Competition and Laws and Regulations in Romania

What are the main competition-related pieces of legislation in Romania?

Besides the EU rules and related guidelines on competition, which may also apply in Romania, the main competition-related instruments are (i) Competition Law no. 21/1996 (Competition Law) and (ii) Unfair Competition Law no. 11/1991.

Other relevant pieces of legislation include:

• Government Emergency Ordinance (GEO) no. 170/2020 concerning actions for damages for competition law infringements;
• Law no. 81/2022 concerning unfair competition practices between undertakings active in the agricultural and food supply chain;
• GEO no. 23/2021 concerning measures for the implementation of EU Regulation 2019 /1150 on promoting fairness and transparency for business users of online intermediation services.

Although not a competition law instrument, particular regard must also be given to GEO no. 46/2022 concerning the implementing measures of Regulation (EU) 2019/452 of the European Parliament and of the Council of 19 March 2019, establishing a framework for the screening of foreign direct investments into the Union.

Primary legislation is further fleshed out by way of e.g., Government decisions or guidelines issued by the competition authority, which set out procedural rules or offer indication on the interpretation and application of the law.

Have there been any notable recent (last 24 months) updates of Romanian competition legislation?

Yes, the legislator has been increasingly active in this field, especially in response to EU initiatives and actions. In particular, we note the following recent developments:

• GEO no. 108/2023 – which sought, among others, to transpose Directive 2019/1 (ECN+ Directive). This resulted in increased powers for the Romanian Competition Council (RCC) in terms of e.g., the conduct of dawn raids/ investigations, attribution of liability, etc.
• GEO no. 84/2022 on preventing and combating speculative actions – introduced, among others, new categories of unfair competition practices (e.g., exploitation of superior bargaining position).
• Law no. 81/2022 concerning unfair competition practices between undertakings active in the agricultural and food supply chain – aimed at transposing Directive (EU) 2019/633. The law sets out lists of practices that are either subject to a blanket ban or prohibited unless certain conditions are met.
• GEO no. 46/2022 – introduced a new screening mechanism for foreign direct investments and greenfield investments which (i) fall under certain sectors deemed sensitive and (ii) exceed EUR 2 million in value. This regime has subsequently been subject to amendments seeking, among others, an ever-wider scope of application (as a consequence, both non-EU and EU investors may now be subject to review from a national security perspective).

What are the main concerns of the national competition authority in terms of agreements between undertakings? How is the sanctioning record of the authority?

Based on recent figures, anti-competitive agreements remain at the forefront of RCC’s enforcement action – with 77% of the total amount of the fines in 2023 being imposed for anti-competitive agreements between undertakings.

On a more granular level, more than half of all investigations launched in 2023 and 44% of the ongoing investigations concern potential cartel cases. Market sharing, bid rigging, and exchanges of sensitive information have all been subject to tight scrutiny and hefty fines. By way of example, the RCC sanctioned in 2022/ 2023:

• 65 companies and an association with total fines of more than RON 130 million (approximately EUR 26 million) for taking part in an agreement on the automotive repair and maintenance services market in Romania;
• three companies with fines totaling approximately RON 20.5 million (approximately EUR 4.1 million) for bid rigging in a tender organized by the Ministry of Internal Affairs for the implementation of the center for the provision of electronic services;
• three insurance companies and an insurance broker with total fines amounting to approximately RON 15 million (approximately EUR 3 million) for anti-competitive agreements on the Romanian aviation insurance market; the companies were found to have split the larger clients into four tenders they had organized.

That is not to say that restrictions such as resale price maintenance included in vertical agreements (i.e., between companies operating at different levels of the production/ distribution chain) escape scrutiny. See, in this regard, the sanction imposed by the RCC (totaling EUR 25 million) on a TV and mobile phone producer and three large online retailers for an anti-competitive agreement consisting of resale price fixing.

Which competition law requirements should companies consider when entering into agreements concerning their activities in Romania?

Companies should carefully consider the rigors of Article 101 of the Treaty on the Functioning of the European Union (TFEU) – prohibiting anti-competitive agreements. The reasons are twofold. First, this article must be applied directly by the RCC when trade between EU Member States may be affected. Second, the corresponding Romanian rule (Article 5 of the Competition Law) largely mirrors the EU provision.

Accordingly, all agreements between undertakings, decisions by associations of undertakings, and concerted practices that have as their object or effect the prevention, restriction, or distortion of competition are prohibited. This prohibition refers both to cartels and vertical agreements, and covers, among others, agreements to fix prices, limit outputs, share markets, etc.

Certain restrictions included in vertical agreements may be block-exempted (permitted without further formalities) should they satisfy the conditions provided for in Commission Regulation (EU) 2022/720 (applicable also in Romania). Other specific EU instruments may be relevant depending on e.g., the nature or scope of the agreement.

For agreements that are not block-exempted, an individual exemption could apply, provided that the conditions in Article 101 (3) TFEU are met – in practice, these conditions are rather difficult to prove.

Does a leniency policy apply in Romania?

The RCC may apply a leniency policy where companies cooperate with the authority during an investigation and voluntarily provide information regarding anti-competitive agreements and their involvement.

As a point of departure from EU rules, the leniency policy may apply in cases of cartels, as well as vertical agreements. Granting immunity from fines (or a reduction thereof) is subject to strict conditions laid down in the Competition Law and secondary legislation.

How is unilateral conduct treated under Romanian competition rules?

Unilateral conduct may constitute an abuse of a dominant position (competition law infringement) or an exploitation of a superior bargaining position (unfair competition practice).

As regards the prohibition of abuses of dominance, Article 6 of the Competition Law largely mirrors the corresponding EU provision (Article 102 TFEU). As dominance in itself is not sanctioned, both a dominant position (under Romanian law, there is a rebuttable presumption of dominance where market shares exceed 40% on the relevant market; dominance may nevertheless be found even below that percentage, depending on e.g., the market shares of competing undertakings, the structure of the market, etc.) and abusive conduct must exist. Examples of abusive conduct include predatory prices, margin squeeze, refusal to supply, price discrimination, etc., and may lead to either exclusionary effects for competitors or exploitative effects for consumers.

Even where the company falls short of dominance, caution should be exercised so as not to fall under the prohibition of exploitation of a superior bargaining position. In brief, such a position may be found where significant imbalances in the relationship with a partner exist (by reference to a series of cumulative factors including lack of alternatives for the partner, the importance of the relationship in the activity of the partner, etc.). Abusive conduct may consist of e.g., unjustified refusal to supply or purchase, the imposition of conditions which are unduly onerous or discriminatory, or unjustified termination of business relations with a partner. Should an infringement be established, fines for legal persons range between RON 50,000 (approximately EUR 10,000) and RON 500,000 (approximately EUR 100,000).

Are there any recent local abuse cases of relevance?

Several abuse cases are currently being investigated by the RCC. Perhaps the most prominent are:

• The investigation concerning Apple – alleged abuse of its dominant position in the iOS app distribution market, allegedly committed by limiting access to user data used for advertising purposes and, at the same time, favoring Apple’s own technological services displaying online advertising in iOS-compatible apps.
• The investigation concerning Sony – alleged abuse of its dominant position on the market for video game consoles, allegedly committed by exclusively selling PlayStation-compatible video games through the PlayStation Store and by eliminating third-party distribution of activation codes for PlayStation-compatible video games.

What are the consequences of a competition law infringement?

Should an infringement of Articles 5 or 6 of the Competition Law be established, undertakings may be subject to fines of up to 10% of the total global turnover derived in the year prior to the sanctioning decision – a specific percentage depending on gravity, duration, and circumstances. On top of that, agreements and decisions infringing these articles are null and void.

Following the latest amendments to the Competition Law, concepts such as the single economic unit and economic/ legal continuity are now expressly regulated under Romanian law. In practical terms:

the turnover derived at the global level by all natural and legal persons part of a single economic unit may be taken into account by the RCC when determining the maximum level of fines. Moreover, persons part of a single economic unit are jointly and severally liable for paying imposed fines; and

the authority may find legal or economic successors of an undertaking liable and fine them, to prevent undertakings from escaping liability through legal/ organizational changes.

Further, infringing companies may be subject to private damages claims.

In terms of personal consequences, the acts of managers, legal representatives, or persons exercising management functions who conceive or organize, with intent, an anti-competitive practice prohibited by Article 5 of the Competition Law which does not benefit from an exemption constitute criminal offenses and may be sanctioned by imprisonment or a fine and restriction of certain rights.

Is there any competition law requirement in case of mergers & acquisitions occurring or impacting the Romanian market?

Transactions are subject to merger control in Romania provided that they (i) imply a change of control within the meaning of EU merger regulations and (ii) meet certain turnover thresholds.

As regards the relevant thresholds:

In the case of the acquisition of sole control, the turnover thresholds are as follows:

• all undertakings concerned (Buyer together with the group it belongs to and the Target) had an aggregated total turnover (worldwide) in the year prior to the transaction (signing) exceeding the RON equivalent of EUR 10 million, and
• each of the parties concerned (i.e., the Buyer and its group, on one hand, and the Target, on the other hand) had a turnover in Romania in the year prior to the transaction (signing) exceeding the RON equivalent of EUR 4 million.

In the case of the acquisition of joint control, the thresholds should be met by at least two of the parties concerned.

Specific rules in terms of turnover calculation are laid down in secondary legislation issued by the RCC, reflecting EU guidelines.

Should the transaction fulfill the above conditions, implementation must be postponed pending clearance (i.e., standstill obligation) – sanctions for failure to observe this obligation (which amounts to gun jumping) may be up to 10% of the total global turnover derived in the year prior to the issuance of the sanctioning decision.

Further, transactions may also be subject to Foreign Direct Investment review, provided that Target’s activity falls under certain areas of activity (broadly drafted) deemed sensitive from a national security perspective and the value of the transaction exceeds EUR 2 million.

What is the normal merger review period?

In terms of legal deadlines for the clearance process, there is no maximum duration, just a 20-day time limit for the RCC to address additional questions (calculated from filing, and then from the date of each answer from the notifying party), and then a 45-day time limit to issue the decision (calculated from the date the RCC has all information) requested.

In practice, the average duration of a clearance process is about 2-2.5 months for a complete notification form and 1.5 months for a simplified form (applicable under certain conditions).

Separately, where transactions are subject to Foreign Direct Investment screening, the FDI approval process usually takes (absent unforeseen circumstances) about 2.5-3 months (and runs in parallel with merger control).

Are there any fees applicable where transactions are subject to local competition review?

As regards merger control, a filing fee (of approximately EUR 970), as well as an authorization fee (assuming no in-depth investigation is launched, between EUR 10,000 and EUR 25,000, depending on the target’s turnover in Romania in the year prior to the decision and on whether commitments are necessary) are applicable.

As regards the Foreign Direct Investment review, an examination contribution in the amount of EUR 10,000 is due at the date of filing (reimbursed, should the authority find the notified investment out of the scope of the screening regime).

Is there any possibility for companies to obtain State Aid in Romania?

As the EU State aid rules and principles are fully applicable, companies may seek to obtain State aid in Romania. State aid (irrespective of form) may be obtained on the basis of individual measures approved by the European Commission or of schemes issued under the EU exemption regulations. Eligibility criteria tend to be sector-specific and depend on factors such as the objective of the scheme in question.

What were the major changes brought by the COVID-19 pandemic? Have any of them stuck and how likely is it for these changes to continue to do so in the foreseeable future?

The COVID-19 pandemic has determined the adoption of multiple (albeit temporary) State aid measures (e.g., support for airlines, certain employers, undertakings active in the tourism sector).

As for measures likely to persist, we note the amendment brought to Unfair Competition Law no. 11/1991 by GEO no. 84/2022 on preventing and combating speculative actions. This sought to introduce, among others, an additional class of unfair practices (applicable in exceptional circumstances).

In essence, actions such as charging unjustifiably high prices, unjustifiably limiting production or sales, stockpiling goods in order to create a deficit on the Romanian market, and subsequently reselling them at an unjustifiably increased price are qualified as unfair practice provided that (i) they are committed during periods of partial or total mobilization of the armed forces, state of war, state of siege, state of emergency, state of alert or other crisis situations explicitly established by normative acts and (ii) concern products deemed to be under “speculative risk.”