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Overview of competition trends in 2017 Romania

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February 22, 2017 By Filip & Company

 I.          OVERVIEW

 

Whenever trying to prepare annual forecasts, you face a high degree of uncertainty, especially in the area of competition law. The Romanian Competition Council is a strong authority, with plenty of experience and a reputation built especially through its previous high fines, which were applied in various industries. The authority’s actions are influenced by various internal elements, such as law amendments or the way in which undertakings act on markets, as well as external factors, such as investigations launched by the European Commission or other national competition authorities.

 

We have presented below some major market trends and the expected main areas of interest for 2017.  The  below  forecasts  take  into  consideration  an  analysis  of  the  Romanian  Competition Council activity’s in the last 3 years.

 

II.        POTENTIAL DEVELOPMENTS

 

A.    Antitrust investigations

 

In Romania, the number of antitrust investigations seems to be on a growing path if we consider the authority’s latest activity:

  • In 2014 – 9 investigations were launched;
  • In 2015 – 13 investigations were launched;
  • In 2016 – 12 investigations were

 

What is to be expected in 2017: We should expect an increase in the number of complaints to the competition authority. This may happen due to the fact that more and more undertakings look towards   the   Competition   Council   when   they   feel   restricted   on   a   given   market   or   use   the Competition  Council  as  a  pressure  tool  for  obtaining  special  treatment.  However,  this  approach may  have  a  negative  impact  if  purely  commercial  disputes  are  presented  to  the  authority  as competition  law  infringements.  We  expect  an  increase  (potentially  10  to  15  %)  of  the  antitrust investigations to be launched by the Competition Council, most of them as a result of complaints.

B.    Sector inquiries

 

The sector inquiry is the most effective tool used by the competition authority in order to better know a given market. This tool is used more and more often by the European Commission and tendency may be adopted by the national authorities.

  • In 2015 no sector inquiry was launched;
  • In 2016 – 5 sector inquiries were launched on the following markets: the market for exploitation of mineral water resources in Romania; the market of copyright; the market of retail banking services; the market of production and commercialization of cement in Romania; e-commerce sector – with a focus on the marketing

 

What  is  to  be  expected  in  2017:  More  sector  inquiries  may  be  launched,  potentially  in  the areas of industry and energy, banking sector, as well as in the food retail sector. Also, the results for the sector inquiries launched in 2016 may be published (although preliminary conclusions). If we rely on the past experience, such sector inquiries may generate new investigations on potential competition law infringements.

C.     Sanctions

 

The  sanctioning  system  applicable  in  Romania  allows  fines  of  up  to  10  %  of  the  total  turnover obtained   in   the   year   prior  to  sanctioning.   In   2016,  the   Competition   Council  fined  several undertakings with amounts totalling EUR 15.2 million.

 

What is to be expected in 2017: The total value of the fines may rise in 2017, given the fact that a significant number of on-going investigations may be finalised. The amount of fines may be influenced also by the turnover values of the undertakings to be sanctioned (it is possible that the number of cases to be finalised in 2017 to be lower than in 2016, yet the total amount of fines to rise   given   higher   turnovers   of   the   involved   undertakings).   At   this   point,   the   Romanian Competition Council is contemplating finalizing cases in the security services market, insurance, food retail and media.

D.    Merger Control

 

2016  was  a  very  good  year  in  terms  of  merger  control.  The  Competition  Council  assessed  59 economic concentrations (compared to only 35 in 2015 and 42 in 2014).

What is to be expected in 2017: The number of economic concentrations to be assessed by the Competition Council in 2017 may decrease, yet without reaching the 2015 level. This tendency may be  linked  to  the  fact  that  investors  seem  to  be  more  cautious  with  respect  to  their  activities  in Romania, as well as to the fact that the number of small mergers may  rise (such operations not being subject to the competition authority’s approval by not meeting the notification thresholds). On  the  other  hand,  Romania  continues  to  be  an  interesting  jurisdiction  for  merger  case  and  we expect  to  have  some  operations  with  impact  on  the  market  (where  commitments  or  a  more complex economic assessment is required).

E.     Dawn raids

 

In  2016,  the  Romanian  Competition  Council  was  very  active  with  respect   to  unannounced inspections,   performing   13   raids   at   68   premises.   Moreover,   in   2016,   the   first   European Commission  dawn  raid  was  performed  in  Romania  (on  the  market  for  commercialisation  of natural gases).

What is to be expected in 2017: It is rather hard to predict whether or not the number of dawn raids shall increase (yet this may happen). However, it is likely that the growing trend of forensic procedures to be maintained. This may generate a new and growing need for compliance by the undertakings that may be targeted by such procedures (including also for their IT departments which currently are the ones exposing the companies to competition risks as a result of their lack of experience when dealing with competition controls).

F.     Challenging the Competition Council decisions

 

In  2016,  the  number  of  court  files  concerning  the  Romania  Competition  Council  decreased  by 4.5% (compared to 2015).

What is to be expected in 2017:  It is likely for this decrease trend to continue in 2017 also, given  the  fact  that  less  and  less  undertakings  consider  challenging  the  authority’s  decisions, especially as a result of the increasing number of settlement decisions. On the other hand, we have already  a  successful  case  of  private  damages  and  this  type  of  cases  are  expected  to  grow  in  the future.  This  would  generate  a  need  for  competition  work  as  well  as  economic  expertise  in determining the damages resulting from the anticompetitive behaviours.

 

About the author: Cătălin Suliman heads the Competition Practice of PeliFilip. Catalin focuses on providing legal advice on competition and intellectual property issues, as well as life sciences and regulatory matters in the retail sector. Catalin provides the entire spectrum of day-to-day advice on competition and compliance matters, as well as overseeing competition-related trainings and mock dawn raids.

E-mail: catalin.suliman@pelifilip.com

Direct number: +40 729 723 182

Mobile: +40 21 527 2035

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