1 Legal and enforcement framework
1.1 Which legislative and regulatory provisions apply to cartels in your jurisdiction?
The main statute that governs cartels in Romania is the Competition Law (21/1996). Article 101 of the Treaty on the Functioning of the European Union is also directly applicable in Romania.
1.2 Do any special regimes apply to cartels in specific sectors?
There are no national rules governing cartels in specific sectors. However, all EU antitrust regulations that set forth special regimes for specific sectors are directly applicable in Romania.
1.3 Which authorities are responsible for enforcing the cartel legislation?
The cartel legislation is enforced by the Romanian Competition Council.
1.4 How active are the enforcement authorities in investigating and taking action against cartels in your jurisdiction? What are the statistics regarding past and ongoing cartel investigations? What key decisions have the enforcement authorities adopted most recently?
Recent years have seen an uptick in cartel enforcement. For instance, 10 of the 16 investigations commenced in 2018 focused exclusively on cartels. Similarly, 11 of the 19 investigations commenced in 2017 were cartel investigations.
In terms of its recent decisions, the Romanian Competition Council has investigated sectors as diverse as the following:
- mandatory third-party liability motor insurance (nine companies were fined a total of approximately €53 million for price fixing in 2018);
- the production and sale of electricity meters (six companies were fined a total of approximately €16 million for bid rigging in 2017); and
- harbour services – towing and pilotage (six companies were fined a total of approximately €2.3 million for coordinated behaviour leading to market foreclosure in 2017).
2 Definitions and scope of application
2.1 How is a ‘cartel' defined in the cartel legislation?
The Romanian cartel legislation mirrors Article 101 of the Treaty on the Functioning of the European Union (TFEU) and employs a broad definition of ‘cartel'. Accordingly, it prohibits all agreements between undertakings, decisions by associations of undertakings and concerted practices which have as their object or effect the prevention, restriction or distortion of competition on the Romanian market. The content and contours of this definition were refined in 2017 when the EU Private Damages Directive was transposed into national law. Under this updated definition, a ‘cartel' is an agreement or concerted practice between two or more competitors aimed at coordinating their competitive behaviour on the market or influencing the relevant parameters of competition through practices such as:
- the fixing or coordination of purchase or sale prices or other trading conditions, including in relation to IP rights;
- the allocation of production or sales quotas;
- the sharing of markets or customers, including bid-rigging;
- the restriction of imports or exports; or
- anti-competitive actions against other competitors.
2.2 What specific offences are defined in the cartel legislation?
In line with Article 101 TFEU, Romanian law sets out the following examples of cartel behaviour:
- price fixing;
- output limitation;
- market sharing;
- application of dissimilar conditions to equivalent transactions with other trading parties (thereby placing them at a competitive disadvantage); and
- imposition of supplementary obligations which have no connection with the subject of a contract as conditions for its conclusion.
These are not distinct offences, but rather examples of cartel infringements. Accordingly, any other coordinated behaviour that falls within the scope of the general prohibition (ie, that has an anti-competitive object or effect) may be investigated by the Romanian Competition Councill and fines imposed accordingly.
2.3 Is liability under the cartel legislation civil, criminal or both?
Liability under the cartel legislation is civil only (ie, administrative fines).
However, the managers of companies that are found guilty of cartel offences may be criminally liable. As such, directors, managers and legal representatives of undertakings who deliberately conceive of or organise a cartel may be punished with either:
- imprisonment for between six months and five years; or
- a fine of up to approximately €30,000.
2.4 Can both individuals and companies be prosecuted under the cartel legislation?
Only individuals may face criminal prosecution for breach of the cartel legislation.
2.5 Can foreign companies be prosecuted under the cartel legislation?
Foreign companies that breach the cartel legislation may be fined by the Romanian Competition Council. Companies (whether foreign or domestic) will not face criminal prosecution for cartel infringements.
2.6 Does the cartel legislation have extraterritorial reach?
Yes. As long as the effects of a cartel arise in Romania, the undertakings involved may be fined by the Romanian Competition Council.
2.7 What is the statute of limitations to prosecute cartel offences in your jurisdiction?
Five years. However, the statute of limitations starts to run only once the infringement has terminated. In practice, this may result in the investigation of cartels more than five years after the date on which the undertakings entered into the anti-competitive agreement.
Further, any actions taken by the Romanian Competition Council for the purpose of investigating a cartel trigger the commencement of a new five-year period; however, this cannot exceed 10 years from the date on which the statute of limitations began to run.
3 Investigations – general
3.1 On what grounds may the enforcement authorities commence an investigation?
Investigations may be commenced by the Romanian Competition Council either ex officio (if the council suspects that a cartel exists) or following a complaint submitted by an entity or individual that has suffered actual harm as a result of the infringement.
Romanian law sets out no minimum requirements regarding the information that may be used by the Romanian Competition Council to justify the commencement of an investigation ex officio. Moreover, the decision to commence an investigation is not subject to judicial review until after the investigation has been completed. As a result, the decision to start an investigation ex officio may appear to be entirely discretionary.
3.2 What investigatory powers do the enforcement authorities have in conducting their investigation?
The main investigatory powers of the Romanian Competition Council are as follows:
- the power to conduct dawn raids at the premises of undertakings suspected of cartel activity, as well as at the residence of managers and employees of such undertakings (although dawn raids must be approved in advance by the Bucharest Court of Appeals, we are not aware of any instance in which such approval has been denied); and
- the power to send written requests for information to the undertakings under investigation (compliance with these requests is mandatory for the recipient, unlike the European Commission's simple requests for information).
3.3 To what extent may the enforcement authorities cooperate with their counterparts in other jurisdictions during their investigation? How common is such cooperation in practice?
The Romanian Competition Council is part of the European Competition Network. As such, it can cooperate with the competition authorities of other EU member states and with the European Commission. Such cooperation is very rare in practice.
3.4 Is there an opportunity for third parties to participate in the investigation?
The Romanian Competition Council may ask third parties (eg, competitors, clients and suppliers of the undertakings under investigation) for information regarding the market and the alleged anti-competitive conduct. Otherwise, there is no opportunity for such parties to participate in the investigation.
3.5 What are the general rights and obligations of the enforcement authorities during the investigation?
Romanian antitrust legislation does not address the general rules of conduct that the Romanian Competition Council must observe in the course of the investigation. The Competition Law provides that the council should issue such rules of conduct, but as yet this has not happened. As a result, the general principles of administrative law that are applicable to all public servants also apply to the council's antitrust enforcement activity.
3.6 What are the general rights and obligations of the target company during the investigation?
The target undertaking's main obligation is to cooperate fully with the Romanian Competition Council, both during any dawn raid and upon receipt of a written request for information. Failure to submit to the dawn raid or to cooperate fully with inspectors during the dawn raid, and the provision of incorrect, incomplete or misleading responses to a request for information, may result in penalties of between 0.1% and 1% of the target undertaking's total turnover in the previous financial year.
The target undertaking enjoys a right of defence, which encompasses the following key components:
- the right to be represented by a lawyer during the dawn raid and throughout the course of the investigation;
- the right to avoid self-incrimination;
- the right to submit a written response to the council's statement of objections; and
- the right to participate in oral hearings if the council's statement of objections recommends the application of fines.
3.7 What principles of attorney-client privilege apply during a cartel investigation?
Communications between attorneys and undertakings are privileged and may not be viewed, copied or collected by Romanian Competition Council inspectors during dawn raids insofar as:
- such communications have been sent to or received from an external attorney (as opposed to in-house counsel);
- such communications relate to the matter under investigation; and
- the undertaking can show (without disclosing the contents of such communication) that the above conditions are met.
In case of disagreement between the undertaking and the inspectors as regards the privileged status of a particular document, the document will be sealed and the matter referred to the chairman of the council. If the chairman rules in the inspectors' favour, the undertaking may challenge this decision in court. The document will be unsealed only if the court rejects the undertaking's claim and the court decision has become final.
3.8 Are details of the investigation publicly announced? If so, what principles of confidentiality apply?
The decision to issue a press release regarding the commencement of an investigation is made by the Romanian Competition Council at its sole discretion. There are no specific rules on confidentiality, other than the council's obligation not to disclose any information that may amount to a business secret of one of the undertakings under investigation.
4 Investigations – step by step
4.1 What initial steps do the enforcement authorities take to commence a cartel investigation?
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.
4.2 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?
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.
4.3 What powers do officers have during the dawn raid? Are there any limitations on these powers?
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.
4.4 What are the rights and obligations of the target company and any individuals targeted during a dawn raid?
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.
4.5 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?
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.
4.6 How can a company best prepare itself for dawn raids? What best practices should it follow in the event of a dawn raid?
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.
4.7 What are the next steps in the cartel investigation following a dawn raid? What timeframe do these typically follow?
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.
4.8 What factors will the enforcement authorities consider in assessing whether cartel activity has taken place?
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.
4.9 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?
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.
5.1 Is a leniency programme in place in your jurisdiction? If so, how does this function?
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.
5.2 What are the benefits of applying for leniency, both for the first mover and for subsequent applicants?
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.
5.3 What steps does a leniency application involve? What timeframe do these typically follow?
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.
5.4 What are the rights and obligations of the applicant during the leniency application and over the course of its cooperation with the enforcement authorities?
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.
5.5 Is the leniency programme open to individuals? Can employees or former employees benefit from a leniency application filed by their employer? Do the authorities operate a programme for individual whistleblowers separate to the leniency programme?
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.
5.6 Can leniency be denied or revoked? If so, on what grounds?
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.
6 Penalties and sanctions
6.1 What penalties may be imposed in criminal proceedings on companies? What penalties may be imposed on individuals?
There is no criminal liability for undertakings in cartel investigations under the Competition Law. As regards the criminal liability of individuals, the Competition Law provides that a director, legal representative or manager of an undertaking who intentionally conceives or organises a restrictive agreement may be sanctioned with imprisonment for between six months and five years, or with a criminal fine.
6.2 What penalties may be imposed in civil proceedings on companies? What penalties may be imposed on individuals?
The fines for restrictive agreements that are not subject to exemption range from 0.5% to 10% of the undertaking's total turnover (not merely in the relevant market) in the year preceding the fining decision. There are specific rules on the calculation of turnover for insurance companies, credit institutions and non-banking financial institutions. Individuals have no tort liability for cartel activity, but risk criminal liability where they conceive or organise cartels.
6.3 How are penalties in cartel cases determined? In deciding on the applicable penalties, will the enforcement authorities consider penalties imposed in other jurisdictions?
The fines for restrictive agreements that are not subject to exemption range from 0.5% to 10% of the undertaking's total turnover (not merely in the relevant market) in the year preceding the fining decision. The amount of the fine will be determined on the basis of the council's fining guidelines, by first taking into account the gravity and duration of the infringement, and then factoring in any mitigating or aggravating circumstances.
The council has full discretion to determine the amount of fines. For instance, when assessing the gravity of a specific horizontal infringement, the fining guidelines allow the council to treat such an infringement as either a medium-gravity infringement (with a fining band of 2% to 4% of the total turnover) or a high-gravity infringement (with a fining band of 4% to 8% of the total turnover).
The fining guidelines provide for an increase of up to 10% of the fine for each year of infringement. Again, the council has full discretion to impose this increase. In some cases involving resale price maintenance infringements, the perpetrators received a 1% increase for each year of infringement; while in other cases involving similar infringements, the council applied a 10% increase for each year of infringement. Cartel activity will be treated as a high-gravity infringement and will incur fines in the 4% to 8% band.
6.4 Can a defendant company pay the legal costs incurred by and/or penalties imposed on its employees?
Nothing in the Competition Law prohibits an undertaking from paying the legal fees of employees in criminal proceedings arising from their involvement in a cartel.
However, this might be questionable under the general principles of Romanian corporate law, as it may be viewed as not being in the corporate interest of the undertaking.
7.1 Can the defendant company appeal the enforcement authorities' decision? If so, which decisions of the authority can be appealed (eg, all decisions or just the final decision) and to which reviewing authority? What is the standard of review applied by the reviewing authority (eg, limited to errors of law or a full review of all facts and evidence)?
A fining decision may be challenged before the Bucharest Court of Appeal, which reviews both procedural aspects (ie, whether the Romanian Competition Council observed procedural norms during the investigation) and material aspects (ie, whether the provisions of law were duly applied to the factual situation). The decision of the Bucharest Court of Appeal may be appealed to the High Court of Cassation and Justice.
7.2 Can third parties appeal the enforcement authorities' decision, and if so, in what circumstances?
Where a third party files a complaint with the council regarding an alleged cartel and the council decides not to open an investigation, that decision may be challenged before the Bucharest Court of Appeal within 30 days of receipt of the decision.
Where the council completes an investigation and issues a decision, a third party may challenge this decision under the Law on Administrative Litigation (554/2004), which allows persons to file claims in administrative courts against individual administrative acts which are addressed to other persons. As yet, we have identified just one reported case (a merger control matter) in which a council clearance decision was challenged in court under the administrative litigation rules.
8 Private enforcement
8.1 Are private enforcement actions against cartels available in your jurisdiction? If so, where can they be brought?
Private enforcement of the Competition Law is still in its infancy. The 2011 amendments to the Competition Law aimed to establish a better legal framework for private damages claims and the Romanian Competition Council has taken steps to increase awareness of this regime among consumers and aggrieved undertakings. However, little progress has been made, as the undertakings harmed by anti-competitive behaviour have been reluctant to file such claims. This may be partly explained by the lengthy duration and unpredictable outcomes of litigation in Romania, as well as by the shortcomings of the private enforcement rules. The rules were overhauled through Government Emergency Ordinance 37/2017, which transposed the provisions of the EU Private Damages Directive (2014/104). However, they are still seldom used.
The Bucharest Tribunal has exclusive competence to hear private damages claims. Its decisions may be appealed to the Bucharest Court of Appeals, whose decisions in turn may be appealed to the High Court of Cassation and Justice.
8.2 Can private enforcement actions be brought against both companies and individuals?
Private claims may be brought only against undertakings or associations of undertakings.
8.3 Are class actions or other forms of collective action available in your jurisdiction?
The Competition Law provides that consumer protection associations and trade or industry associations may submit private damages actions on behalf of consumers. Consumer protection associations must be legally registered, while trade associations must be mandated by their members to commence private enforcement proceedings.
8.4 What process do private enforcement actions follow?
Any natural or legal person that has suffered damage as a result of an anti-competitive practice prohibited by the Competition Law may file a claim for damages. The claim may be filed by a person directly affected by the restrictive agreement or by a person indirectly affected by such agreement.
The five-year limitation period in which to file a private damages claim begins to run when the plaintiff knew or should have known of:
- the behaviour and the fact that it constitutes an infringement;
- the fact that the infringement of competition law has caused it harm; and
- the identity of the infringer.
The limitation period does not begin to run, or will be suspended, if the council takes actions for the purpose of its investigation or proceedings in respect of an infringement to which the action for damages relates.
Where infringement has been found by a final decision of the Romanian Competition Council or the European Commission, or a final decision of a review court, the infringement is deemed to have been irrefutably established for the purposes of a private damages claim before the Romanian courts. As regards decisions taken in other EU member states, such a final decision amounts to rebuttable evidence of infringement which may be assessed along with all other evidence submitted by the parties.
8.5 What types of relief may be sought and what types of relief are most commonly awarded? How is the relief awarded determined?
Any natural or legal person that was harmed by a competition infringement may seek full compensation for that harm, to restore it to the position it would have been in had the infringement not occurred. Compensation must include actual loss and lost profits, plus accrued interest. Punitive damages are not available and the compensation awarded must not overcompensate the aggrieved party.
In estimating the harm, the courts must ensure that neither the burden nor the standard of proof required to quantify the harm makes the exercise of the right to damages practically impossible or excessively difficult. Like the directive, the national rules on private enforcement presume that cartel infringements cause harm, but the infringing undertaking has the right to rebut this presumption. Further, the council may, upon the request of the relevant court, assist the latter in determining the quantum of damages where it considers such assistance to be appropriate.
8.6 Can the decision in a private enforcement action be appealed? If so, to which reviewing authority?
The Bucharest Tribunal has exclusive competence to hear private damages claims. Its decisions may be appealed to the Bucharest Court of Appeals, whose decisions in turn may be appealed to the High Court of Cassation and Justice.
9 Trends and predictions
9.1 How would you describe the current cartel enforcement landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?
The Romanian Competition Council will continue to focus and prioritise its resources on key concentrated markets and use sectoral investigations as a gateway to targeted investigations. It is making clear efforts to recalibrate the admission of guilt procedure so that it can close investigations early and make best use of its resources. While this may achieve the desired results, it may make the fine reduction under the leniency rules a less viable option for undertakings. It is expected that the council will continue its increased use of dawn raids and focus more on forensic reviews of large volumes of data seized from undertakings.
10 Tips and traps
10.1 What would be your recommendations to companies faced with a cartel investigation and what potential pitfalls would you highlight?
No two cartel investigations are the same. Each case requires the development and implementation of a tailored strategy, given the particulars of the investigation, the options available to the undertaking and the potential risks.
The target undertaking should determine whether the Romanian Competition Council has carried out investigations in neighbouring markets or a sectoral market investigation, and clarify the scope of such investigations and the answers prepared by the undertaking following the council's request for information.
It should also assess whether there may be spill-over issues in other markets in which it has a presence. A swift response may place it in pole position for a Type B leniency application, or for a Type A leniency application in spill-over markets. While private damages are clearly not a routine threat in Romania, the risk may still be need to be considered when deciding on the strategy. Although the Competition Law provisions on the criminal liability of managers have seldom been put to the test, it is advisable to verify managers' potential exposure to criminal liability, as they may need their own counsel.
The target undertaking may also need to change its business practices and ensure strict compliance by ceasing the questionable conduct, as this may influence the size of the fine. Its document retention policy should be suspended to ensure that no evidence relevant to the investigation is accidentally destroyed.
The undertaking should also assess the impact of the investigation on its relations with joint venture or trade partners, lenders, customers and suppliers, and assess its activities in trade associations.
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.