Romanian Competition Council Conducts Investigations of Alleged Abuse of Superior Bargaining Position and Alleged Unfair Trading Practices. What Does This Mean for Companies?

Not even a month later, on 22 July 2024, the RCC also announced that it had initiated another similar investigation, and further conduced an unannounced inspection, for alleged unfair trading practices/ unfair competition, an area where the authority had not been genuinely that active so far.

The Unfair Competition Law

Under Romanian legislation, the concept of "superior bargaining position" (but falling short of dominance) has been introduced through GEO No. 84/2022 on preventing and combating speculative actions aimed to amend Law No. 11/1991 on combating unfair competition (the "Unfair Competition Law"). The concept of "superior bargaining position" is defined within the context of significant imbalances caused by factors such as the unique structure of the production or distribution chain, susceptibility to external factors, perishability or seasonality. Such factors are considered to enable a non-dominant company to influence partners operating in a different market, based on the following cumulative criteria:

• the presence of unbalanced forces due to the non-dominant company's substantial size or market position;
• the significance of the business relationship for the partner's business, such as a large share of its sales or purchases, the critical importance of its products or services, or significant investments; and
• the partner's difficulty in finding an alternative solution or the lack of other options.

Under the Unfair Competition Law, an undertaking can be sanctioned only if it (i) holds a superior bargaining position, (ii) abuses that position, and (iii) the case is deemed to be of "public interest" for the RCC. Should an infringement be established, fines may range between RON 50,000 (approximately EUR 10,000) and RON 500,000 (approximately EUR 100,000).

An increasingly focal point

At the European Union level, there is no prohibition against an abuse of economic dependence or superior bargaining power enshrined in general antitrust legislation. Nonetheless, the necessity to guard against the potential abuse of entities with superior bargaining power underlines recent sector-specific pieces of legislation, such as the UTP Directive, for the food and agricultural sectors and the DMA, as regards digital markets.

At the national level, several EU Member States, such as France, Germany, Belgium and Italy, are also starting to increase their enforcement actions in relation to cases of superior bargaining power and the potential abuses that might ensue.

Belgium

At the end of 2023, the Belgian Competition Authority initiated an ex officio investigation into a possible abuse of economic dependence in the agricultural sector, under powers laid down in 2019. The outcome of the case is still pending, but the investigation marks the Belgian authority's first probe in relation to abuse of bargaining power.

Italy

In 2023, the Italian competition authority ("ICA") imposed interim measures on Meta during an ongoing investigation into an alleged abuse of economic dependence against the Italian Authors' and Publishers' Association ("SIAE"). The court upheld the ICA's intervention obliging Meta to immediately resume negotiations with the SIAE, emphasising that a negotiation impasse would have caused significant harm not only to the SIAE but also to the artists it represents. The impasse could have led to economic losses, the risk of losing authors to other collective managers, and would have prevented artists from sharing their content on Meta's social networks.

France

Such abuse is addressed in the French Commercial Code, which prohibits the exploitation of a client's or supplier's economic dependence by an undertaking or group of undertakings if it is likely to affect the functioning or structure of competition. This abuse can include practices such as refusal to sell, tie-in sales, or certain discriminatory practices. To establish an infringement, it must be shown that there is no equivalent solution available (e.g. no alternative supplier). The French Competition Authority can initiate a case ex officio or based on a complaint from the victim of the abuse. For instance, Apple was recently fined EUR 1.1bln for abusing the economic dependence of its commercial partners.

Unfair practices under the spotlight

In late July, the RCC also carried out a dawn raid at a company active in the distribution of food supplements, as part of an investigation meant to assess possible breaches of fair competition rules, also covered under the Unfair Competition Law. While not many details are known about this investigation at this stage, the RCC stated it was assessing practices which are conditioning the commercial transactions between partners.

As such, the investigation on alleged abuse of superior bargaining position is not a singular occurrence, but rather signals an emerging trend towards increased focus on previously overlooked unfair practices.

What the future holds

At a local level, the newly launched investigations confirm our predictions for 2024 as regards the RCC's increased enforcement, especially in relation to the authority's new investigative tools and unfair practices more generally. In addition, they also confirm the RCC's positioning as a modern antitrust authority, which pays due attention to European developments and economic theory.

For companies, these investigations emphasise the need to further adapt the existing internal compliance policies to account for the new rules on superior bargaining power and an increased focus on unfair practices. More generally, these cases are prominent because they highlight the RCC's willingness to deploy its full array of powers, potentially signalling increased enforcement and novel investigations of alleged theories of harm in the future.

By Sabina Aionesei, Attorney at Law, and Teodora Burduja, Associate, Schoenherr