‘Dominance’ by undertakings in their respective relevant markets is defined and regulated by Article 6 of the Competition Law (21/1996, as republished).
In addition, Article 102 of the Treaty on the Functioning of the European Union applies whenever the trade on the internal market might be affected.
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The legislation is solely intended to protect economic interests.
The Romanian Competition Council and the European Commission.
Abuse of dominance cases in Romania are rather limited. The most prominent cases in recent years have concerned:
- several gas distribution companies (Premier Energy, Gaz Sud and Distrigaz Sud Rețele);
- the largest Romanian electronic marketplace (Dante International – Emag); and
- pharmaceutical companies (GSK).
The dominance legislation applies to an undertaking in the sense provided by the case law of the Court of Justice of the European Union – that is, “any entity engaged in an economic activity”, without any exemptions.
The law provides for a presumption of dominance for any undertaking that holds, alone or jointly with other undertakings, a market share of more than 40%.
A market share of more than 40% in a specific product and geographic relevant market, which remains stable over a longer period, creates a presumption of dominance.
Dominance is also assessed taking into account:
- the stability of market share over an extended period of time; and
- the barriers to entry to and exit from the respective relevant market.
The relevant product market is composed of all products with the same function which can be substituted with each other, taking into account a price increase of 5% to 10%. This is known as the ‘small but significant increase in price’ test. The relevant geographical market is composed of a homogenous area in which consumers are served by the same suppliers.
‘Dominance’ is defined in the same manner both downstream and upstream.
‘Collective dominance’ is contemplated by the Competition Law and is defined as dominance held jointly by several companies.
The statute of limitations is five years, which may be interrupted and suspended, but is capped at a maximum of 10 years.
‘Abuse of dominance’ is defined by Romanian law as actions undertaken by a company in a dominant position aimed at:
- imposing prices or other trading conditions;
- limiting production, markets or technical development to the prejudice of consumers;
- applying dissimilar conditions to equivalent transactions with other undertakings and placing them at a competitive disadvantage; or
- conditioning the conclusion of a contract on supplementary obligations which, by their nature or according to trading standards, have no connection with the object of such contracts.
The main categories of prohibited conduct according to the law are as follows:
- the imposition of prices or other trading conditions;
- the limitation of production, markets or technical development;
- the application of unequal conditions to equivalent transactions; and
- the imposition of unusual contractual conditions.
Other types of conduct may also fall under the abuse of dominance prohibition, in line with the jurisprudence of the Court of Justice of the European Union.
An investigation will commence where there are sufficient indicators that:
- a company is in a dominant position; and
- it has engaged in a possible abuse of dominance.
Often, such investigations are opened following complaints by aggrieved parties.
The Competition Council may conduct unannounced inspections at the headquarters and other premises used by the undertakings investigated, with the prior authorisation of the president of the Bucharest Court of Appeal. It can also interview anyone who may have information about the behaviour under investigation.
The investigation is conducted ex officio and third parties cannot take part. However, an entity that has submitted a complaint on which an investigation is based will receive a copy of the investigation report and may submit written observations thereon.
The Competition Council has the right to:
- search the premises and electronic devices of the undertakings under investigation, as well as private premises and devices, with the prior authorisation of the president of the Bucharest Court of Appeal; and
- request any information from those investigated and from third parties.
The Competition Council’s obligations are not clearly delineated; but in principle, it must:
- respect the right of defence and the presumption of innocence; and
- keep confidential all the information received within the framework of the investigation.
The investigated undertakings have the right to be informed about the accusations and to defend against them, including the right to be heard at the end of the investigation by the Plenum of the Competition Council, acting as peer reviewer of the matter. During dawn raids and throughout the investigation, the relevant undertakings may be assisted by outside legal counsel; in such case, all correspondence with them aimed at exercising the right of defence is shielded from access by the Competition Council (legal privilege).
The Competition Council will consider whether the behaviour imputed on the undertaking under investigation has produced an effect on the market.
Before receiving the investigation report, the undertaking under investigation can propose commitments which could quickly restore the competitive environment; if these are accepted, this will result in a finding of no infringement. The undertaking may also negotiate a settlement, which involves admitting its fault and, if necessary, assuming changes to its behaviour; this will result in a reduced fine (by up to 30%).
In its defence, an undertaking can demonstrate that:
- it is not in a dominant position; or
- its behaviour did not affect and could not affect other market participants.
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The sanctions are up to 10% of the global total turnover of the sanctioned undertaking in the previous fiscal year. In addition, the Competition Council may impose remedies or make recommendations to the undertakings.
The monetary sanctions are typically in the 4% to 8% range, although the amount may be higher or lower depending on aggravating or mitigating circumstances.
The sanctions and remedies are applied directly by the Competition Council.
The sanctioning decision of the Competition Council may be challenged before the Bucharest Court of Appeal within 30 days of receiving the full-text decision, which in turn must be redacted within 120 days of its announcement, at the end of the administrative proceedings.
As a matter of principle, certain third parties may appeal the decision of the Competition Council, including:
- persons that complained to the Competition Council against the relevant behaviour; and
- sanctioned or other affected persons.
In order to lodge such a claim, third parties must be able to demonstrate an interest arising from the case, such as a claim for damages against the undertaking under investigation.
Private actions for damages are possible and benefit from a special legal framework, which consists of the transposition into national law of the EU Damages Directive (2014/104/EC).
As a matter of Romanian law, actions for damages resulting from an abuse of dominance may be brought before the Bucharest Tribunal, acting as the only competent court in such matters.
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Claims for damages benefit from the provisions of the EU Damages Directive (2014/104/EC), such as:
- the absolute presumption that a finding of an infringement by the competition authority, the European Commission or a court also establishes the existence of a civil wrongdoing;
- the possibility for the claimant to access certain information from the investigation file of the competition authority;
- an extended statute of limitations of five years, instead of the normal three years; and
- the possibility for the defendant to invoke the passing-on defence.
The most common relief is the payment of a sum of money to compensate for the damage caused, which may include:
- the effective loss;
- unrealised profits; and
- legal interest.
The decisions of the Bucharest Tribunal in actions for damages caused by infringements of the competition rules, such as abuse of dominance, can be appealed to the Bucharest Court of Appeal and the High Court of Justice.
The number of abuse of dominance cases is expected to remain stable over the next 12 months. Legislative amendments are in progress, but none of the contemplated changes concerns abuse of dominance.
To reduce the risk of abuse of dominance charges, companies should:
- check whether they have a dominant position in the relevant markets in which they operate, according to the criteria applied by the Competition Council; and
- continuously monitor disputes with smaller companies operating downstream or upstream with which the company concludes contracts or which may wish to contract with the company, as most complaints to the Competition Council have similar origins.
