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Romania: Draft law sanctioning the abuse of superior bargaining position published for public consultation

June 2020 – On 3 June 2020, the Romanian Competition Council (“RCC”) published for public consultation on its website a draft Government emergency ordinance amending and supplementing Law no. 11/1991 on unfair competition (the “Draft Law”), available in Romanian here. Observations and proposed changes to the Draft Law can be submitted to the RCC until 3 July 2020.

In the Draft Law, the RCC draws upon its experience enforcing Romanian Competition Law (the “Competition Law”). As such, the Draft Law includes, inter alia, the possibility for the infringing party to acknowledge its breach in order to benefit from a reduced fine, the investigative tools and procedures already used by the RCC to scrutinise breaches under the Competition Law and a provision that a final RCC decision finding an infringement will automatically constitute proof of the infringement before the courts dealing with follow-on claims on damages caused by the respective unfair competition practices (similar to the provisions in the EU Damages Directive[1] regarding follow-on damages cases).

Overview of changes introduced in the Draft Law

The Draft Law introduces an overhaul of the unfair competition legal framework currently applicable in Romania and may well cause the sudden turn of a regulation currently very difficult to enforce.

Introducing the abuse of superior bargaining position

Without a doubt, the most striking amendment brought by the Draft Law is the definition of superior bargaining position (“SBP”) and the regulation of its abuse. In this sense, Romania appears to be following the steps of other jurisdictions in the world, most specifically in the European Union, that have already prohibited this type of unfair practice.

Currently, only the abuse of dominant position[2] is enforced in Romania and small and medium enterprises (“SMEs”) have very few options to counteract must-have business partners that do not have a dominant market share. In Romania, a dominant position is presumed above 40% relevant market share and companies not meeting the dominance threshold are mostly at ease in their business-to-business interactions, from the perspective of abuse of dominance rules. The Draft Law is to provide additional fire power during negotiations to SMEs and increase the spectrum of compliance priorities for larger companies in Romania.

Considering how the Draft Law is structured, for an undertaking to be sanctioned it must (i) hold an SBP, (ii) abuse such position, and (iii) the case itself must be of “public interest” for the Competition Council to investigate it.

According to the Draft Law, SBP refers to the position of an undertaking that is not dominant according to Romanian Competition Law, a position that is determined by market features, favouring the appearance of significant imbalances that are generated by factors such as (i) the specific structure of the production or distribution chains, (ii) vulnerability towards external factors, (iii) perishability or seasonality, and the specific relation between this undertaking and other undertakings active on different markets. This relation is to be analysed based on the following cumulative criteria:

  • the existence of an imbalance of power due to elements such as the considerably larger dimension or market position;
  • the importance of the commercial relationship for the proper functioning of the activities carried out by the other undertaking as a result of elements such as (i) the significant sales or acquisition rate of the undertaking holding a SBP in the activity of the other undertaking, (ii) the critical role of its goods and services for the activity of the other undertaking, or (iii) the existence of significant investments of the latter undertaking, made in view of honouring the agreed commercial relation; and
  • the difficulty or absence of alternative equivalent solutions for the other undertaking.

According to the Draft Law, the abuse of SBP qualifies as a prohibited act of unfair competition if it meets the following cumulative conditions:

  • the undertaking holding SBP abuses its position towards another undertaking that the infringer was or is under commercial relations with;
  • such abuse is prone to cause the latter undertaking significant damage or to affect normal market competition; and
  • the abusive behaviour consists in actions or inactions such as: (i) the unjustified refusal to supply or acquire goods or services, (ii) failure to comply with contractual clauses regarding payment, supply or acquisition, (iii) imposing unduly burdensome or discriminatory conditions considering the scope of the contract, or (iv) amending or terminating in an unjustified manner commercial relation with the partner undertaking.

The above examples of behaviour leading to an abuse of SBP appear to be sourced from the RCC’s experience in sanctioning abuse of dominance. Moreover, considering the wording of the Draft Law, the RCC remains free to determine in practice what other specific behaviour could equally fulfil the criteria to amount to an abuse of SBP.

Other types of unfair competition practices

Apart from prohibiting the abuse of SBP, the Draft Law also reshuffles the current list of behaviour deemed as unfair competition practices. In this regard, the Draft Law stipulates that prohibited unfair competition practice means those commercial practices of undertakings or employees that are contrary to fair practices and the general principle of good faith and that cause or are prone to cause damages to other undertakings, such as:

  • denigrating an undertaking or its goods/services in a way that affects its legitimate interests, through communicating or disseminating false information by another undertaking or a former or current employee;
  • poaching clients of an undertaking by a former or current employee by using information that the respective person knew when it committed the act to represent commercial secrets or confidential information the disclosure of which would significantly affect the interests of the respective undertaking;
  • discrediting the activity of an undertaking or its goods and services by another undertaking or former or current employee by means seeking to affect the good reputation or credibility of the undertaking through means other than those under the first point above (i.e. regarding denigration); and
  • affecting the activity of an undertaking through the concerted practices of a competitor and employees of the affected undertaking with the aim of destabilising its functioning.

For the types of unfair competition practices above, including the abuse of SBP, a case brought before the RCC must also be of “public interest” for the RCC to analyse it and apply fines. The RCC will evaluate to what extent a potential unfair competition practice affects public interest by considering (i) the high degree of social danger, (ii) the importance or dimension of the economic sector concerned, (iii) the high number of undertakings involved in the practice, (iv) the high number of affected undertakings and (v) the long duration of the unfair competition practice.

Should the RCC consider that the practice in question affects legitimate public interest, it will launch an in-depth analysis of the facts through an order issued by the RCC’s President. The order will be communicated to the author of the complaint and the parties covered by the analysis.

Fines under the Draft Law

Under the Draft Law, committing an act of unfair competition affecting public interest is sanctioned as follows:

  • with a fine between 0.01% and 1% of the total turnover in the year before the sanction is applied, but no less than RON 5,500 (approx. EUR 1,100) and no more than RON 100,000 (approx. EUR 20,000) for breaches committed by undertakings; and
  • with a fine between RON 5,500 (approx. EUR 1,100) and RON 11,000 (approx. EUR 2,200) for breaches committed by individuals.

Should the infringing parties acknowledge the breach as presented by the RCC, the competition authority may apply a 10%–20% reduction of the fine.

For procedural breaches under the Draft Law (e.g. supplying incomplete or misleading information or documents following information requests from the RCC, refusing to allow an RCC dawn raid), the following sanctions will apply:

  • a fine between 0.01% and 1% of the total turnover in the year before the sanction is applied, but no less than RON 1,100 (approx. EUR 230) and no more than RON 50,000 (approx. EUR 10,000) for breaches committed by undertakings, public authorities and institutions; and
  • a fine between RON 600 (approx. EUR 120) and RON 2,500 (approx. EUR 500) for breaches committed by individuals.

The statute of limitation for applying the above fines is three years from the moment the breach is committed. In case of continued or repeated breaches, the statute of limitations will run from the last act of unfair competition.

Final remarks

It remains to be seen to what extent scrutinising the abuse of SBP will make it to the RCC’s enforcement agenda considering that the authority’s resources have been generally used in recent times to investigate cartels and abuse of dominance cases or to conduct market studies or inquiries into economic sectors seen as paramount to the proper functioning of the economy and well-being of consumers.

In this regard, it will also be relevant to follow the RCC’s stance on what constitutes the “public interest” criteria to trigger the sanctioning of unfair competition practices as introduced by the Draft Law, as this will represent one of the main ways to filter the cases to be brought before the RCC.

Large companies should now also keep an eye on potentially abusing their SBP with the entry into force of the Draft Law. In addition to fines from the RCC, being sanctioned would also entail reputational damage and risk of follow-on damages litigation.

The evolution of the Draft Law pending enactment remains important as the current text could be further amended as a result of the on-going public consultation.

For more information contact Iustinian Captariu, Partner, at , or Cătălin Graure, Senior Associate, at .


[1] Directive 2014/104/EU 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, transposed in Romanian law through Government Emergency Ordinance no. 39/2017.

[2] According to the Competition Law, an undertaking is presumed dominant if it holds a market share above 40%.

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