The competition legislation has been recently amended following the enactment of the Government Emergency Ordinance no. 170/2020 on actions for damages in the case of infringements of competition law, as well as for amending and supplementing Competition Law no. 21/1996 (“GEO no. 170/2020”).

At the same time, the enactment of a government emergency ordinance to establish a framework for the screening of direct foreign investments ("GEO on foreign investments") is imminent.

1. GEO no. 170/2020

GEO no. 170/2020 (re) transposes into national legislation the Directive no. 2014/104 / EU of the European Parliament and of the Council, ensuring the procedural framework for the effective exercise of the right to compensation in cases of infringement of competition law.

Initially, this Directive had been implemented in Romania through Government Emergency Ordinance no. 39/2017 (“GEO no. 39/2017”), but on 23 July 2020, GEO no. 39/2017 had been declared unconstitutional, for the failure to request the opinion of the Economic and Social Council. The purpose of GEO no. 170/2020 is to fill the legal vacuum which came about since GEO no. 39/2017 has ceased to produce effects, and, at the same time, to avoid the initiation by the European Commission of an infringement action for the non-fulfillment of the obligations by the Romanian state.

As a reminder, GEO no. 39/2017 had as main subject matter the provisions of the right of any person that has suffered damages, due to competition rules infringement by an undertaking or an association of undertakings, to request the competent courts for full compensation. On the basis of this ordinance, without being able to lead to unjust enrichment (in Romanian “îmbogățire fără justă cauză”), the injured party was entitled to claim such full compensation which included the incurred loss, the profit of which the injured party was deprived, as well as the payment of the related interest. One of the most important provisions stipulated by GEO no. 39/2017 was establishing an absolute presumption according to which an infringement of competition law asserted by a final decision issued by the Competition Council, the European Commission or by a court constituted an irrefutable evidence of such breach for the court vested with an action for damages under competition law. Moreover, GEO no. 39/2017 stipulated the possibility of disclosure of some evidence containing confidential information, in certain limits and conditions, if the court considered them relevant for the respective action for damages. Also, according to these legal provisions, the statute of limitations period (in Romanian “termen de prescripție”) for filing an action for damages was 5 years and the claim had to be submitted to the Bucharest Tribunal, the first court’s decision being subject to an appeal and a second appeal.

In fact, to a significant degree, GEO no. 170/2020 mirrors the provisions of GEO no. 39/2017, but also includes a few updates, the most important being the establishment of the presumption that infringements in the form of abuse of a dominant position cause damages, as well as the presumption that infringements in the form of cartels cause damages represented by products or services’ prices increasing by 20%.

In addition, GEO no. 170/2020 also brings some amendments to the Competition Law no. 21/1996. In this regard, we note in particularly the change of the method of calculating the fine for infringement of competition rules by an undertaking, being introduced for the first time the possibility of applying the fine based on the worldwide turnover, and not only on the turnover achieved in Romania, as was provided previously. Furthermore, the new legal provisions add clarity with respect to the revenues which are taken into account by the Competition Council in order to establish the basis for fining foreign undertakings (i.e. undertaking which are not registered in Romania) for breaches of merger control rules.

Moreover, the method of individualizing fines, which was usually provided exclusively in the Instructions adopted by the Competition Council, is now also included broadly in the Law no. 21/1996, by way of reference points such as the duration and gravity of the deed, the existence of mitigating and / or aggravating circumstances and the ability of the undertaking to pay the fine.

At the same time, another important amendment concerns an obligation for any undertaking to provide, at the request of Competition Council, information related to the selling prices of their products, in order to perform analyses, market studies or price comparisons, included on online platforms designed for consumer informing, the selection of the sectors of economy included in such online platforms being decided by the Competition Council.

2. GEO on foreign investments

In order to implement into national legislation the provisions of Regulation (EU) 2019/452 establishing a framework for the screening of direct foreign investments into the European Union, Romania shall be adopting an emergency ordinance aiming to establish the necessary means in order to approach the risks to national security and public order and to secure essential interests in this regard.

The ordinance, currently undergoing the legislative process, concerns the foreign investor who falls into one of the following categories:

• a natural person who is not a citizen of a Member State of the European Union;
• a legal person whose registered office is not located in a Member State of the European Union;
• a legal person whose registered office is in a Member State of the European Union, but which is directly or indirectly controlled by a natural person, a legal person or an entity without legal personality whose registered office is not located in a Member State of the European Union;
• the trustees of an entity without legal personality or persons in a similar position if they are not natural or legal persons of the European Union.

Moreover, in accordance with the provisions of this emergency ordinance, it is considered a foreign investor both the person who made a foreign investment, as well as the person who intends to make a foreign investment.

In addition, the direct foreign investment is defined as an investment of any kind made by a foreign investor in order to establish or maintain lasting, direct and indirect links between the foreign investor and the undertaking to which the funds are or are to be made available in order to carry out an economic activity in Romania, and which allow the foreign investor to exert control over the management of the undertaking or to obtain, through this economic entity, access to relevant information, systems or technologies that are likely to impact the security or public order of Romania.

Pursuant to this ordinance, there will be subject to examination those foreign investments whose value represents at least the equivalent in RON of EUR 2.000.000 and which are made in connection with activities whose object is limited to areas that are considered sensitive from the perspective of national security and of public order, such as energy infrastructure, financial-banking system, information and communication system, transport infrastructure, media etc.

By way of exception, portfolio investments are not subject to the provisions of this emergency ordinance.

The draft of emergency ordinance establishes the notification procedure of such investments, the information and documents to be submitted, as well the relevant terms, in general the procedure being similar with the one provided by the Regulation on concentration between undertakings for such operations.

According to this emergency ordinance, the notification is submitted to the Competition Council by the foreign investor, or, in case of a merger, by all parties involved in the transaction. In the situation where the conditions for the transaction to be considered an economic concentration are not fulfilled, the above obligation to file the notification under GEO no. 170/2020 is still applicable, but if the provisions of the Competition Law no. 21/1996 on economic concentrations are also applicable, only one notification will be submitted.

According to this draft, a Commission for the screening of direct foreign investments (“CEISD”) will be established attached to the Government of Romania, by decision of the Prime Minister, and will consist of representatives of several ministries and state institutions.

The Competition Council will be the contact with the foreign investor and generally for the observance of the notification procedure, will collaborate with CEISD and will submit the notification to CEISD, which will analyse the notification and should complete its screening within no more than 45 days from communication of all necessary information and documents, date on which the notification will be considered to have become effective.

CEISD may consider that the foreign investment does not endanger the security or public order of Romania and may issue an approval for authorisation of the investment, which will be followed by decision of the Prime Minister.

Alternatively, CEISD may advise for conditional authorisation, prohibition, or cancellation of the authorisation of a foreign investment on the territory of Romania, which will be followed by Government decision.

Also, the Competition Council will notify the European Commission and the other Member States of the European Union in respect of any foreign investment examination procedures and the decisions on authorisation, conditional authorisation, prohibition or cancellation of authorisation will be published on the website dedicated to foreign investment assessment, administered by CEISD.

The failure to notify the implementation of a direct foreign investment or the provision of inaccurate, incomplete or misleading information, constitutes a contravention and may be sanctioned by the Competition Council with a fine from 1% to 5% of the total turnover obtained during the financial year prior to the sanction.

 

Note: No information in this document should be deemed or interpreted as recommendation or legal opinion. Therefore, we recommend seeking professional legal advice before making any decision in relation to this information.