During its last meeting of May 2017, the Romanian government adopted Government Emergency Ordinance no. 39/2017 (the ‘GEO’) on damage claims related to cases of competition law infringements and amending the Competition law no. 21/1996. The GEO was published in the Official Gazette of Romania on 8 June 2017 and entered into force the same day.
The GEO transposes to Romanian law Directive 2014/104/EU of 26 November 2014 on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the European Union (the ‘Damages Directive’).
The Damages Directive was initiated at the EU level in order to ensure the effectiveness of competition rules by regulating the interaction between public enforcement of the rules by national competition authorities and private enforcement actions brought before the courts by those harmed following breaches of competition law. As such, the Damages Directive regulates key aspects such as disclosure of evidence (including evidence from the file of a competition authority), limitation periods, joint and several liability, the passing-on of overcharges or consensual dispute resolution, in order to address the uneven playing field regarding actions for damages within different Member States.
Although the Romanian Competition Council (‘RCC’) had already published for public consultation a first draft of the law transposing the Damages Directive on 29 July 2016, the Romanian authorities did not manage to enact the relevant legislation in a timely manner, as the political scene in Romania went through several changes, including the appointment of a new government. Therefore, the transposition of the Damages Directive fell behind on the agenda.
According to Article 21 of the Damages Directive, Member States had the obligation to ‘bring into force the laws, regulations and administrative provisions necessary to comply with the Directive by 27 December 2016.’ Taking into account that Romania had failed to transpose the Damages Directive by the required deadline, the European Commission delivered Romania, on 24 January 2017, a reasoned opinion under Article 258 of the Treaty on the Functioning of the European Union (‘TFEU’), formally opening an infringement case on the matter. On this occasion, the Commission required Romania to fully transpose the Damages Directive within two months, until 24 March 2017. The deadline was further prolonged by another two months, until 24 May 2017.
It was on 31 May 2017 that the GEO transposing the Damages Directive was adopted by the Romanian government. The Commission website, as updated on 14 June 2017, noted that twenty Member States communicated full transposition of the Damages Directive and many of the remaining Member States were in the final stages of their national legislative process to adopt and/or officially publish measures transposing the Directive.
Subject matter and scope of the GEO
The GEO establishes the right of any person that suffered harm caused following an infringement of competition law by an undertaking or association of undertakings to claim full compensation before the competent courts. The GEO is applicable (i) in case of violations of Article 101 or 102 TFEU; (ii) in case of breaches of Article 101 or 102 TFEU and national competition rules; or (iii) where only Romanian competition law has been breached. The right to full compensation is expressly provided under the GEO, as the victim of an infringement of competition law can claim damages for the actual loss (damnum emergens), any loss of profit (lucrum cessans) and the payment of interest.
Particular aspects of the Romanian transposition
Competent courts – the competent court for settling damages claims is the Bucharest Tribunal. The first court judgment can be appealed before the Bucharest Court of Appeal, and the judgement of the Bucharest Court of Appeal can be further appealed before the High Court of Cassation and Justice.
Disclosure of evidence – the court can request disclosure of evidence by the defendant or by third parties taking into account an obligation of proportionality and observing the legitimate interests of the parties to the case and any third parties. Whenever it decides the disclosure of confidential information, the court will take effective measures for protecting such information. However, the interest of undertakings to avoid actions for damages following competition law infringements cannot constitute an interest warranting protection.
The court can also request disclosure of evidence from the file of a competition authority only when that evidence cannot be obtained from a party or a third party. Also, when there is a sanctioning decision of a competition authority, the court can request documents on which the decision was based. When receiving such evidence, the court must ensure the protection of documents containing business secrets and confidential information, as defined by competition rules.
The court can decide the disclosure of the following categories of evidence only after the competition authority has closed its proceedings: (i) information prepared by a natural or legal person specifically for the proceedings of the RCC; (ii) information that the RCC has drawn up and sent to the parties in the course of its proceedings and (iii) settlement submissions that have been withdrawn. In addition, this type of evidence (obtained by a person solely through access to the files of a competition authority) is inadmissible in actions for damages before the proceedings of the competition authority are closed. On the other hand, the court cannot order the disclosure of leniency statements or settlement submissions and evidence from such documents obtained by a person solely through access to the file of a competition authority is deemed inadmissible in actions for damages.
Related penalties – the court can fine the parties, third parties and their legal representatives with fines between RON 500 (approx. EUR 110) and RON 5,000 (approx. EUR 1,100) for natural persons and between 0.1 and 1% of the turnover during the previous year for legal persons in case they (i) fail or refuse to comply with the disclosure order of the court; (ii) destroy relevant evidence; (iii) fail or refuse to comply with the obligations imposed by the court in order to protect confidential information or (iv) breach the limits on the use of evidence provided by the GEO.
Presumption of culpability and harm – a breach of competition law asserted by a final decision of the RCC, the European Commission or by a court represents an irrefutable presumption as to the infringer’s culpability for the court dealing with an action for damages. A final decision taken in another Member State attests, until proven otherwise, that an infringement of competition law has occurred.
In addition, there is a rebuttable presumption that cartels cause harm. The court has the competence to quantify the harm suffered by the victims of a competition law infringement and can also request the assistance of the RCC in this respect.
Extended limitation periods – the previous limitation period of 2 years for bringing a claim for damages is extended to 5 years and will not run before the infringement has ceased and the claimant knows, or should have known (i) of the behaviour and that it constitutes an infringement of competition law; (ii) of the fact that the infringement caused it harm and (iii) the identity of the infringer.
The limitation period will not run or, if already running, will be suspended while a competition authority investigates the breach to which the action for damages relates and will resume only one year after the infringement decision has become final or after the proceedings are otherwise terminated.
In case the infringer is a small or medium-sized enterprise (‘SME’) or an immunity recipient, it will be generally liable only to its direct or indirect purchasers or providers and will only be liable to other injured parties where full compensation cannot be obtained from other infringers. If full compensation cannot be obtained from other infringers because of their inability to pay, the limitation period for an action for damages against the SME or the immunity recipient will not run for a period of three years following the final bankruptcy decision concerning the other infringers.
Joint and several liability – competition law co-infringers are jointly and severally liable towards the victims of the breach. Also, any infringer can recover a contribution from any other infringer, determined in the light of their relative responsibility of the harm caused by the competition law infringement.
Passing-on of overcharges – the burden of proving the existence and scope of passing-on rests with the claimant, who can require disclosure from the defendant or from third parties. However, there is a rebuttable presumption that passing-on to an indirect purchaser occurred where that indirect purchaser has shown that (i) the defendant has committed an infringement of competition law; (ii) the infringement of competition law has resulted in an overcharge for the direct purchaser of the defendant; and (iii) it purchased goods or services that were the object of the infringement of competition law, or purchased goods or services derived from or containing them.
Consensual settlements – the court dealing with an action for damages can suspend its proceedings for up to 2 years when the parties are involved in consensual dispute resolution. Following a consensual settlement, the claim of the settling injured party is reduced by the co-infringer’s share of the harm.
Mitigating factor – the RCC can retain as mitigating factor the payment of damages by the infringer(s) following a consensual settlement concluded with the victims of the infringement of competition law.
Temporal application – the substantive provisions of the GEO do not apply retroactively, whereas its procedural provisions apply to any damages claims brought as of 26 December 2014.
Amendments brought to the Competition Law
Apart from transposing the Damages Directive, the GEO also amended Competition law no. 21/1996 (the ‘Competition Law’). Among the relevant changes is the clarification of the turnover taken into account as the basis for fining foreign undertakings for breaches of merger control rules. As per the latest changes, for the purposes of setting the fine, the total turnover of a non-resident person is replaced with the sum of the following revenues:
- the turnover of each of the undertakings registered in Romania under the control of the infringer;
- the revenues generated in Romania by each of the non-resident undertakings under the control of the infringer; and
- own revenues generated in Romania by the infringer and registered in its individual financial statements.
The Competition Law defines a ‘non-resident person’ as any foreign person as well as any other foreign entity, including collective investment undertakings without a legal personality, not registered in Romania.
Another change brought to the Competition Law is the possibility of the RCC to request from both food and non-food retailers (hypermarkets, supermarkets, discounters and cash&carry) their sale prices for market study and price comparison purposes. Failing to comply with such requests will be sanctioned with a fine between RON 20,000 (approx. EUR 4,400) and RON 50,000 (approx. EUR 11,000). This amendment was introduced in the context of the price comparison platform launched by the RCC in 2016 that displays the prices of retailers (enrolled on a voluntary basis only) from the Bucharest-Ilfov area for a series of food products.
Another important amendment to the Competition Law concerns the possibility given to the RCC to copy in full and take under seal electronically stored information encountered during dawn raids. Identifying the information relevant for the investigation would be conducted only later, at the headquarters of the RCC and in the presence of representatives of the undertaking(s) concerned.
The transposition of the Damages Directive should better place natural and legal persons harmed following violations of competition law to obtain compensation from the infringer(s). As such, the introduction of legal presumptions shifting the burden of proof, the new rules on disclosure of evidence and the extended limitation periods represent an important step forward to encouraging victims to bring damage claims before the courts.
On a different note, as the President of the RCC also declared on several occasions that the transposition of the Damages Directive could also represent an effective means for public authorities to claim damages for the harm incurred following breaches of competition law (e.g. bid rigging).
It is difficult to predict whether the new framework will trigger extensive competition damage litigation, as Romania cannot be considered as having a specific culture or tradition on the matter. The only exception worth mentioning is the successful claim for around RON 4.2 million (approx. EUR 920,000) brought by Mailers Serv against the Romanian Post before the Bucharest Court of Appeal, in October 2015. The judgment was later upheld by the High Court of Cassation and Justice, in November 2016. The case was a follow-on claim brought by one of the companies that the RCC found to have been discriminated against by the Romanian Post in a 2010 sanctioning decision for abuse of dominant position. In that particular case, the RCC fined the Romanian Post with RON 103 million (approx. EUR 23 million) for imposing discriminatory commercial conditions on postal advertising and commercial post markets.