural incidents relating to the raid itself, such as claims concerning the privileged status of documents seized during the dawn raid or the performance of forensic procedures on storage devices copied during the dawn raid. At this stage, the target undertakings are also requested to verify the documents seized, and to redact any confidential information and submit non-confidential versions of the seized documents for inclusion in the investigation dossier that will be made available to all concerned undertakings.

Following the dawn raid, the target undertakings will receive requests for information (recent experience indicates that the scope of such requests is quite extensive). In 2017 the Romanian Competition Council began availing of the possibility to interview any natural or legal persons that consent to be interviewed for the purpose of collecting information relating to the subject matter of an investigation. These interviews are carried out on a voluntary basis. This investigative tool is different from the inspectors’ power to ask oral questions during an inspection, which representatives are obliged to answer and where incorrect, incomplete or misleading answers, or refusals to reply, may result in fines.

The final phase of the investigation begins with the issuance of the statement of objections, followed by a hearing scheduled at least thirty days from the communication of the statement of objections. A summary decision is made by the deliberative body of the council, either at the hearing or shortly after the hearing, and the concerned undertakings have access to a summary decision. A full decision is then drafted within 120 days from the deliberation date. The council’s full decision may be appealed to the Bucharest Court of Appeals within 30 days of its communication to the parties.

Analysis of the council’s annual reports reveals that investigations have accelerated in recent years. The average duration of its investigations stood at 2.8 years in 2018 and 2017, as opposed to almost five years in 2015 and 4.4 years in 2016. That said, the relevance of these figures is debatable: extreme outliers are likely to influence the average, as the number of investigations finalised each year is relatively low.

For more information about this answer please contact: Gelu Goran from Biris Goran SPARL
What factors will the enforcement authorities consider in assessing whether cartel activity has taken place?

Answer ... The cartel investigations are either initiated by the Romanian Competition Council ex officio or triggered by complaints. As internal council documents (eg, notes, preliminary reports, memoranda) are not made public, it is difficult to pinpoint what has triggered the council’s suspicions of questionable market conduct. In some instances, the council has commenced investigations following political pressure or public or media outcry; but most of these investigations were terminated with no finding of market distortions as a result of cartel activities.

The council has unfettered discretion to commence investigations. Due to its periodic reviews of key concentrated markets and its sectoral market investigations, it is well aware of market dysfunctions and will commence an investigation once it has solid indicia of questionable market conduct.

For more information about this answer please contact: Gelu Goran from Biris Goran SPARL
In case of a finding of cartel activity, can the company seek to negotiate a settlement, plea bargain or similar resolution? If so, what is the process for doing so?

Answer ... The Romanian Competition Council introduced a plea bargaining programme in 2010, in a bid to make better use of its resources. Under this programme, investigated undertakings can admit a breach of the Competition Law in exchange for a 20% reduction in fine. However, the programme was inefficiently designed, as an admission of guilt could be made only after receipt of the statement of objections and no later than the hearing date. The programme was overhauled in 2016 to allow undertakings to admit their transgressions before receipt of the statement of objections in exchange for a 30% reduction in fine. As a result, a few undertakings opted to avail of the programme. In an effort to further improve the effectiveness of the programme, revised rules were published for public consultation in late October 2019. The new rules propose a reduction in fine of up to 30% where an undertaking initiates a full admission of guilt within six months of commencement of the investigation, and of up to 20% if the admission of guilt occurs between six and 12 months after commencement of the investigation. This will probably make the programme more effective, as undertakings that enter into discussions on an admission of guilt at least 12 months after commencement of the investigation will qualify only for a maximum 12% reduction in fine.

An investigated undertaking may also propose commitments with the aim of remedying a situation which led to breach of the Competition Law. However, this procedure is expressly precluded in the case of cartels.

For more information about this answer please contact: Gelu Goran from Biris Goran SPARL