Whenever trying to prepare annual forecasts, you face a high degree of uncertainty, especially in the area of competition law. The Romanian Competition Council is a strong authority, with plenty of experience and a reputation built especially through its previous high fines, which were applied in various industries. The authority's actions are influenced by various internal elements, such as law amendments or the way in which undertakings act on markets, as well as external factors, such as investigations launched by the European Commission or other national competition authorities. We have presented below some major market trends and the expected main areas of interest for 2017. The below forecasts take into consideration an analysis of the Romanian Competition Council activity's in the last 3 years.
II. POTENTIAL DEVELOPMENTS
A. Antitrust investigations
In Romania, the number of antitrust investigations seems to be on a growing path if we consider the authority's latest activity:
- In 2014 – 9 investigations were launched;
- In 2015 – 13 investigations were launched;
- In 2016 – 12 investigations were launched.
What is to be expected in 2017: We should expect an increase in the number of complaints to the competition authority. This may happen due to the fact that more and more undertakings look towards the Competition Council when they feel restricted on a given market or use the Competition Council as a pressure tool for obtaining special treatment. However, this approach may have a negative impact if purely commercial disputes are presented to the authority as competition law infringements. We expect an increase (potentially 10 to 15 %) of the antitrust investigations to be launched by the Competition Council, most of them as a result of complaints.
B. Sector inquiries
The sector inquiry is the most effective tool used by the competition authority in order to better know a given market. This tool is used more and more often by the European Commission and tendency may be adopted by the national authorities.
- In 2015 no sector inquiry was launched;
- In 2016 – 5 sector inquiries were launched on the following markets: the market for exploitation of mineral water resources in Romania; the market of copyright; the market of retail banking services; the market of production and commercialization of cement in Romania; e-commerce sector – with a focus on the marketing strategies.
What is to be expected in 2017: More sector inquiries may be launched, potentially in the areas of industry and energy, banking sector, as well as in the food retail sector. Also, the results for the sector inquiries launched in 2016 may be published (although preliminary conclusions). If we rely on the past experience, such sector inquiries may generate new investigations on potential competition law infringements.
The sanctioning system applicable in Romania allows fines of up to 10 % of the total turnover obtained in the year prior to sanctioning. In 2016, the Competition Council fined several undertakings with amounts totalling EUR 15.2 million.
What is to be expected in 2017: The total value of the fines may rise in 2017, given the fact that a significant number of on-going investigations may be finalised. The amount of fines may be influenced also by the turnover values of the undertakings to be sanctioned (it is possible that the number of cases to be finalised in 2017 to be lower than in 2016, yet the total amount of fines to rise given higher turnovers of the involved undertakings). At this point, the Romanian Competition Council is contemplating finalizing cases in the security services market, insurance, food retail and media.
D. Merger Control
2016 was a very good year in terms of merger control. The Competition Council assessed 59 economic concentrations (compared to only 35 in 2015 and 42 in 2014).
What is to be expected in 2017: The number of economic concentrations to be assessed by the Competition Council in 2017 may decrease, yet without reaching the 2015 level. This tendency may be linked to the fact that investors seem to be more cautious with respect to their activities in Romania, as well as to the fact that the number of small mergers may rise (such operations not being subject to the competition authority's approval by not meeting the notification thresholds). On the other hand, Romania continues to be an interesting jurisdiction for merger case and we expect to have some operations with impact on the market (where commitments or a more complex economic assessment is required).
E. Dawn raids
In 2016, the Romanian Competition Council was very active with respect to unannounced inspections, performing 13 raids at 68 premises. Moreover, in 2016, the first European Commission dawn raid was performed in Romania (on the market for commercialisation of natural gases).
What is to be expected in 2017: It is rather hard to predict whether or not the number of dawn raids shall increase (yet this may happen). However, it is likely that the growing trend of forensic procedures to be maintained. This may generate a new and growing need for compliance by the undertakings that may be targeted by such procedures (including also for their IT departments which currently are the ones exposing the companies to competition risks as a result of their lack of experience when dealing with competition controls).
F. Challenging the Competition Council decisions In 2016, the number of court files concerning the Romania Competition Council decreased by 4.5% (compared to 2015).
What is to be expected in 2017: It is likely for this decrease trend to continue in 2017 also, given the fact that less and less undertakings consider challenging the authority's decisions, especially as a result of the increasing number of settlement decisions. On the other hand, we have already a successful case of private damages and this type of cases are expected to grow in the future. This would generate a need for competition work as well as economic expertise in determining the damages resulting from the anticompetitive behaviours.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.