In October 2015, the Bucharest Court of Appeals awarded damages in a follow-on action for the first time

Background

In December 2010, the Romanian Competition Council ("RCC") sanctioned the Romanian Post with a fine of EUR 24.06 million for abuse of dominant position. The Romanian Post was found to favor one of its clients, I___ G___ SRL ("IG") in relation to standard postal services for advertising mail between 2005 and 2009. In addition, the RCC considered that the Romanian Post granted discriminatory rebates (IG being one of the companies that benefited from favourable rebates). After being escalated through the appeal instances the High Court of Cassation and Justice upheld the decision in April 2015.

M____ S___ SRL ("MS"), a competitor of IG, filed a law suit against the Romanian Post following the decision of the RCC. It claimed damages for the difference in the tariffs (compared to IG's tariffs) for the period 2005 – 2011. The total damages amounted to approx. EUR 910,000.

The Bucharest Tribunal decision

The Bucharest Tribunal (court of first instance) considered that MS’s case was initiated and continued pending the appeal process of the RCC decision. It, thus, found that MS would have had the burden of proof with respect to the (alleged) abusive practice of the Romanian Post and also with respect to damages claimed. It concluded that MS proved none of these and, hence, rejected the claims.

While the Bucharest Tribunal attempted to suspend MS’s case pending the appeal process, the higher court (Bucharest Court of Appeals) overruled the staying of the proceedings upon the request of MS and decided that the case should proceed.

The Bucharest Court of Appeals decision1

On appeal of MS against the dismissal of its damages claim, the Bucharest Court of Appeals set aside the Bucharest Tribunal judgement. The court considered that the Bucharest Tribunal should have taken into consideration the RCC decision, this being presumed legal and valid until a final decision.

The Bucharest Court of Appeals then considered the evidence presented in the RCC decision and found that all elements for establishing Romanian Post's liability (deed, guilt, causal link and prejudice) were proven. Moreover, once the High Court of Cassation and Justice, as last instance, upheld the RCC's decision (which overtook the appeal process in the damages claim dispute) the existence of the infringement was irrefutably presumed.

Thus, the court awarded damages to MS, which included both damnum emergens (actual damages) and lucrum cessans (loss of profit), consisting of the tariff differences not granted by the Romanian Post to MS in the period 2005 – 2009.

Conclusion

While the Bucharest Court of Appeals decision is subject to a final appeal, this is a landmark development for the Romanian judiciary system. It is the first ever follow-on damages claim in Romania, and it is widely expected that this will set a precedent for follow-on claims. The RCC is particularly active in pursuing cartels and bid rigging practices (in average there are more than five decisions per year) which is likely to translate into significant follow-on actions going forward. For companies this means that it will be all the more important to ensure effective compliance and attention to the exposure generated by anticompetitive practices.