The European Antitrust Review 2014 • Section 3: Country chapters
Recent developments of domestic competition rules
Amendments to the Competition Act 21/1996
The only amendment brought to the Romanian Competition Act in 20121 concerns the appointment of the members of the Competition Council plenum. Thus, while according to the former appointment procedure the proposals were made by the government after the candidates were heard by parliament’s special commissions, the proposals are now initiated by the Competition Council Advisory Board. Nevertheless the government and parliament’s special commissions still play a role since the proposed candidates have to be heard by the latter and approved by the former. However the secondary legislation was subject to further amendments. The main amendments focused mainly on:
- the legal regime applicable to the assessment of economic concentrations from a ‘national security’ standpoint undertaken by, the Supreme Council of National Defence (SCND);
- the procedure of accepting commitments by the Competition Council in the case of anti-competitive practices; and
- the adoption of the Regulation regarding the organisation and functioning of the Supervision Council of the Railway System.
In addition to the amendments laid down above, it is worth mentioning the impact of the new Criminal Code and its Application Act on the national competition law provisions.
National security scrutiny
The Competition Act was amended in July 2011 in order to bring in line our national legislation with that of other EU and non-EU states. As a result, provisions regarding the assessment of operations consisting of acquiring control over undertakings or assets which might raise risks from a ‘national security’ standpoint were introduced early in 2012. Of course, the secondary legislation issued by the Competition Council was amended accordingly and the attributions of the involved authorities (SCND, the Competition Council and the government) were established.
It is important to mention that the assessment undertaken by the SCND from a national security standpoint takes place not only with respect to the transactions that represent, in light of articles 10 to 15 of the Competition Act, notifiable economic concentrations but, to all operations consisting of acquiring control over undertakings or assets which might raise risks from a ‘national security’ standpoint even though the turnover thresholds provided by the Competition Act are not met.
The Romanian Merger Regulation contains an independent definition of what operations that may raise national security risks represent. These operations imply the acquisition by a person of decisive influence, based on the held rights, contracts or any other means, solely or jointly and bearing in mind the applicable de jure and de facto circumstances, over undertakings or assets of interest to national security, which can function independently and have economic utility.
Therefore the key elements that trigger the national security control are the following:
- change of control where ‘control’ means decisive influence, based on the held rights, contracts or any other means; and
- the target consisting of undertakings or assets of interest to national security, which can function independently and have economic utility.
Through a decision issued on 27 September 2012 (the SCND Decision), the SCND established the domains which may incur risks for our national security:
- citizen and community safety;
- safety of the borders;
- energetic safety;
- safety of information and communication systems;
- financial, tax, banking and insurance safety;
- safety of production and circulation of weapons, ammunition, explosives, toxic substances;
- industrial safety;
- protection against disasters;
- agriculture and environment protection; and
- protection regarding privatisation of state-owned companies or their management.
With respect to the national security scrutiny procedure we should distinguish between:
- the transactions that represent notifiable economic concentration; and
- the operations consisting of acquiring control that do not represent notifiable economic concentrations.
Upon receipt of a transaction that according to the Competition Act provisions represents an economic concentration, if such transaction is also susceptible to being assessed from a national security standpoint, the Competition Council shall inform the SCND thereof and provide certain specific details (eg, the nature of the transaction, the parties involved, the field of activity). The SCND has an obligation to inform the Competition Council within 30 days as to whether the economic concentration should also be analysed from a national security standpoint. If such analysis is necessary, the parties involved in the transaction shall immediately be informed by the Competition Council and any correspondence following this will be between the SCND and the parties.
The analysis regarding the national security risks shall be finalised within a maximum of 45 days from the date when the necessary information and documents are made available by the parties, and takes place at the same time as the assessment undertaken by the Competition Council regarding the compatibility of the concentration. The result of the SCND’s assessment shall be communicated to the parties, and if the SCND intends to put forward a proposal for a prohibition decision of the concentration, the government shall be notified of this proposal within five days. Subsequently, the government is entitled to issue a decision prohibiting an economic concentration which raises security risks based on the proposal made by the SCND.
It is important to bear in mind that assessment carried out by the Competition Council (focusing on aspects of competition law) takes place at the same time as the assessment undertaken by the SCND (focusing on aspects of national security). The Competition Council can issue a decision regarding the economic concentration in question even before the SCND finalises its own analysis.
If the economic concentration does not meet the thresholds provided by article 14 of the Competition Act, the party/parties acquiring control will directly inform the SCND of the concentration, providing any information concerning the transaction which is necessary for the national security assessment. The analysis shall be finalised within 45 days of the receipt of all necessary documents and information sent by the parties.
Nevertheless, in light of the SCND’s decision (ie, article 6 thereof), article 291 of the Merger Regulation should be amended,2 so that all notifications regarding transactions that imply a change of control over undertakings carrying out their activity in one of the domains listed in the SCND’s decision be sent to the Competition Council by the party/parties acquiring control, whether or not they represent notifiable economic concentrations according to the Competition Act provisions.
Regarding the assessment of transactions that focuses on national security risks, for both types of operations the analysis shall be widely carried out by the national security body and by the state authorities, having direct responsibilities within the domains listed within the SCND’s decision. Bearing in mind that there are no pre-established criteria for assessing the risks, the authorities enjoy wide discretion when undertaking the analysis.3
If, following the assessment, a proposal put forward to the government to issue a decision prohibiting the transaction seems appropriate, the result of the evaluation and proposal is discussed within the next SCND meeting, according to article 6 (1) of Law no 415/2002 regarding the organisation and the functioning of the SCND. The SCND decision adopted within this meeting shall be communicated to the prime minister and the Competition Council.
If, according to an unequivocal conclusion reached by the state institutions involved in the procedure, the transaction does not raise national security risks the Secretariat of the SCND shall promptly inform the Competition Council.
The SCND therefore has two measures available to it:
- finding that the transaction raises risks to national security and putting forward a proposal to the government to issue a decision prohibiting the transaction in question; or
- finding that the transaction does not raise any risks to national security and notifying the Competition Council of this.
Therefore neither the SCND nor the government has the right to conditionally approve these transactions and to impose certain amendments to the transactions so that national security risks be eliminated or diminished.
Changes brought to the procedure of accepting commitments by the Competition Council in the case of anti-competitive practices
The amendments brought to the Guidelines regarding the conditions, the terms and the procedure for accepting and assessing commitments in case of anti-competitive practices entered into force at the end of 2012. Some of these concern procedural rules, as well as substantial rules, while others bring clarifications to the pre-existent provisions.
Probably one of the most important amendments is represented by the provision that the commitments procedure is usually applicable for less serious infringements (such as vertical agreements or abuse of dominant position) when it is possible to quickly restore a normal competitive environment. Furthermore, the Guidelines include an express provision regarding the exclusion of the horizontal agreements (cartels) which are prohibited under article 5 (1) of the Competition Act and cannot be exempted under the provisions of Article 8 (4) of the same Competition Act (ie, hard-core agreements).
At the same time, the Competition Council should be reluctant when accepting commitments proposals put forward by the undertakings which had the opportunity to apply for leniency.
The Guidelines provide for a six-month period within which the parties that have been informed of the investigation’s launch can put forward a commitments proposal. The Competition Council may take the initiative and ask the parties if they wish to put forward commitments; however, this is only following the proposal made by the rapporteur of the case and with the prior approval of the Competition Council plenum. The request through which the parties take an interest in discussing the possibility of undertaking commitments must contain a summary thereof, bearing in mind the evidence on which the Competition Council relied on when launching the investigation.
Regarding the commitments proposal put forward by the interested undertaking, one cannot withdraw it after filing it with the Competition Council nor before the issuance of a decision by the Competition Council. The Competition Council is therefore not obliged to consider the withdrawn commitments proposal. Once the Competition Council accepts the initiation of the commitments proposals process, it shall inform the parties and send them a ‘concerns notice’ regarding the competition concerns being investigated. According to this document, the parties must present the written commitments proposal within 30 days (with the possibility for an additional 30-day extension). Also, as a general rule the duration of the procedure (ie, from notification to the issuance of the final decision) cannot, in principle, exceed six months (with the possiblity for an additional 60-day extension). If the undertaking does not put forward adequate commitments proposals, the Competition Council can close the commitment procedure.
The analysis undertaken by the investigation team shall be presented as a report and shall be debated in the Competition Council plenum.
According to the amendments brought to the Guidelines, after the expiry of the commitments’ validity, the undertakings are under the obligation to refrain from any kind of action which might lead to circumstances similar to those that triggered the launch of the investigation.
Another important amendment concerns the relation between the party undertaking commitments and the monitoring trustee appointed by the Competition Council at the former’s proposal to observe its activity with regard to the commitments. Thus, the monitoring trustee cannot provide assistance or consultancy services for the monitored undertakings during the monitoring period and for an additional 12-month period following this. Also, the monitoring trustee, its partners or attorneys in fact cannot receive any benefit during the same period. The monitoring trustee is exclusively liable before the Competition Council when it comes to fulfilling the attributions with which it was entrusted and can be replaced if it fails to do so.
The Guidelines also now provide the possibility for the monitored undertakings to ask for the monitoring trustee to be sanctioned if it oversteps its mandate or it reveals information obtained during the course of the monitoring activity. However, the Guidelines do not provide for the manner in which this sanctioning can occur. The Guidelines also do not include any specific sanctions that could be applied to the monitoring trustee.
Another important clarification inserted in the revised Guidelines regards the possibility to make use, in the investigation procedure, of the requests or any other documents provided by the undertakings in relation to the commitments procedure only after obtaining the express approval from the undertaking that put forward the commitments proposal.
Changes in the organisational structure of the Competition Council
On 4 March 2013 the Regulation regarding the organisation and the functioning of the Supervision Council of the Railway System entered into force. The Supervision Council represents an entity without legal personality that functions within the Competition Council and has attributions such as, inter alia:
- assessing and adopting decisions with regard to the complaints filed by the operators who consider that they were unfairly treated and discriminated against through the decisions adopted by the administrator of the railway infrastructure or by the railway transport operator;
- monitoring the tariffs set by the administrator of the railway infrastructure, which must be non-discriminatory and set in accordance with the legal provisions in force; and
- monitoring the activity of the railway services markets.
The Supervision Council’s decisions are compulsory for all the parties involved. One can challenge the decision before the Bucharest Court of Appeal within 30 days of the date it was communicated. The Court of Appeal decision can be appealed before the Supreme Court within 15 days as of its communication. Also, the parties have the possibility to apply for a stay in the enforcement of the challenged decision.
The Competition Council’s activity
In the first quarter of this year, the Competition Council issued best practices guidelines regarding the petitioning activity carried out jointly by competitors or associations of undertakings. As a starting point, the Competition Council recognises the right to formulate petitions and states that the petitioning activity carried out by a single undertaking does not raise any competition concerns even when other undertakings are involved in similar activities at the same time. Nevertheless, if the petitioning activity is carried out jointly by one or more undertakings in a coordinated manner, either within or outside the framework of an association, the undertakings’ activity shall be assessed more rigorously by the Competition Council in order to avoid the development of an anti-competitive behaviour thereof on the market. For such assessment, the Competition Council shall consider, on the one hand, the scope of petitioning activity such as advocating for the introduction of some unjustified administrative entry barriers or for regulated prices (especially minimum prices); and, on the other hand, the possible consequences of the joint petitioning activity, especially in what concerns the exchange of strategic information.
The Practices state that the objectives of the petitioning activity cannot go against general interest objectives such as consumers’ well-fare. Thus, any collective action which is capable to increase costs of the undertakings active on the market or their market power can represent an infringement of the national or European competition law provisions. Therefore, the Competition Council recommends that the undertakings involved in collective petitioning activities avoid the exchange of information such as: actual prices, discounts, increases, reductions or rebates, customer lists, production costs, quantities, turnovers, sales, capacities, qualities, marketing plans, risks, investments, technologies and R&D programmes and their results. In case the petitioning activity cannot be carried out without such exchange of information, then the information it must reach the others in a cumulated manner so that one cannot identify its holder.
In 2011, the Competition Council issued a Report regarding the vehicles spare parts market and submitted this Report to a public consultation. The most important element of the Report is represented by the proposal to introduce the ‘repair clause’ in our national legislation.
With regard to the investigations carried out by the Competition Council in the past year, it is worth mentioning:
- the intensification of the Competition Council’s activity with regard to bid-rigging practices: eg, the Competition Council sanctioned four undertakings in November 2012 for having participated with cover bids in the public tender organised by Transgaz in 2009–2011 for the award of contracts for natural gas connections, and in the same month, the Competition Council sanctioned five other undertakings for rigging the bid organized by CNADNR for awarding the contract ‘Longitudinal, transversal and various marking works on national roads managed by CNADNR’ through a subcontracting procedure;
- the decisions of the Competition Council accepting commitments undertaken by the Romanian mobile phone operators: Orange, Vodafone and Cosmote with regard to the prepaid products market investigation;
- the sectorial investigation regarding the Romanian banking services market, which was closed without imposing any sanctions for infringing the substantial provisions (a few banks were sanctioned for having supplied incorrect/inaccurate information though);
- the new sectorial investigation launched by the Competition Council with regard to the pharmaceutical market; and
- the investigation regarding the media services market (consulting and strategy, planning, development and media buying) initiated by the Competition Council.
The impact of the new Criminal Code and its Application Act on the national competition law provisions
The new Criminal Code is bound to enter into force on 24 July 2013 and its Application Act on 1 February 2014. These two acts will have a significant impact on the criminal liability of persons involved in anti-competitive practices.
Currently, there is a provision in the Competition Act providing that natural persons who take part in the conception, organisation or realisation of a prohibited practice, according to the competition provisions, risk being given a prison sentence of between six months and three years, or a fine and the prohibition of certain rights.
Once the Application Act of the new Criminal Code enters into force, the subjects of the criminal liability, the manner in which the infringement is committed and the upper limit of the punishment are amended. Therefore only the persons acting as director or legal representative, or holding any other management function within an undertaking, that takes part intentionally in the conception, organisation or realisation of a prohibited practice, according to the competition provisions, risk being given a prison sentence of between six months and five years, or a fine and the prohibition of certain rights. Furthermore, the Application Act provides that the persons who reveal their participation in the prohibited practice before the initiation of criminal proceedings, which enable the authorities to identify and hold liable the other participants, shall not be held liable for such deed. If such disclosing takes place after the initiation of criminal proceedings, the limits of the punishment shall be reduced by half.
Nevertheless, the provisions laid down in the prior paragraph do not apply in case the prohibited practice refers to a bid-rigging practice/agreement through which the price of a public bid is distorted. In this case, a new provision of the new Criminal Code is applicable, according to which the agreement between bidding participants to distort the price of the tender is sanctioned with imprisonment from one year to five years.
Popovici Nitu & Asociatii
Bucharest 1st District, Postal Code 010567
Romania Tel: +40 21 317 79 19
Fax: +40 21 317 85 00 Silviu Stoica
email@example.com Mihaela Ion
Popovici Nitu & Asociatii is one of the first incorporated professional partnerships in Romania. The firm combines strong local resources with exceptional credentials, outstanding records and distinguished careers in law, business and academia. Experienced in most major legal fields, the firm’s lawyers provide quality legal services combined with strong client relationships.
The firm acts as outside counsel to a wide spectrum of legal entities, including key players in major industries, financial institutions, public authorities and investment funds.
The firm has linked its name with the creation of the essential Romanian market economy institutions after 1990, including property funds, stock exchanges, numerous regulatory agencies and judicial bodies. For decades, significant investment and acquisitions projects on the local market have been carried out with the legal assistance of Popovici Nitu & Asociatii. The Popovici name has been associated with legal service in Romania since the beginning of the last century.
Popovici Nitu & Asociatii is divided into 18 major practice groups: banking and finance; capital markets; competition and antitrust; corporate and commercial; electronic communications, IT and media; employment and pensions; energy and natural resources; environmental law; health care and pharmaceuticals; insurance; intellectual property; litigation and arbitration; mergers and acquisitions/privatisation; project finance/PPP, concessions and infrastructure; public procurement; real estate; restructuring and insolvency; and tax.
Popovici Nitu & Asociatii has a strong competition practice that covers all aspects of the field, including antitrust, unfair competition and state aid. The firm provides a full range of legal services, including assistance and representation in relation to antitrust litigation, investigations and inquiries, guidance during merger control proceedings and counselling in respect of restrictive agreements and abuses of dominant position.
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