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Investigations

Initiating an investigation

Who can initiate an investigation of potential cartel conduct?

Investigations of potential cartel conduct are initiated by the Competition Council president on his or her own initiative or following complaints filed by third parties directly affected by the cartel.

If an investigation is initiated by complainants or third parties, what rights (if any) do they have?

If the Competition Council finds a complaint to be ungrounded, it will inform the complainant of its resolution not to start an investigation, whereupon the complainant will have the right to present its views on this matter. The complainant may also request access to the documents on which the Competition Council intends to ground its preliminary assessment. If the complaint is eventually rejected, the complainant may contest the Competition Council’s resolution in court. If an investigation is initiated pursuant to the complaint, the complainant may request a hearing to present its views on the case without confronting the undertaking under investigation. The complainant may also request a copy of the investigation report, if the president of the Competition Council considers this to be useful for the purposes of the investigation. Any documents to which the complainant may be granted access can be used only for the purposes of legal or administrative procedures concerning the enforcement of competition rules. Further, the complainant cannot be granted access to business secrets or any other confidential information that the Competition Council obtains during the investigation.

Parties other than complainants may have access to the case file in accordance with Government Emergency Ordinance 39/2017 of May 31 2017 – namely, if they are prejudiced further to a breach of the Competition Law. 

What obligations does a company have on learning that an investigation has commenced?

An undertaking subject to an investigation must:

  • provide exact and complete information and documents following the request of the competition inspectors; and
  • duly cooperate with competition inspectors on dawn raids.

Although not expressly provided for by law, based on existing EU and national court practice, an undertaking subject to investigation should, in principle, have the right not to incriminate itself (ie, not to provide proof of a breach of the Competition Law). However, in practice, it is difficult to draw a clear line between information that is exempted based on a self-incrimination principle and information that must be provided.

What obligations does a company have if it believes that an investigation is likely?

A company which believes that an investigation is likely has no formal obligations before the investigation is formally brought to its attention.

Nonetheless, should the undertaking wish to benefit from the Competition Council’s leniency policy on cartels (which may lead to reduced or even complete relief from fines), it should be one of the first parties to submit on its own initiative information that may enable the council to initiate an investigation and establish whether a cartel exists.

In such a case, the undertaking must meet several other obligations before the formal investigation commences, including:

  • cooperating fully and promptly with the Competition Council;
  • not destroying, falsifying or hiding information relevant to the object of the investigation;
  • keeping the leniency request secret; and
  • ceasing any involvement in the concerned cartel. 

What are the potential consequences of failing to act or delaying action?

Failure to observe obligations that arise after an investigation is formally commenced may trigger administrative fines of up to 1% of the undertaking’s annual turnover.

If the company fails to observe obligations pertaining to the leniency policy before the investigation formally commences, it may no longer be eligible for leniency.

Under certain circumstances, criminal liability may also occur (eg, for the obstruction of justice if evidence in the Competition Council’s possession is destroyed or forged documents are provided).

Formal stages of investigation

What are the formal stages of and approximate timeframe for investigations?

Investigations mainly consist of:

  • preliminary examinations, during which the Competition Council decides whether a complaint filed by a third party or a leniency application filed by a potential offender are sufficient grounds to start a formal investigation;
  • the formal investigation phase;
  • the debates phase, during which the Competition Council issues a draft resolution on which it consults with the concerned parties; and
  • the final resolution phase.

The timeframe for an investigation depends on the case’s complexity and the Competition Council’s workload. In practice, they may take from several months to five years. However, the overall duration of an investigation cannot exceed 10 years, whereas the administrative offences for breaches of the Competition Law become time barred within five years from the cessation of the breach. Certain Competition Council actions interrupt the statute of limitations, in which case a new five-year term starts. Notwithstanding that, if the investigation exceeds 10 years, fines can no longer be applied.

Investigative powers

What investigative powers do the authorities have?

If there are indications that documents or information deemed necessary for the accomplishment of their tasks exist, competition inspectors with investigative powers may:

  • enter the premises, lands or means of transport legally owned or used by the undertaking subject to investigation or the directors, managers or employees thereof;
  • examine any documents, registers or financial, accounting and commercial deeds, as well as other records relating to the business of the undertaking subject to investigation, irrespective of the place where they are stored or their physical or electronic format;
  • request explanations from the undertaking’s representatives or staff members subject to investigation concerning the subject matter and purpose of the investigation and record their answers;
  • collect or obtain in any form copies or excerpts from documents (including financial and accounting documents), registers and other records concerning the activity of the undertaking subject to investigation;
  • collect electronic information on sealed electronic support; sampling of the relevant information will take place at the Competition Council’s headquarters in the undertaking’s presence; and
  • seal any premises where the activity of the undertaking subject to investigation is performed, as well as any documents, registers, financial, accounting and commercial deeds and other records relating to the undertaking’s activity.

What is the geographic reach of public enforcement actions?

Enforcement actions can be conducted only in Romania. However, within the European Competition Network framework, the Competition Council may request the cooperation and assistance of the European Commission and the national competition authorities of any other member state.  

Similar mechanisms of cooperation with national competition authorities of non-EU member states may also exist, based on multilateral or bilateral treaties concluded by the European Union.

In case of an undertaking’s failure to pay fines, the Competition Council will inform the relevant tax authority, which may start recovery procedures in Romania or abroad.

When is court approval required to invoke these powers?

Court approval is required for competition inspectors to undertake dawn raids on the premises, lands or means of transport of:

  • an undertaking subject to an investigation; or
  • the directors, managers or employees thereof.

Are searches of business and personal premises authorised? If so, which bodies carry out searches and will they wait for legal advisers to arrive?

The Competition Council president authorises searches of business and personal premises, but court approval is also necessary. Inspections are conducted by competition inspectors. While undertakings have the right to be assisted by legal advisers during a search, competition inspectors have no obligation to wait for them to arrive.

What level of cooperation with the authorities is required and what are the consequences for failing to cooperate?

Undertakings subject to investigations must provide all relevant information requested by the Competition Council in a full and timely manner.

Providing incorrect or misleading information or refusing to be subject to an investigation is punishable with fines of between 0.1% and 1% of the undertaking’s annual turnover in the preceding year.

Given that the burden of proof lies with the Competition Council, the undertaking subject to investigation has, in principle, the right not to incriminate itself and therefore cannot be forced to provide proof of its default. Nonetheless, in practice, it is difficult to draw a clear separation between information that an undertaking is entitled to withhold and that which the Competition Council is entitled to request.

Is in-house legal advice or attorney work product protected by the law of privilege? Does this extend to the advice of in-house counsel?

Communications carried out between an undertaking subject to investigation and its attorney solely for the purpose of the undertaking exercising its right to a defence (before or after the opening of the investigation) cannot be taken or used as evidence in the course of the Competition Council’s proceedings. Such communications must concern the object of the investigation. This does not extend to the advice of in-house counsel.

Are any other limitations imposed on investigatory powers in order to safeguard the rights of those under investigation?

Competition inspectors may perform a search only if:

  • it is based on a formal investigation order issued by the Competition Council president;
  • there are indications that documents or information deemed necessary for the accomplishment of the inspectors’ tasks exist; and
  • it is performed within the limits set out in the court order approving the search.

What is the process for objecting to an authority’s exercise of its claimed powers?

An investigation order can be challenged before the Bucharest Court of Appeal within 15 days from its receipt.

Court approval of an on-premises investigation can be challenged before the Supreme Court within 72 hours of its receipt.

Publicity and confidentiality

What information about investigations will be made publicly available and at which stage(s) of the process?

As a matter of practice, the resolution to initiate a formal investigation is publicly announced on the Competition Council’s website.

Resolutions issued by the Competition Council at the finalisation of an investigation are sent to the parties involved and published in the Official Gazette and on the Competition Council’s website. Before publishing a resolution, the Competition Council must consider the rights of the concerned undertakings regarding the protection of trade secrets and other types of confidential information which would significantly damage the undertaking if disclosed. However, only certain sections of a resolution can be made confidential.

Is any information automatically confidential and is confidentiality available on request?

Under Romanian law, confidentiality is not automatically conferred on any category of information. Rather, confidentiality is available for parts of a file on the basis of a duly grounded request from the undertaking concerned. To date, the Competition Council has been open to such requests.

International cooperation

Do the authorities in your jurisdiction cooperate with authorities in other jurisdictions?

The Competition Council cooperates with the European Commission and the national competition authorities of other EU member states within the European Competition Network framework, established pursuant to the EU Regulation on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty on the Functioning of the European Union (1/2003).

The European Competition Network is a framework for:

  • cooperation, assistance and the allocation of competences between the European Commission and the national competition authorities of EU member states regarding the enforcement of EU competition rules; and
  • discussion and exchanges aimed at the development of competition culture within the European Union.

The Competition Council is also a member of the International Competition Network, an informal group that allows discussions between national competition authorities from across the globe, but has no rulemaking function.

Formal mechanisms of cooperation with competition authorities outside the European Union may exist based on international treaties concluded by the European Union and the member state concerned, such as treaties between the European Union and Brazil, China, Mexico and Switzerland.

In addition, the Competition Council has signed a number of cooperation memoranda with competition authorities from various third-party states (eg, Russia and China) in order to exchange information regarding:

  • competition legislation;
  • investigation procedures; and
  • studies concerning competition rules.

Do the relevant enforcement authorities request waivers so as to allow for increased cooperation with authorities in other jurisdictions? What are the consequences of declining to grant a waiver?

At the international level, a non-binding template for waivers of confidentiality has been created within the International Competition Network framework. Although a member thereof, the Competition Council could not request or use the template other than within the leniency application framework, as waivers are not regulated in Romania in regard to cartels (although certain provisions concerning wavers of confidentiality in merger control procedures exist).

Decisions

How is a cartel investigation resolved? Are settlements, plea bargains or other negotiated resolutions available?

A cartel investigation ends with a final Competition Council resolution that can be challenged in court.

A negotiated resolution is possible only:

  • within the framework of the cartels leniency procedure; and
  • where the Competition Council accepts commitments from the parties to the cartel, provided that:
    • the commitments are sufficient for safeguarding competition; and
    • their implementation would lead to the elimination of the situation that triggered the investigation. 

What is the process for negotiating a settlement, plea bargain or other negotiated resolution? Do such resolutions require court or other approval?

The negotiated resolutions require neither court nor other approval. Nonetheless, they can be challenged along with the Competition Council’s final resolution regarding the investigation.

If a settlement is not reached, what is the procedure for adjudicating a charge of cartel conduct?

If a settlement is not reached, the procedure follows the stages described in the ‘Formal stages of investigation’ section above.

Which party must prove its case? What is the relevant standard of proof?

In competition investigations, the burden of proof lies with the Competition Council, unless the concerned undertaking invokes certain exemptions from the prohibition of cartels (in which case the burden of proof lies with the concerned undertaking).

Under Romanian law, there is a general standard of proof requiring evidence concerning an alleged breach of the Competition Law to be sufficient (failing which, the Competition Council must close the investigation).

If the Competition Council’s resolution is challenged, the court will normally require that the evidence filed be useful, pertinent and conclusive to the case.

The Supreme Court has also examined whether proof leading to penalties applied by the Competition Council complied with the standard established by EU case law – specifically, whether the evidence used by the council was “precise and consistent”.

In actions concerning private damages, the burden of proof regarding the existence of the competition breach and the evidence concerning the quantum of the damages lies with the claimant. The standard of proof required for the quantification of damages must not render the exercise of the right to damages impossible or excessively difficult. 

Is there a hearing? If so, what is the process for submitting evidence and testimony?

The Competition Council may organise a hearing after completion of the investigation report, either on its own initiative or at the request of one of the parties concerned. The hearing of the parties may be conducted separately or in the presence of other invited parties, subject to the legitimate interest of the undertaking in relation to their trade secrets and other confidential information. The hearings are recorded, but not public.

If considered necessary and useful for the case, the Competition Council president may appoint experts.

The Competition Council president may also approve the participation and hearing of the complainant, as well as any other person who might provide relevant information.

The president, or a designated replacement, will chair the hearings. The chair will allow the parties concerned to make statements regarding the investigation report and support their claims or defences, particularly those deemed to be relevant for clarifying the essential aspects of the case. 

What are the accused’s procedural rights?

The main right of an undertaking undergoing investigation is the right to a defence, which encompasses:

  • the right to be assisted by an attorney;
  • the right to access the case file;
  • the right to be informed in writing of various aspects throughout the procedure (eg, the investigation order and related documents);
  • the right to submit its views on the investigation report before a resolution is taken;
  • the right to be heard by the Competition Council in a hearing, if the council deems a hearing necessary; and
  • the right to challenge the Competition Council’s resolutions in court.

In addition, the undertaking has a right to claim the confidentiality of certain parts of the submitted documents or information.

Appeal process

What is the appeal process?

The final Competition Council resolution regarding the outcome of an investigation can be appealed in court within 30 days from its communication. The following resolutions can also be appealed along with the final resolution:

  • resolutions to commence an investigation;
  • refusals to grant leniency; and
  • resolutions regarding the confidentiality of documents or access to the case file, among other things.

The court may, but is not obliged to, suspend the enforcement of a resolution. If fines were imposed by the resolution, the suspension will be adopted only against a cash collateral, to be established by the court pro rata to the fine amount in accordance with the rules set out by law (Lei14,500 plus 0.1% of the fine being the highest cash collateral that can be imposed for fines exceeding Lei1 million).

To what extent can the appeal body review the agency’s findings of fact, legal assessment and penalties?

The appeal body can fully assess and review the findings regarding the facts, legal assessment and penalties.

Penalties

Penalties for companies

What are the potential penalties for companies involved in a cartel?

The potential penalties for companies involved in a cartel can be up to 10% of their annual turnover for the preceding year.

Are there guidelines in place for penalties? If not, how are penalties normally calculated?

The Competition Council has issued guidelines on the calculation of penalties. Penalties are established with regard to the gravity of the infringement. A base penalty of between 4% and 8% of the company’s annual turnover applies to cartels. However, aggravating or mitigating circumstances may increase or reduce the penalty.

Do the authorities take into account any penalties imposed in other jurisdictions?

As per EU case law, an infringement of both EU and national competition legislation should be punished only once (ie, it will not be punished as an infringement of both EU and national legislation) if it concerns the same person and the protection of the same interest. Further, Romanian legislation expressly provides that no one can be punished twice for the same deed, in either criminal or administrative offence proceedings. Hence, it is unlikely that a single deed would trigger multiple penalties in various EU jurisdictions.

Where the same conduct breaches the competition laws of non-EU jurisdictions, it could be punished twice or more if no pleas can be invoked to prevent double punishment of the same offence in those jurisdictions. In Romania, a plea exists which can allow a party to escape double liability. 

How can a company mitigate its exposure to fines?

A company may wish to consider benefiting from the cartels leniency programme, which may lead to full relief or the substantial reduction of a fine.

In addition, if a company acknowledges its participation in a cartel before any hearings and, where applicable, proposes remedies that can generate the end of the breach, the Competition Council may reduce the basic level of the applicable fines by 10% to 30%.

Further, a company may diminish its exposure by considering the mitigating circumstances that have a bearing on the calculation of fines in Romania – for instance:

  • implementing a proper competition compliance programme;
  • ceasing the breach as soon as the Competition Council has intervened; and
  • concluding settlement agreements to compensate parties aggrieved by the cartel.

Penalties for individuals

What are the potential penalties for individuals involved in a cartel?

If an individual is deemed to be an undertaking within the meaning of the Competition Law, the same penalties as for companies (ie, between 0.5% and 10% of the annual turnover) can be inflicted thereon.

Do the authorities take into account any penalties imposed in other jurisdictions?

The authorities do not consider penalties imposed in other jurisdictions when calculating fines. However, in certain cases, conduct that has already been punished cannot, as a matter of principle, be subjected to further fines in Romania.

Is a company permitted to pay a penalty imposed on its employee?

The only case where an employee could be subject to a fine for competition infringement is where he or she holds a management position and the criminal prosecution bodies find that he or she has wilfully conceived or organised a cartel action. In such cases, if the penalty applied is a fine, rather than imprisonment, the company may provide the relevant amounts to the employee to pay the fine (alternatively, the company may enter into an insurance policy to this effect). There is no express interdiction for the company to provide such amounts.

Is a company permitted to continue to employ an employee involved in cartel conduct?

There is no express interdiction for a company to continue to employ a person involved in cartel conduct. However, a court may decide to revoke the employee’s right to exercise the function or carry out the activity which was used to commit the offence. In such cases, the company cannot continue to employ the employee involved in cartel conduct.

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