A Q&A guide to competition law in Romania.
The Q&A gives a high level overview of merger control, restrictive agreements and practices, monopolies and abuse of market power, and joint ventures. In particular, it covers relevant triggering events and thresholds, notification requirements, procedures and timetables, third party claims, exclusions and exemptions, penalties for breach, and proposals for reform.
To compare answers across multiple jurisdictions visit the Competition Country Q&A tool.
This Q&A is part of the PLC multi-jurisdictional guide to competition and cartel leniency. For a full list of jurisdictional Q&As visit www.practicallaw.com/competition-mjg.
Economic concentrations, such as mergers and acquisitions or creation of full-function joint ventures, exceeding certain thresholds must be notified and cleared by the Romanian Competition Council (Consilul Concurenţei) (RCC) prior to their implementation. Foreign-to-foreign economic concentrations must also be notified if the thresholds are met.
The regulatory framework for merger control comprises the Competition Law No 21/1996 (Competition Law) and the regulations published by the RCC. The latter include, among others:
Regulation regarding economic concentrations.
Regulation regarding the concepts of economic concentration, undertakings concerned, full functioning and turnover.
Regulation on the definition of the relevant market.
Regulation on restrictions directly related and necessary to concentrations.
Regulation on the calculation of the authorisation fee in cases of merger control.
Regulation on commitments in merger control proceedings.
The regulatory authority is the RCC.
A transaction must be notified and cleared by the RCC if it represents an economic concentration and the turnover thresholds are met.
An economic concentration represents a change of control over an undertaking occurring on a lasting basis. Situations were economic concentrations arise are:
Mergers between previously independent undertakings (two or more independent undertakings amalgamate into a new undertaking or one undertaking is absorbed by another).
Acquisition of direct or indirect, sole or joint control, over an existing undertaking or parts of an undertaking by contract or other means.
Creation of full-function joint ventures (see Question 37).
Control is defined as the power to exercise a decisive influence over another undertaking. Decisive influence represents the power to determine the strategic commercial behaviour of an undertaking on the market (for example, appointment of the board of directors, approval of the budget or business plan, entry into new product or geographical markets).
Control may be acquired by various means such as, for example, acquisition of shares, veto rights, power to appoint more than half of the board members. Control can also be exercised on a de facto basis.
The RCC must take action and apply fines within five years from the date when the infringement was committed (that is, the economic concentration was implemented without prior clearance). However, it may be argued that implementing an economic concentration without prior clearance from the RCC is a continuous infringement and this makes it very difficult in practice to escape the jurisdiction of the RCC based on the five-year limitation period (see Question 16, Statutes of limitation).
An economic concentration must be notified and cleared by the RCC prior to its implementation if the following two conditions are met:
The combined worldwide turnover of the undertakings concerned (or, if they are part of a group of companies, the combined turnover of the groups) for the previous financial year exceeds the RON equivalent of EUR10 million.
The turnover for the previous financial year of each of at least two of the undertakings concerned (or, if they are part of a group of companies, the turnover of the groups) derived from Romania exceeds the RON equivalent of EUR4 million.
The RON equivalent is calculated at the official exchange rate published on 31 December by the National Bank of Romania for the year preceding the notification.
The turnover represents the income resulting from the sale of products and/or provision of services in Romania. There are specific rules for determining the undertakings concerned and their groups, the concept of turnover and calculation rules, and geographical allocation of turnover, among others.
The turnover must be adjusted according to several rules prescribed by the RCC, the most important being that intra-group turnover, any taxes directly related to the sale of products and/or provision of services (for example, excise duties) and export values (including intra-community deliveries) must be excluded.
The prior notification and clearance of an economic concentration that meets the turnover thresholds is mandatory.
An economic concentration must be notified to the RCC after the conclusion of the agreement based on which control is acquired and before its implementation. A notification may also be possible based on a letter of intent, heads of terms or pre-agreement, provided that it shows, without a doubt, the intention of the parties to carry out an economic concentration.
Both formal and informal guidance before notification can be obtained through pre-notification meetings or discussions with the case team allocated by the RCC. Such meetings are advisable in order to clarify any aspects regarding the notification and the overall process.
The undertaking acquiring control has the obligation to notify the RCC. In practice, this means that:
In the case of mergers, each of the merging undertakings must notify.
In an acquisition of sole or joint control, the acquirer(s) must notify.
Where a full-function joint venture is created, the undertakings which will hold joint control must notify.
A notification of an economic concentration must be submitted to the RCC.
When the RCC receives a notification of an economic concentration it must also inform the Supreme National Defence Council, which must analyse the transaction from a national security perspective.
Official forms for standard merger notifications and simplified merger notifications are used, similar to notification forms used for notifications of economic concentrations to the European Commission.
Two types of fees must be paid by the undertaking which files a notification of an economic concentration with the RCC:
The filing fee of approximately EUR1,100 which must be paid before lodging any notification form with the RCC.
The authorisation fee which must be paid if the RCC clears a notified transaction. The amount of the authorisation fee can be between EUR10,000 and EUR25,000.
Until the economic concentration is cleared by the RCC, the parties are prohibited from implementing the transaction. The following measures, without limitation, are considered implementation of a transaction:
Entering or exiting other/new product or territorial markets, in accordance with the strategy of the acquirer.
Changing the business purpose/investment objectives of the target or changing the members of the board in accordance with the instructions/strategy of the acquirer.
Changing the name of the target or publicly listing the target.
Restructuring, closing or any de-merger of the target.
Terminating or entering into long-term or other important agreements.
Sacking of employees of the target or selling the assets of the target.
Exceptionally, the RCC may grant derogation from the non-implementation rule based on a grounded request received from the parties.
Phase I. Following submission of a notification form, the RCC has 20 days to request additional information if it considers that the notification form is incomplete (the parties must respond no later than 15 days after receipt of the additional request for information from the RCC).
The notification becomes effective as of the date the RCC considers that the information received is both accurate and complete. The RCC must immediately inform the notifying parties in respect of the date when the notification has become effective.
Within 45 days as of the effective date, the RCC must either issue a non-objection decision (subject to conditions where appropriate) or order the initiation of an in-depth investigation if it believes that the economic concentration may significantly impede competition. If the RCC does not issue a decision within the above term, the concentration is considered authorised.
Phase II. Where the RCC initiates an investigation, it will analyse the compatibility of the economic concentration with the competition environment. At the end of the investigation, the RCC can issue:
A refusal decision.
An authorisation decision.
A conditional authorisation decision.
The investigation must be completed within five months from the effective date. If the RCC does not issue a decision within this term, the concentration is considered authorised.
For an overview of the notification process, see flowchart, Romania: merger notifications.
As a general rule, the RCC and the responsible case team must keep confidential the information specifically identified as such by the parties.
Upon receiving a notification of an economic concentration, the RCC will publish on its website and/or in the press a note regarding the notified operation. The note will identify the undertakings concerned, their country of origin, the nature of the concentration, the economic sectors concerned and the date when the RCC received the notification. However, the parties can request (providing sound reasons) that no publication be made until the issuance of the final decision.
At the end of the procedure, the decisions of the RCC are published on its website. The parties are asked before publication to identify the confidential information in the decision which will not be published and to provide reasons as to why confidentiality is requested.
The RCC personnel have a general obligation to keep confidential all business secrets and other information that it receives, but the parties must identify the information which they consider confidential and must provide the RCC with arguments justifying their confidentiality request.
The parties must identify the confidential information which must not be published or made available to third parties with supporting arguments in this respect and a non-confidential version of the respective documents.
The RCC may request a point of view from other undertakings active in the relevant market(s).
In the case that the RCC intends to accept remedies proposed by the parties (see Question 8), it will publish a summary of the case and contents of the proposed remedies and any interested third parties can send their observations within the term set by the RCC.
The RCC may grant access to other parties involved in the economic concentration procedure (that is, the parties other than the notifying undertaking, such as the seller or the target), to which the investigation report was sent, if the RCC considers that access to the file is necessary in order for the respective parties to present their observations. The right of access to the file does not cover confidential information.
The RCC may decide to hear interested third parties if they can provide relevant information in an investigation regarding an economic concentration.
The substantial impediment of effective competition test is used (SIEC test). In particular, the test may be satisfied if the economic concentration creates or strengthens a dominant position.
Both behavioural and structural remedies can be proposed in order to address competition concerns, although structural remedies are preferred. Remedies can be proposed both during Phase I (at the latest within two weeks of the effective date) and during Phase II of the investigation (see Question 4).
Specific examples of remedies are:
Divestments or eliminating ties with competitors.
Granting access to infrastructure, networks or technologies.
Amendment of long-term exclusive agreements.
The monitoring procedure is agreed with the RCC. The maximum monitoring period is ten years after the issuance of the clearance decision.
Providing incomplete, inaccurate or misleading information to the RCC may result in an administrative fine between 0.1% and 1% of the total turnover achieved in Romania by the infringing undertaking(s) during the year preceding the year of the sanctioning decision.
Implementation before approval or after prohibition will result in an administrative fine between 0.5% and 10% of the total turnover achieved in Romania by the infringing undertaking(s) during the year preceding the year of the sanctioning decision.
The RCC has the right to impose an administrative fine of up to 5% of the average daily turnover of the undertakings for each day of delay in complying with a decision of the RCC.
Failure to implement or observe any remedial commitments may result in an administrative fine between 0.5% and 10% of the total turnover achieved in Romania by the infringing undertaking(s) during the year preceding the year of the sanctioning decision.
The decisions of the plenum of the RCC can be appealed before the Bucharest Court of Appeal within 30 days from its communication or publication, as the case may be. The decision of the Bucharest Court of Appeal can be appealed before the High Court of Cassation and Justice within 30 days from its communication. There are special deadlines and procedures for appealing other orders or decisions of the RCC.
Third parties could theoretically challenge the decisions of the RCC if they prove a legitimate interest.
A clearance decision of an economic concentration by the RCC also covers the restrictions directly related and necessary to the respective concentration (ancillary restraints). However, the undertakings concerned must assess for themselves whether and to what extent the restraints are ancillary to the economic concentration.
For example, non-competition clauses are justified for periods of up to three years, when the transfer of the undertaking includes the transfer of customer loyalty in the form of both goodwill and know-how. When only goodwill is included, they are justified for periods of up to two years.
There are no specifically regulated industries under the merger control rules. However, there are several industry-specific provisions concerning the calculation of turnover achieved by undertakings in sectors such as banking and insurance.
Article 5 of the Competition Law prohibits any express or tacit agreements between undertakings or associations of undertakings, any decisions by associations of undertakings and any concerted practices, which have as their object or effect the restriction, prevention or distortion of the competition on the Romanian market or a part of it, such as:
Fixing of resale prices or other commercial terms.
Limitations on production, trade, investments or innovation.
Partitioning of the market or of supply sources.
Bid-rigging.
Eliminating from the market other competitors.
Limiting access to the market.
The RCC is the competent administrative authority which can investigate and sanction restrictive agreements and practices.
Article 5 of the Competition Law applies to both agreements (express or tacit) and to concerted practices.
The EU block exemption regulations for the application of Article 101(3) of the Treaty on the Functioning of the European Union (TFEU) are directly applicable in Romania. Notification to obtain an individual exemption is not possible, and the parties must therefore self-assess the situation.
An anti-competitive practice or agreement may also be exempted if it satisfies the following conditions:
Contributes to the improvement in the production or distribution of goods, or promotes technical or economical progress.
Ensures, at the same time, an advantage to consumers comparative to the one obtained by the parties to the respective practice or agreement.
Does not impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives.
Does not afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question.
Intra-group agreements or practices and those agreements or practices that fall below the de minimis thresholds are exempted from the prohibition laid down in Article 5 of the Competition Law. Also, certain restrictive agreements and practices are permissible in the context of genuine agency relations.
The de minimis market share thresholds are:
An aggregate 10% share in case of actual or potential competitors.
A 15% share in case of non-competitors, actual or potential, per undertaking.
In case it is difficult to establish if the parties are competitors or not, the 10% threshold applies. If competition on a relevant market is reduced by the cumulative effect of several agreements, all the thresholds are reduced to 5%.
Agreements or concerted practices between parties who have a market share below the de minimis threshold are exempted from the prohibition laid down in Article 5 of the Competition Law, provided they do not contain any hard-core restrictions (for example, price-fixing, limiting of production or sales, market or client partitioning).
Depending on the nature of the infringement the following limitation periods apply:
Three years for providing incomplete, incorrect or misleading information, or for refusing to submit to a dawn raid.
Five years for all other infringements (for example, cartels, abuse of dominance, implementing an economic concentration without prior notification and clearance by the RCC).
The limitation period starts to run from the date when the infringement was committed. In the case of continuous or repeated offences, the limitation period starts running from the date when the breach stops or the date of the last breach.
The limitation periods are interrupted if the RCC takes any action with a view to conduct a preliminary analysis or if the RCC launches an investigation in relation to an infringement. The following measures taken by the RCC will interrupt the limitation periods:
Written requests for information.
The order of the Chairman of the RCC (Chairman) of launching an investigation.
Commencement of legal proceedings.
Upon interruption of the limitation period, a new term starts to run from the date of the act which interrupted the limitation period. However, the limitation period lapses at the latest after twice the duration of the limitation period, if the RCC has not applied any sanctions.
The possibility of notifying restrictive agreements and practices to obtain an individual exemption through a decision of the RCC no longer exists, as the parties must now self-assess.
Not applicable (see above, Notification).
Not applicable (see above, Notification).
Not applicable (see above, Notification).
Not applicable (see above, Notification).
Not applicable (see above, Notification).
The RCC is the competent administrative regulatory authority that has the right to investigate on its own initiative restrictive agreements or practices.
An investigation can be launched by the RCC also following a complaint lodged by a third party.
Third parties have the right to inform the RCC that they hold information or evidence relevant for an investigation.
A third party that lodged a complaint has certain limited rights regarding document access prior to the opening of an investigation in case the RCC intends to dismiss the complaint. The access covers the documents based on which the RCC reached the conclusion to dismiss the complaint, but does not cover business secrets or other confidential information (see Question 5).
Where an investigation is started following a third party complaint, the author of the complaint may receive a non-confidential version of the investigation report, if the Chairman considers that this is in the interest of the investigation.
If an investigation is launched following a third party complaint, the Chairman may, upon the third party's request, grant the latter the right to be heard. Other third parties may be heard only if the Chairman deems it necessary.
An investigation can be launched by the RCC ex officio or following a complaint from a third party. A case handler (rapporteur), designated by the Chairman, will conduct and oversee the investigation.
During the investigation dawn raids can be carried out by the RCC and requests for information or questionnaires can be sent to the investigated party(ies).
Where the evidence collected does not justify the imposition of fines or other sanctions:
In an investigation launched at the initiative of the RCC, the investigation is closed by order of the Chairman.
In an investigation launched following a third party complaint, the investigation is closed through a decision of the plenum of the RCC, following the hearing of the parties involved if the complainant requests it.
Where an investigation leads to the conclusion that a breach of the Competition Law occurred, a report is drafted and communicated also to the investigated parties, who can:
Request access to the file.
Submit written observations to the report.
Request an oral hearing.
The RCC can hold oral hearings even if the parties do not expressly request it. The maximum term for the submission of written observations (at least 30 days) and the hearing date, are both set by the Chairman.
Following the receipt of the parties' observations or after the oral hearings, as the case may be, the RCC will adopt a decision through which it may:
Order the parties to cease the investigated practices or agreements.
Adopt interim measures.
Accept commitments from the investigated parties.
Apply fines.
Issue recommendations or impose certain obligations or conditions on the investigated parties.
Find that no infringement has been committed.
There is no prescribed term for the duration of an investigation (in practice investigations may last between three to five years), but the RCC cannot apply any sanctions once twice the duration of the statute of limitation has elapsed (ten years for restrictive practices or agreements) (see Question 16, Statutes of limitation).
The RCC usually publishes on its website information regarding new investigations that were launched (including the names of the companies investigated and the suspected infringements). At the end of an investigation, the RCC will publish its findings and measures taken and will also publish a non-confidential version of the final decision on its website or in the Official Gazette.
The RCC personnel have a general obligation to keep confidential all business secrets and other information that they receive, but the parties must identify the information they consider confidential and must provide the RCC with arguments justifying their confidentiality request.
The information collected during dawn raids can be used only for the purposes of applying the competition rules. However, the RCC can refer matters to other public authorities or institutions if the aspects uncovered fall under their jurisdiction.
When providing documents, responses or any other information to the RCC or before publication of the final decision in a case, the parties are requested to identify the business secrets and other confidential information that must not be made available to third parties or published. The parties must give reasons as to why the identified information must be treated as confidential.
The RCC has broad powers for the investigation of potentially restrictive agreements or practices. The RCC can send questionnaires to undertakings or request specific information or documents. However, the most important and effective investigative tool is the dawn raid.
During a dawn raid, RCC inspectors have the power to:
Enter the company premises and means of transport or the private homes of its managers, directors or other employees (in this latter case, based on a court warrant).
Search for and review documents considered relevant to the investigation at the place where they are kept.
Take copies of documents.
Conduct interviews with individuals.
Require electronic information to be produced in hard or soft copy for it to be taken away.
Seal the premises or parts of the premises.
Inspectors are not allowed to review or take copies of documents or information covered by legal privilege. Legal privilege covers correspondence between an undertaking and its external lawyers for the exclusive purpose of exercising the right of defence in relation to the object of the investigation.
The RCC may reach settlements with the parties by accepting binding commitments for behavioural or structural remedies. The initiative for settlements belongs exclusively to the investigated undertakings, who can decide on the content, nature, duration and other elements of the proposed remedies. The procedure regarding commitments is carried out in parallel with the investigation and does not suspend the investigation. Hard-core restrictions of competition, such as price-fixing cartels, are unlikely to qualify for the settlement procedure.
The proposed commitments must:
Entirely eliminate the competition concerns identified.
Be complete and efficient.
Be able to be implemented effectively within a short period of time.
However, the RCC retains sole discretion in deciding between accepting commitments and applying fines. The offer for commitments is irrevocable from the moment of registration with the RCC and until the issuance of a decision.
The RCC has the right to order the parties, through interim measures, during an investigation, or through the final decision, to put an end to the restrictive agreement or practice.
The RCC can order any other interim measures which are adequate for the restoration and maintenance of the competition conditions on the relevant market, provided that:
At least prima facie there is evidence regarding the existence of restrictive practices or agreements which must be eliminated without delay.
The measures are required as a matter of urgency due to the risk of serious and irreparable damage to the competition on the relevant market.
The RCC can apply administrative fines on the undertakings which participated in anti-competitive practices or agreements between 0.5% and 10% of their turnover for the year preceding the year of the sanctioning decision.
If an undertaking fails to comply with any decision or order of the RCC, the RCC can impose periodic administrative fines of up to 5% of the average daily turnover in the year preceding the year of the sanctioning decision for each day of delay.
Refusal to submit to a dawn raid or providing incorrect, incomplete or misleading information may lead to an administrative fine between 0.1% and 1% of the turnover for the year preceding the year of the sanctioning decision.
As a matter of practice, the RCC has applied fines calculated based on the turnover achieved in Romania, but there are no legal provisions limiting the RCC from applying fines calculated based on the global turnover.
The fines become fiscal debts of the sanctioned undertakings, subject to delay penalties calculated according to tax norms, and are enforced by the tax authorities if they remain unpaid. As an exception, the execution of the fines can be suspended in court if certain conditions are fulfilled.
The participation with intent of a natural person in an anti-competitive practice or agreement can incur criminal liability, sanctioned with imprisonment between six months and three years or a criminal fine, which can be up to approximately EUR11,000.
Restrictive horizontal agreements or practices and some vertical restrictive agreements or practices may benefit from immunity/leniency. The RCC's leniency notice provides for the terms and conditions under which companies can use the self-reporting procedure.
Immunity can be granted to the first undertaking that provides evidence which enables the launching of an investigation, in the RCC's sole opinion. However, the initiator of the cartel cannot benefit from immunity. Other undertakings that provide additional information regarding anti-trust infringements may benefit from fine reductions as follows:
The first undertaking (after the one granted immunity) that provides information with significant added value to the RCC: a fine reduction between 30% and 50%.
The second undertaking: a fine reduction between 20% and 30%.
Subsequent undertakings: a fine reduction of up to 20%.
In principle, only the anti-competitive clauses of an agreement are void, provided, however, that such clauses were not determinant or essential for the respective agreement, in which case the whole agreement may be void.
Third parties (whether legal or natural persons), have the right to claim damages for losses suffered as a result of a prohibited restrictive agreement or practice. However, in Romania, the general tendency for third party damages claims remains low.
Third parties can claim damages in court under the general rules and conditions applicable to court claims. There are no special procedures, except that the limitation period for such claims is two years from the date when the decision of the RCC becomes final.
Class actions are theoretically possible, but the trend has not been picked up in Romania.
See Question 10, Rights of appeal and procedure.
See Question 10, Third party rights of appeal.
The Competition Law prohibits, under the penalty of administrative fines, an abuse of a dominant position. The regulatory authority which has the power to investigate and sanction abuse of dominance is the RCC.
Abuse of market power not amounting to an abuse of dominance is not specifically regulated and sanctioned.
Dominance represents the power of an undertaking to behave independently on a relevant market without fear of pressure from competitors. There is a relative legal presumption that an undertaking or several undertakings having a market share above 40% are dominant on the respective relevant market.
Exclusionary or exploitative behaviours can fall under the category of abusive conduct. The following may constitute abusive behaviour, without limitation:
Excessive/predatory pricing.
Tying/bundling.
Margin squeeze.
Refusal to supply.
Limitation on output.
Discrimination.
There are no exemptions or exclusions.
It is not possible to notify the conduct in order to obtain clearance from the RCC.
There are no differences between investigations into abuse of dominance and investigations into restrictive agreements and practices (see Questions 18 to 21 and Question 23).
See Question 22.
See Question 24. The RCC can also impose any structural and/or behavioural remedies which may be deemed necessary (see Question 8).
See Question 25.
The RCC has the power to apply the provisions of Article 101 and Article 102 of the TFEU alongside domestic law whenever the agreement/concerted practice or the unilateral conduct in question affects the trade between member states. There are no differences between the powers of the RCC and courts in relation to cases dealt with under Article 101 and/or Article 102 of the TFEU, and those dealt with only under national law.
Full-function joint ventures, meaning joint ventures performing on a lasting basis all of the functions of autonomous economic entities, are subject to the merger control rules, while non-full-function joint ventures are reviewed under the framework of anti-competitive practices and agreements.
A joint venture satisfies the full-functionality criterion if:
It has sufficient resources to operate independently on a market.
Its activities are beyond one specific function for the parent companies.
The sale/purchase relations with the parent companies are not predominant.
It operates on a lasting basis.
The RCC co-operates with competition authorities from other jurisdictions, being a member of the:
European Competition Network (ECN).
International Competition Network (ICN).
A reform is expected in the field of unfair competition, currently regulated by the Competition Law, the RCC already having the power to investigate and sanction acts of unfair competition. Unfair competition covers, among other things, obtaining or disclosing commercial secrets, commercial or industrial espionage, and damaging the reputation of another firm through false advertising. The reform aims to further clarify the cases amounting to unfair competition and to grant effective investigation and sanctioning powers to the RCC. An important aspect relates to the proposed increase in the severity of the fines, which, in the current draft, can be of up to 3% of the turnover. However, the time frame for the enactment of the new legislation is unclear.
Description. The official website of the RCC where original language text of the legislation, case law and rules referred to in this article can be obtained. English language version is not always up to date.
Head. Bogdan Chiriţoiu (Chairman)
Contact details. 1 Piaţa Presei Libere
D1, District 1, 013701
Bucharest, OP 33
Romania
T. +40 21 317 11 91
F. +40 21 316 49 09
E office@consiliulconcurentei.ro
W www.consiliulconcurentei.ro
Outline structure. The RCC is headed by its Chairman. The organisation chart also includes the plenum and other divisions, such as commissions, departments, and services directions, among others.
The RCC departments include:
Responsibilities. The main responsibilities of the RCC are to:
Procedure for obtaining documents. The RCC's website contains the legislation, decisions, press releases, orders in relation to investigations, recommendations, and annual reports and publications.
Kinstellar SPARL
T +40 21 307 1643
F +40 21 307 1555
E iustinian.captariu@kinstellar.com
W www.kinstellar.com
Professional qualifications. Attorney-at-law, Bucharest Bar
Areas of practice. Competition; litigation.
Recent transactions. Recent work includes advising in all fields of competition law clients such as BMW, BRD Pension Fund (part of Groupe Société Générale), CORA Hypermarché, E.ON, Johnson Controls, MasterCard.
