Answer ... The Romanian Competition Council has historically initiated investigations following either complaints from disgruntled competitors or distributors or media scrutiny regarding allegedly dysfunctional markets. Its first leniency notice was issued in 2004, replicating the European Commission’s 2002 Leniency Notice; but there were no reported cases of council investigations initiated following a leniency filing.
In 2009, in an effort to jump-start its leniency programme, the council adopted an improved leniency notice modelled on the European Commission’s 2006 Leniency Notice. At the same time, the council was becoming increasingly active in conducting dawn raids and adopting a more aggressive stance in terms of market scrutiny and fining policy. As a result of this initiative, the council reported that it had initiated investigations following leniency filings. However, the numbers remained small: only four investigations were initiated and completed following leniency filings in the last 10 years, with three of these (one Type A immunity and two Type B immunity) completed in 2017 and 2018. It is thus apparent that the council’s leniency programme is suboptimal.
There are several reasons for this. First, the council’s detection and fining track record is still not a sufficient incentive for undertakings to blow the whistle on cartel behaviour and put their trust in a leniency application. Second, the local business culture as yet does not recognise whistle blowing as ethically acceptable when it facilitates law enforcement.
Third, there is a fear of retaliation: in Romania’s small markets, market players know each other very well, making anonymous leniency filings impossible in practice. Further, local undertakings are yet to be reassured that regulatory safeguards are sufficiently effective to protect them from any unethical reactions by competitors to a leniency application. Finally, the decision to file for leniency and the process itself require thorough internal preparation and extensive data gathering, but there is a lack of training and internal compliance procedures in this regard.
Answer ... The council’s leniency programme encourages cartel members to disclose the existence of their illegal cartels in exchange for full immunity from fines. The whistleblower must provide sufficient evidence to enable the council to open an investigation (Type A immunity) or find the existence of a cartel (Type B immunity) in exchange for immunity from fines.
Subsequent applicants may obtain fine reductions of up to 50% if they provide evidence that adds significant value to the evidence already in the council’s possession and cooperate actively with the council.
As a general rule, coercers – cartel members that actively took steps to establish the cartel – cannot obtain full immunity from fines. However, they may still qualify for a reduction, like any other cartel member, if they actively cooperate with the council and provide it with additional evidence of significant added value.
Answer ... Pursuant to the council notice, an applicant for immunity must produce information and evidence about the cartel which, in the council’s opinion, will enable it to start an investigation and conduct dawn raids (Type A immunity) or find the existence of a cartel (Type B immunity).
To this end, the applicant must submit a corporate statement containing detailed information about the cartel, the product and geographical markets, the applicant and other cartel members, and evidence relating to the cartel. This statement can be provided in oral or written form.
A marker system was introduced in 2009, which confirms that an applicant has submitted a leniency application and gives it a priority ranking while affording it additional time to gather evidence. The marker system aims to prevent other potential applicants from ‘jumping the queue’ and enhances the applicant’s position with regard to the council and other potential applicants. The timeframe specified by the council to gather the necessary evidence is usually short – just one week – so the applicant must be relatively well prepared before submitting a marker request.
Under the council’s leniency programme, an undertaking can also submit a hypothetical application for immunity without disclosing the identity of the applicant or of the other cartel members. However, given the size of the Romanian markets and inherent market transparency, this option is of no practical use, as the applicant must identify the products and services concerned and the geographical scope of the cartel.
The timeframe for completing a leniency process varies depending on:
- the complexity of the cartel and the relevant industry;
- the quality of the evidence submitted by the applicant;
- the applicant’s ability to submit additional information; and
- whether there are subsequent leniency applicants.
The timeframes for Type A leniency filing have ranged from two years in a bid-rigging case on the electrical counter market, completed in 2017, to five years in an oilfield bid-rigging case, completed in 2014. Type B immunity cases are generally quicker, with the council completing its investigations within two years.
Answer ... An immunity applicant is legally bound to remain actively involved in the leniency process by cooperating closely with the council until the end of the investigation.
A high level of cooperation is required throughout the process, which may make it difficult for leniency applicants to preserve their leniency status. The applicant must:
- cooperate fully with the council by providing all relevant information that comes into its possession or that should be in its possession;
- not destroy or conceal information or evidence relating to the alleged cartel (although this may nevertheless happen due to a rogue employee or director);
- make current (and, if possible, former) employees and directors available for interviews with the council;
- not disclose the fact or contents of its leniency application until the council has issued a statement of objections; and
- cease the cartel activities, unless it is instructed by the council to continue such activities in order to preserve the integrity of the investigation.
Answer ... The Romanian leniency programme is aimed at companies and is not available to individuals, even though key directors or managers of an undertaking who intentionally conceive or organise restrictive agreements may be found criminally liable. There is only one reported instance of the council requesting the Prosecutor’s Office to commence a criminal investigation against an individual who established a minimum price agreement among the members of a trade association.
Thus, a leniency application filed by an employer does not actually benefit its employees. This may partly explain the underwhelming performance of the leniency programme, as undertakings are deterred by the lack of protection for key employees who may be involved in a cartel as ringleaders or organisers.
However, the Competition Law offers immunity or reduced prison sentences for individuals who intentionally conceived or organised cartel activities. To benefit from immunity:
- the relevant individual must inform the Prosecutor’s Office of his or her participation in the infringement before the commencement of criminal proceedings; and
- the self-reporting must lead to the identification and sanctioning of other participating individuals.
If criminal proceedings have already commenced, an individual may still benefit from a reduction of up to half of the initial sanction if the self-reporting leads to the identification and sanctioning of other participating individuals. This immunity or sentence reduction is granted regardless of whether the employer has made a leniency application.
Answer ... The leniency rules set high thresholds for granting immunity or favourable treatment. The applicant must produce information and evidence about the cartel which, in the council’s opinion, enables it to commence an investigation and conduct dawn raids (Type A immunity) or find the existence of an infringement (Type B immunity).
This threshold is rather broad and subjective, as it gives the council unfettered discretion to assess the importance of the information received. Thus far, however, the council does not appear to have exercised this discretion to the detriment of leniency applicants; on the contrary, given the relatively low number of leniency filings, the council has been willing to accept leniency filings that were not particularly persuasive in terms of the evidence submitted. Nevertheless, any potential immunity applicant should be represented by experienced counsel who can present the available information in the best possible light and negotiate with the council throughout the leniency process.
The leniency notice sets out cumulative conditions and obligations that must be observed by a leniency applicant. It is of the utmost importance that the leniency applicant has appropriate internal controls and safeguards in place prior to filing an immunity request, to avoid losing its conditional immunity status due to the accidental or voluntary destruction of evidence or disclosure of the leniency filing.