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Introduction |
Collusion among competitors in a market severely affects the economic
environment, particularly for consumers and is a breach of competition
rules that can result in severe punishment. But since secret cartels are
often difficult to detect and investigate without the cooperation of
undertakings or individuals involved in them, the European Commission
has developed a leniency policy that rewards undertakings involved in
such illegal practices that are willing to end their participation and
cooperate in the investigation of the illegal cartel. A decisive
contribution by an undertaking to the opening of an investigation or to
the finding of an infringement of competition rules may justify granting
the undertaking immunity from or a reduction in the fine that might
otherwise have been imposed for their wrongdoing.
Following leniency reform by the European Commission in 2006, the
Romanian Competition Council adopted the Guidelines on the Conditions
and Application Criteria of a Leniency policy, in force since September
7, 2009 (the “Guidelines”). This article describes that policy. |
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General Considerations |
The Romanian Competition Council’s Guidelines for its leniency policy
applies to cartels, which are defined as horizontal agreements and/or
concerted practices between two or more competitors aimed at and having
as effect the coordination of their competitive behavior on the market
and/or influencing the relevant parameters of competition, by fixing the
purchase or selling prices and the commercial terms, the allocation of
production or sales quotas, the market-sharing, restrictions of imports
or exports and/or other anticompetitive deeds against some competitors.
The Guidelines also apply to vertical agreements and/or concerted
practices among undertakings regarding the conditions in which the
parties may purchase, sell or re-sell certain services and products that
have as their object the restriction of the freedom of the purchaser to
determine its sale price and/or the restriction of the territory or of
the clients, that grant complete territorial protection. The Guidelines
provide, however, that the Competition Council will evaluate the
effectiveness of including this latter category of vertical agreements
and concerted practices into its leniency policy. Therefore, we cannot
assess at this point if the leniency policy will, in fact, also be
enforced in regard to vertical agreements.
Basically, the leniency policy offers companies involved in a cartel -
which self-report and hand over evidence to a competent authority -
either total immunity from fines or a reduction of fines which the
Competition Council would otherwise have imposed upon them. |
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Common General Conditions |
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The Guidelines have provided clarifications with regard to the general
conditions that must be met in order for undertakings to qualify for
immunity or reduction of fines. Based on the concept of genuine
cooperation, the Guidelines set up the following: the undertakings
should not destroy, falsify or conceal relevant evidence, and they
should not disclose to other cartel members the existence or the content
of their immunity request until the transmission of the investigation
report to the parties, unless otherwise requested by the Competition
Council. |
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Immunity from Fines |
Criteria for Immunity
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order to obtain total immunity under the leniency policy, a company
which participated in a cartel must be the first one to inform the
Competition Council of an undetected cartel by providing sufficient
information to allow the Competition Council to launch an inspection at
the premises of the companies allegedly involved in the cartel.
If the Competition Council is already in possession of enough
information to launch an inspection or has already undertaken one, the
company must provide evidence that enables the Council to prove the
infringement. Furthermore, at the date the undertaking provides the
relevant evidence, the Competition Council must not be in possession of
enough elements to carry out the respective investigation or inspection.
In all cases, the company must also fully cooperate with the Competition
Council throughout its procedure, provide it with all evidence in its
possession and put an end to the infringement immediately. The
cooperation with the Council implies that the existence and the content
of the application cannot be disclosed to any other company. Also, the
company may not benefit from immunity if it took steps to coerce other
undertakings to participate in the cartel.
In addition to the conditions described above, the following cumulative
conditions must be met to qualify for immunity: (i) the undertaking
cooperates fully, truly, on a continuous basis and expeditiously
throughout the Competition Council's investigation by: supplying all the
relevant information and evidence it holds or could hold, remaining at
the disposal of the Competition Council for any requests, not
destroying, forging or hiding relevant information or evidence and not
revealing the existence of the leniency request or its content before
the Competition Council sends its investigation report to the parties;
(ii) the undertaking discontinues its involvement in the suspected
infringement at the request of the Competition Council; and (iii) the
undertaking has not revealed its intention to submit a leniency request
or elements in a leniency request to any other party than other
competition authorities.
Content of Immunity Application
The Guidelines provide that an undertaking making a formal immunity
application must either: (i) provide the Competition Council with a
statement and also with all information and evidence related to the
alleged breach available to it, or (ii) initially present this
information and evidence in hypothetical terms, in which case the
undertaking must present a detailed descriptive list of the evidence it
proposes to disclose at a later agreed date.
This list should accurately reflect the nature and content of the
evidence, while safeguarding the hypothetical nature of its disclosure.
Copies of documents, from which sensitive parts were removed, may be
used to illustrate the nature and content of the evidence. Following the
disclosure of the evidence no later than on the date agreed and after
verification that it corresponds to the description made in the list,
the Competition Council will grant the undertaking conditional immunity
from fines in writing.
According to the provisions of the Guidelines, the evidence and
information that needs to be submitted by an undertaking consists of a
statement including: (i) a detailed description of the manner in which
the respective collusive agreement/concerted practice is organized,
including its purpose, activities, manner of functioning, the products
and services involved, the territory, duration, an estimate of the
affected market share, the dates and meeting places, the content of
discussions and participants to the respective meetings and all relevant
explanations in regard to the supplied evidence; (ii) the name and
address of the undertaking filing the request and of all the other
undertakings that participate or have participated in the respective
agreement/concerted practice; (iii) the names, positions, offices
locations, domiciles, as the case may be, of the persons involved in the
agreement, including the representatives of the undertakings; and (iv)
information regarding other competition authorities that have been
contacted in regard to the breach. Furthermore, any other evidence that
is available to the undertaking at the moment of the submission of the
leniency request, especially evidence regarding the duration of the
breach, should be included.
The Competition Council considers that any statement submitted to it
within the context of its leniency policy forms part of the Council’s
file and may therefore not be disclosed or used for any other purpose
than the Council’s own cartel proceedings.
The Marker System
The Guidelines provide that an undertaking may contact the Competition
Council manifesting its intent to cooperate with it. The undertaking can
also request at this point that it be granted a marker for the supply of
the respective information for the purposes of ensuring its priority in
regard to the order of registration of immunity requests. The request
for a marker needs to be properly grounded.
The marker is granted for a period that the Competition Council
considers necessary, on a case by case basis, for the relevant evidence
and information to be collected. To obtain such a marker, the
undertaking needs to provide the Competition Council with its name and
address, the parties to the alleged agreement/concerted practice, the
affected products and territories, the type of agreement, the estimated
duration of the breach, as well as a short description of how it
operates. The undertaking must also inform the Competition Council in
regard to other leniency requests it has submitted or it intends to
submit to other competition authorities.
When providing a marker, the Competition Council also provides for a
term in which the undertaking needs to provide all the relevant evidence
and information in support of its request for leniency. |
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Reduction from Fines |
 Companies
which do not qualify for immunity may benefit from a reduction of fines
if they provide evidence that represents "significant added value" to
that already in the Competition Council’s possession and have terminated
their participation in the cartel. Evidence is considered to be of a
"significant added value" for the Council when it reinforces its ability
to prove the infringement.
In case the undertaking does not fulfill the conditions for immunity it
could benefit from a reduction of the fine as follows: the first
undertaking to provide evidence bringing significant added value gets a
reduction of 30-50%; the second undertaking to provide significant added
value receives a reduction of 20-30%; and subsequent undertakings that
provide significant added value obtain a reduction of up to 20%.
In order to determine the actual level of reduction within each of these
ranges, the Competition Council will take into account the time at which
the evidence was submitted and the extent to which it represents added
value. Such evidence of an alleged infringement must represent
significant added value, as compared to the evidence which is already
available to the Competition Council. If the applicant is the first to
submit evidence which the Competition Council uses to establish
additional facts leading to an increase in the gravity or the duration
of the infringement, the Competition Council would not take such
additional facts into account in imposing any fine upon the undertaking
which provided such evidence. |
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Various Other Considerations |
When an undertaking is party to a cartel, it should firstly conduct a
preliminary analysis in order to assess the potential infringement of
the competition legislation. Such an analysis must take into
consideration the particularities of the specific cartel in relation to
the potential breach of competition rules. If a thorough assessment
demonstrates an infringement of the competition regulations, then the
impact on the business of the infringer of a public disclosure of such
infringement should be assessed.
If it is decided that an application for clemency is the best way to
proceed, the application should be submitted as soon as possible. Also,
it is necessary to gather enough information to ascertain that the
undertaking satisfies the requirements for leniency. |
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Conclusions |
 The
Guidelines increased the transparency of both the leniency procedure and
of the conditions on which immunity is granted. As the Guidelines were
recently enacted, the Competition Council does not have a consolidated
approach or a common practice yet regarding its leniency policy in
general. However, at the level of the EU, the leniency policy benefits
from an ever increasing practice and has allowed the European Commission
to discover and prosecute very serious cartel cases.
However, based on the new Guidelines, the Council is allowed not only to
reveal the secrecy in which cartels operate, but also to obtain inside
evidence on cartel infringement. Consequently, the implementation of the
leniency policy should have a discouraging effect on cartel formation
and would represent a further safeguard for the competitive environment.
By resorting to the transparent leniency procedure established by the
Guidelines, and with proper and specialised legal guidance, undertakings
will benefit from a clearer path if they decide to leave a cartel and
cooperate with the Competition Council. The evolution of Competition
Council case law will be very interesting to follow especially in regard
to the enforcement of leniency on vertical agreements and the marker
system.
Overall, the establishment of a leniency policy in Romania to deal with
anti-competitive cartels is a further example of the benefits afforded
by the European Union to new entrants who, without such EU mandated
requirements, might have taken another generation to expand the rule of
law to cover such matters. |
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Editors Note: It is our policy not to mention our clients by name in
The Romanian Digest™ or discuss their business unless it is a matter of
public record and our clients approve. The information herein is correct
to the best of our knowledge and belief at press time. Specific advice
should be sought from us, however, before investment or other decisions
are made.
Copyright 2009 Rubin Meyer Doru & Trandafir, societate civila de avocati.
All rights reserved. No part of The Romanian Digest™ may be reproduced,
reused or redistributed in any form without prior written permission
from the publisher.
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