The Competition Act No. 183/2012 (Act No. 183) (which transposes the EU competition acquis in Moldova) entered into force in 2012, and its last provisions came into force at the beginning of 2015. At first glance, one would think that this period would suffice for local players to start playing by the rules. In practice, however, some decide to learn the hard way.

Two recent investigations by the Competition Council showed how one should not react when investigated, as fines can start pouring in faster than you realise if you do not abide by the rules. Things definitely get more interesting when such cases are brought to court.

Outset

Through the Competition Council's Plenum Decision No. 7 dated 4 March 2015, an investigation into the market of consumer electronics (household appliances) was initiated. As a result, two physical investigations took place at undertakings operating under the trademarks "Alina Electronic" and "Bomba". On the same day the representatives from the Competition Council presented themselves on site, inter alia demanding access to information, documents and IT infrastructure.

Things You Should Never Do

As the publically available court and Competition Council's materials show, in both cases the investigated undertakings behaved in a way that later was identified as constituting a refusal to be subjected to investigation by the Competition Council, thus, breaching Act No. 183. In particular, the behaviour obstructing the investigation included:

  1. applying delay tactics precluding the investigation from commencing, by refusing to communicate the location of offices of the general manager, commercial manager and accounting, the undertaking in question allowed itself additional time to possibly destroying or alter pertinent evidence;
  2. refusing to present solicited information which by law should be kept at the seat of the enterprise;
  3. disconnecting the commercial manager's computer (working station) from the enterprise's server;
  4. attempting to remove certain materials from the accounting office; and
  5. continuing to work at a computer (by responsible person(s)) after receiving verbal requests from Competition Council representatives to cease operating such computer and phone.

This behaviour was treated by the Competition Council as refusal to be subjected to investigation and was thus sanctioned.

How Much is the Fine?

According to Act No. 183, refusal to be subjected to investigation is regarded as a serious breach and the fine quantum can range between 0.15 % and 0.45 % of the total turnover from the previous financial year of the undertaking in breach. Furthermore, a series of multipliers are in place which can increase or decrease the fine quantum depending on the time length of the breach in question.

In the cases at hand, each of the undertakings' refusals to be subjected to investigation received a fine of 0.4 % of their respective turnovers from the previous financial year. Consequently, one undertaking was ordered to pay approximately MDL 1.3m (approx EUR 58,000), and the second almost MDL 1m (EUR 45,000). These are the highest fines the Moldovan competition domain has ever ordered to be paid for refusal to disclose information. In addition, under Moldovan tax rules, such fines are not tax deductible for local undertakings.

Can you Challenge?

Further to the March 2015 fines, the two undertakings attempted to have them annulled before the Moldovan courts. However, both the Chisinau Court of Appeal (first instance court for such matters) and the Supreme Court of Justice (as recourse instance) entirely dismissed the complaints. These were however dismissed on procedural grounds and not on merits. As irrevocable decisions of the Supreme Court indicate (pronounced on 13 April 2016 and on 20 April 2016 respectively, for the second case), claimants omitted to file their statements on time. Pursuant to Act No. 183 (as opposed to Act 793/2000 on Administrative Courts) there is no need to file any preliminary complaint to the issuing authority, but to file a statement of claims challenging the Competition Council's decision regarding the fine directly with the court. Such statements will not be accepted by the court when submitted 30 calendar days after the decision is communicated to the challenging person.

The two undertakings received the Competition Council's decisions in March 2015, but did not file any statements to court before May, as a result, the statutory 30-day term was not adhered to.

Important: Application of the above fines will in no way affect the continuation of the investigation by the Competition Council.

Conclusion

Until today, the question remained whether the Competition Council was in fact going to stringently apply those sanctions as set by Act No. 183. Practice shows that it will. In consequence, local players are recommended to pay special attention to Act No. 183 and recent practical examples in this respect. Furthermore, local players are advised to implement internal rules regarding behaviour in relation to the Competition Council, and are also advised to have proficient legal advisors at hand for cases similar to the above and also throughout the investigations.