I OVERVIEW OF RECENT PRIVATE ANTITRUST LITIGATION ACTIVITY
Currently, private enforcement tools remain relatively underused, as public enforcement still prevails in Romania. The entry into force in 2017 of the Government Emergency Ordinance No. 39/2017,2 (the Ordinance) has removed a lot of the obstacles to private enforcement of competition law, facilitating the full reparation of harm caused by competition law infringements. Despite this significant improvement of the legal framework and the active promotion of the private enforcement tool conducted by the Competition Council, there has been no visible increase in the amount of private antitrust litigation activity in Romania.
To date, the level of private antitrust litigation activity has been relatively low in comparison with other Member States. In one landmark case, the Bucharest Court of Appeal approved a claim3 and obliged the defendant to pay the plaintiff approximately €930,000 as compensation; this decision was upheld by the High Court of Cassation and Justice.4
However, as claims for damages may be brought as a result of European competition regulation infringements, whenever such infringements arise, there is a tendency for the parties to seek relief before national courts from jurisdictions that have greater experience with respect to private enforcement. In other words, there is a tendency towards forum shopping as claimants seek to bring their claims before the courts most likely to render a favourable judgment.
For this reason, the National Union of Road Hauliers from Romania organised the framework under which Romanian transport companies initiated a private enforcement claim following the trucks cartels before courts in Germany.5
II GENERAL INTRODUCTION TO THE LEGISLATIVE FRAMEWORK FOR PRIVATE ANTITRUST ENFORCEMENT
The legal framework for cartel damages claims is the specific competition legislation set out in the Romanian Competition Act No. 21/1996 (the Competition Act) and in the Ordinance, the Council Regulation on the analysis and resolving of complaints regarding breaches of Articles 5, 6 and 9 of the Competition Act and Articles 101 and 102 of the Treaty on the Functioning of the European Union(TFEU),6 as well as Articles 101 and 102 of the TFEU. The specific validity conditions for the relevant legal actions and applicable procedural rules are supplemented by the Romanian Civil Code (the Civil Code)7 and the Romanian Civil Procedural Code (CPC).8
The Council Regulation on the analysis and solving of complaints regarding breaches of Articles 5, 6 and 9 of the Competition Act and Articles 101 and 102 of the Treaty on the Functioning of the European Union(TFEU),9 as well as Articles 101 and 102 of the TFEU.
In a nutshell, the Competition Act prohibits:
- any express or tacit agreement between undertakings or associations of undertakings, any decisions taken by the associations of undertakings and any concerted practices that have as their object or effect the restriction, prevention or distortion of competition on the Romanian market or on part of it; and
- the abusive use of a dominant position held by one or more undertakings on the Romanian market or on a substantial part of it that may harm competition through anticompetitive actions.10
Both Article 3 of the Ordinance and Article 66 of the Competition Act state that both legal and natural persons, as well as associations, harmed directly or indirectly by anticompetitive practices are entitled to seek relief in court. It is expressly provided in the Ordinance that such claims may be brought based on infringements of both national and European rules – Articles 101 and 102 of the TFEU.
The Ordinance set out the existing principles regarding private enforcement actions:
- any person responsible for any conduct (practice, act or deed) that caused damage to another person has the obligation to repair the damage;
- if the damage was caused by more than one person, they will be held jointly liable;
- legal persons may also be held liable for their representatives' infringements; and
- losses caused by the infringement are to be recovered in full, including the effective loss (damnum emergens), lost profits (lucrum cessans) and interest. Indeed, the Ordinance states that damages are awarded according to the principle of full reparation for the harm suffered.
Claims may be filed both before (stand-alone actions) and after (follow-on actions) the issuance of a sanctioning decision by the Council.
For follow-on claims, there is a presumption of the existence of an infringement if a final decision has established an infringement. One specific distinction is made here: while the definitive decisions issued by the Competition Council, a national court or the European Commission represent conclusive evidence, sanctioning decisions issued by other competition authorities or definitive decisions issued by other national courts than those where the action for damages is introduced represent only rebuttable presumptions of competition law violations.
In both stand-alone and follow-on actions damage claims must be brought within five years from when the infringement ceased; and from when the plaintiff knew or should have known of the behaviour and the fact that it constituted an infringement of competition law, the damage and the person responsible for it. If the victim of a competition law infringement submits a complaint to the Competition Council, the statute of limitations will start running as it will be considered that when it submitted the complaint, the plaintiff knew of the infringement.
The limitation period will be suspended for the period of the administrative measures taken by the competition authority in view of opening an investigation and for the period when the investigation is ongoing. Also, the time limit will elapse one year after the infringement decision becomes final or after the proceedings are otherwise terminated. Moreover, the limitation period will not start or will be suspended for the duration of the consensual dispute resolution process.
Another essential presumption aims to facilitate private enforcement claims. The establishment of a cartel creates a rebuttable presumption of the existence of harm suffered by the plaintiff. Thus, in this case the burden of proof shifts, and the defendant has to demonstrate that no harm was caused.
To be compensated for damage, the victim of an anticompetitive practice must prove that all of the following conditions triggering tort liability are met:
- an infringement of national or EU competition rules has occurred;
- the defendant is at fault, regardless of the form (e.g., negligence or wilful misconduct);
- the damage caused to the claimant; and
- the link between the infringement and the damage caused to the claimant.
In the case of stand-alone actions, the burden of proof of an infringement of the competition legislation and the harm caused to a person lies with the plaintiff. In contrast, in follow-on actions, as final decisions of the Competition Council, a national court or the European Commission constitute conclusive evidence, the infringement no longer needs to be proved by the plaintiff. Therefore, in cases where a final decision has been issued, the plaintiff has only to prove that a final decision truly exists (i.e., he or she did not challenge the decision). Afterwards, the plaintiff will only have to demonstrate points (b) to (d).
The exclusive subject matter over the award of damages to individuals, as well as territorial jurisdiction, belongs to the Bucharest Tribunal and on appeal to the Bucharest Court of Appeal.
The Competition Act is clear on its extraterritorial application to anticompetitive acts and practices committed by Romanian or foreign undertakings in Romania, or committed abroad but having effects in Romania; therefore, nationality or location have no relevance as long as the infringement has effects in Romania. Based on these principles, the Council has issued a series of decisions sanctioning foreign undertakings for having breached the provisions of the Competition Act and of the TFEU.11 In all cases, the Council imposed the fine directly on the foreign undertakings.
Thus, infringements of competition law committed by foreign undertakings in Romania or committed abroad but having effects in Romania may serve as the basis for damages claims introduced before the Bucharest Tribunal.
As mentioned above, claims for relief in courts are governed by Articles 3 and 14 of the Ordinance, Article 66 of the Competition Act and Article 10 of the Competition Council Procedure Regulation, under which both the persons directly and indirectly affected by an anticompetitive behaviour may bring a private antitrust action to seek compensation for any damage incurred due to a prohibited practice under the provisions of the Competition Act or of Articles 101 or 102 of the TFEU.
Third parties, either natural or legal persons, may intervene in a case in accordance with the CPC if they can prove an interest. Furthermore, if the judge considers that it is necessary to involve third parties in the case, he or she will bring up this issue with the parties.
The Competition Act expressly provides for the Council's right to intervene in competition cases before the national courts. In addition, under Article 16 of the Ordinance, the Competition Council may assist the court with respect to the determination of the quantum of damages if the court requests it.
V THE PROCESS OF DISCOVERY
Before the entry into force of the Ordinance, the legal framework was set up under general civil procedure rules that did not provide for an extensive or specific discovery procedure. The Ordinance has extended the scope of discovery and has set up specific conditions under which disclosure of evidence can be ordered by courts.
As a general rule, the principle of proportionality is the main condition under which disclosure of evidence can be ordered. To establish whether a disclosure claim is proportional, the court takes into consideration all parties' legitimate interests. The Ordinance also provides the measures and instruments for ensuring that the confidential nature of the information subject to the disclosure procedure is observed.
In addition, to ensure the effectiveness of court orders for disclosure, the Ordinance provides sanctions related to the non-disclosure and destruction of evidence that apply to individuals, legal entities and even their legal representatives. Indeed, the court may sanction a defendant, a plaintiff, other third parties and their legal representatives with a fine ranging from 500 to 5000 lei for individuals, and from 0.1 to 1 per cent of the turnover realised in the year preceding the sanctioning for corporations. The Ordinance specifically mentions the deeds that may be sanctioned:
- failure or refusal to comply with the disclosure order;
- destruction of relevant evidence;
- failure or refusal to comply with the obligations imposed with respect to the protection of confidential information; and
- breaches of the limits on the use of evidence provided in the Ordinance.
i General rules regarding evidence disclosure
As previously mentioned, the principle of proportionality governs the disclosure procedure regardless of the moment at which it takes place (i.e., before or during the action for damages).
Under the Ordinance, when a plaintiff provides a reasoned justification containing facts and evidence sufficient to support the plausibility of its claim for damages, the courts can order the defendant or a third party to disclose relevant evidence that lies in their control. Likewise, the court, if requested by a defendant, can order a plaintiff to produce relevant evidence. The criteria set out by the Ordinance for assessing the proportionality of the disclosure include, inter alia, the extent to which the claim or defence reasonably justifies the disclosure of evidence, the scope and cost of disclosure, and the confidential character of the information requested to be disclosed.
To ensure the confidential nature of the disclosed information is protected, the court may use one or more of the following measures:
- removing the sensitive information from the document disclosed;
- holding hearings without a public presence;
- limiting the number of persons that may have access to the evidence to appointed experts and legal representatives of the parties;
- issuing expert appraisals to ensure the protection of confidential information; and
- taking any other measures provided by law to ensure the protection of confidential information.
In addition, note that under the general civil procedure rules, the court may reject a request for evidence disclosure if the documents could expose personal issues regarding a person's dignity or personal life, if producing the evidence would violate the legal duty to keep the document secret or if such disclosure could trigger criminal prosecution of the party, its spouse or its relatives or in-laws until the third degree.12
ii Specific rules applicable to disclosure of evidence included in the Competition Council's file
The Ordinance details the legal framework of claims of disclosure of evidence contained in the Council's file. Besides the general rules described above, specific rules apply.
When assessing the proportionality of the claim, the court will take into consideration whether the evidence requested is specific, and is not merely an attempt to gain access to the file; whether the party requesting disclosure is doing so in relation to an action for damages before the court; and the need to safeguard the effectiveness of the public enforcement of competition law. The Competition Council can also submit observations regarding the proportionality of the request for evidence disclosure.
Only when the court cannot obtain some proof from another party can it request that the Council provide evidence, including proof of the basis on which a sanctioning decision was issued. If one of the parties provides evidence contained in the Council's file obtained exclusively through exercising his or her right to access to the file, such proof is deemed inadmissible if the Council has not yet finalised its investigation.
The court must ensure that confidential information and business secrets considered under the competition law are protected. However, the reasons for which the Council has granted confidentiality for certain documents or information may not subsist in the litigation phase (i.e., financial data, information regarding costs or prices) if they are qualified by the court as historical data, and the Council may be bound to disclose the documents or information in question.
Thus, the court can order disclosure of various types of evidence included in the Competition Council's file. Nonetheless, besides the observance of the proportionality principle, some limits are set out concerning specific categories of evidence that are included on the 'grey list': observations submitted by the parties, investigation reports and written recognition statements of anticompetitive practices that were withdrawn. Such evidence may be disclosed only when the administrative proceedings before the Council are finalised.
In addition, certain categories of evidence are included on the 'blacklist', which means that they shall never be disclosed: leniency statements and recognition statements. Indeed, these types of proof are deemed to be inadmissible and thus cannot be used in actions for damages. Nonetheless, the plaintiff can provide a reasoned request to obtain access to these documents, but for the sole purpose of ensuring that their contents correspond to the definitions set by the Ordinance.
VI USE OF EXPERTS
In court actions, in the absence of relevant case law and specific legal provisions, it should be determined how and what type of experts will be used in private competition law litigation in addition to certified accountants. The CPC provides general principles that allow judges to request the opinion of one or more experts in the relevant field, and one or all of the parties to produce experts' reports or opinions that support their allegations. Nevertheless, to date, in contrast with the accounting field, there have been no certified experts officially acknowledged in the competition field.
Therefore, we have to rely once again on general principles provided by the CPC that state that, in domains that are strictly specialised, and where there are no authorised ex officio experts or experts requested by any of the parties, the judge may request the viewpoint of one or more independent specialists in such field. The members of the Competition Council Plenum may not be appointed as experts or arbitrators by the parties, the court or any other institution, as they lack independence. Interestingly, the courts have increasingly tended to appoint experts, both national and European specialists. Under the general rules, the court may also order an appraisal of the damage in which experts appointed by the parties may also participate. Due to damage quantification difficulties, the need for economic expertise is expected to increase.
Experts' or specialists' opinions are not binding, so the court will consider them together with all other evidence. In addition, the court has the right to refer a case to the Council to obtain a specific opinion on competition aspects (e.g., relevant market definition).
VII CLASS ACTIONS
The Competition Act expressly regulates the rights of specified bodies (i.e., registered consumer protection associations and professional or employers' associations having these powers within their statutes or being mandated in this respect by their members) to bring representative damages actions on behalf of consumers. The regulator seems to have chosen the opt-in system for collective damages claims based on the Competition Act. Unlike individual actions, class actions are exempted from the obligation to pay stamp duty.13
VIII CALCULATING DAMAGES
The Ordinance has set out a unitary legal framework regarding damage determination. Also, some useful clarification regarding damage appraisal has been brought. In this sense, it is provided that the court will evaluate the quantum of the damages awarded, ensuring that the burden and standard of proof necessary for damage appraisal does not render impossible or excessively difficult the right to full reparation. As in the past, the fines imposed by the competition authorities do not represent a criterion for settling damages in private enforcement claims.
The general principles of tort law are followed, including the main principle of full reparation of the harm suffered. In this respect, the damage caused by breaching competition law shall be fully repaired so as to put the victim in the position it would have been in if the infringement had not happened. In line with this principle, the victim is entitled to recover both the actual losses suffered, any lost profits, as well as interest. Moreover, the Civil Code provides that if the illegal act caused the loss of an opportunity to obtain an advantage or to avoid harm, the victim shall be entitled to recover damages to compensate for this. Future damage, if certain to occur, can also be compensated. Moreover, the victim may also request penalties for delay calculated as from the date when the judgment became final up to the date of the actual payment of the damages. Punitive damages are not allowed under Romanian law.
The CPC provides for the potential to recover attorneys' fees. In general, legal costs are imposed on the losing party upon the request of the winning party. To qualify for recovery, damages have to be proven and they may not have been already recovered (e.g., under an insurance policy).
In practice, the reference date for calculating the value of damages is still uncertain. Some court decisions take into consideration the value available when the actual damage was caused, while others consider the prices applicable at the time of the court decision awarding damages.
The Council proposed that for class actions, a representative consumer should be found and the principles applying to him or her should apply to a broader range of plaintiffs, including undertakings subject to exclusionary practices. Thus, the damage suffered by this consumer would be used as a reference when calculating compensation for a whole class of plaintiffs. In this manner, plaintiffs will have to show that they suffered damage without being required to quantify the exact value of the damage, which most of the time implies a costly analysis.14
IX PASS-ON DEFENCES
Specific provisions on passing-on defences are set out in our legal framework. In this sense, under Article 14 of the Ordinance, the indirect buyer has to prove that the harm was passed on to him; more precisely, he must prove that the defendant has committed an infringement of competition law; the infringement of competition law has resulted in an overcharge for the direct purchaser of the defendant; and the indirect purchaser has purchased the goods or services that were the object of the infringement of competition law, or has purchased goods or services derived from or containing them.
An indirect buyer can bring before the courts an action for damages, but only if he did not pass on the overcharged price generated by the competition law infringement. If he overcharged in his prices, the defendant can invoke the pass-on defence against him: in other words, the indirect claim is deemed to be ungrounded as the indirect buyer has already repaired the harm suffered. In such cases, damages actions might be introduced by the next indirect buyer. If all buyers have overcharged in their prices, then the one who is entitled to bring an action for damages will be the final consumer. In this scenario, the discovery procedure will likely be a reciprocal one involving all parties on the sale chain until the last buyer.
X FOLLOW-ON LITIGATION
In follow-on actions, since liability arises from the prior infringement decision, the claimant must establish that he has suffered a loss as a result of the infringement. The statute of limitations, both for stand-alone actions and for follow-on actions, starts running from the date where the plaintiff knew or should have known about the infringement, the damage and the identity of the infringer and not before the anticompetitive practice has ceased.
The decision of the Council becomes final if the term during which the Council decision may be challenged expires and no interested party challenged it; or, after being challenged, the decision is upheld (totally or partially) or annulled and declared by the court as final. National legislation does not make a distinction between the court actions through which a party challenges the existence of the anticompetitive deed itself, and the imposition of a penalty and the amount thereof. If no appeal is filed against the decision or the decision is upheld by the courts, the Council decision will have all the effects of a court judgment, including a res judicata effect. The res judicata effect establishes a legal presumption that is twofold: on the one hand, the losing party will not be able to re-examine the right in another dispute and on the other, the winning party can avail itself of the recognised right in another dispute.
As mentioned above, leniency and recognition statements are included in the black list and thus may never be disclosed.
In addition, the information and documents contained in the Council's investigation file are also protected by the Council's confidentiality obligation. The following are deemed confidential:
- business secrets (technical or financial information relating to the know-how of an undertaking, costs evaluation methods, production processes and secrets, supply sources, manufactured and sold quantities, market shares, lists of customers and distributors, marketing plans, cost and price structures, sale strategy); and
- other confidential information (such as information communicated by third parties about the respective undertakings that could exert a significant economic and commercial pressure on competitors or commercial partners, customers or suppliers) that may cause access to the file to be totally or partly restricted.
Moreover, general rules acknowledge the privilege of confidentiality of communications between lawyers and their clients.
XII SETTLEMENT PROCEDURES
Given the nature of claims for damages, parties are allowed to use settlement negotiations either before or even during litigation proceedings. Settlement procedures include mediation and negotiations that arise during transactions.
Parties may agree upon the value of the damages and method of reparation. If the parties settle their dispute, the court cannot be called on to rule on such legal action; the court accepts the settlement without analysing the merits. Furthermore, the parties are able, at any time during a trial, even without being summoned, to go to court and request a judgment acknowledging their settlement. Such settlement must be submitted in writing to the court, which will include it in the operative part of the judgment.
The effect of the settlement procedure on the quantification of damages when there are various infringers and only one is involved in the settlement procedure is also regulated. In this case, the victim can claim only the part of the prejudice caused by the infringers that did not participate in the settlement procedure. Also, the national court may suspend its proceedings for up to two years where the parties thereto are involved in consensual dispute resolution concerning the claim covered by the action for damages.
In addition, the payment of damages following a settlement procedure is qualified as a mitigating circumstance by the Competition Council when individual sanctions are imposed for competition law infringements. Competition law infringements may lead to the exclusion of the infringers from future public tenders under Law No. 96/2016 on public acquisitions. In order to avoid exclusion, the infringers may try to prove their rehabilitation (know as the self-cleaning procedure). In this sense, payment of damages caused by competition law infringements may qualify as self-cleaning measures.15
The parties may agree to the conduct of arbitration by a permanent arbitration institution or a third party. The Ordinance does not refer to arbitration separately from settlement procedures. Thus, the provisions regarding the suspension of court proceedings and determination of the damages described in Section XII also apply to arbitration.
XIV INDEMNIFICATION AND CONTRIBUTION
The rule established by the Civil Code and also by the Ordinance is that the defaulting party must repair any damage caused to another party. Where an infringement may be attributed to more than one party, they should be held jointly liable towards the victim, who may initiate legal proceedings against any of them for the full amount of the damages. Before the entry into force of the Ordinance, the successful applicants for leniency could not be held jointly and severally liable for their participation in anticompetitive practices. Under the Ordinance, this exemption no longer exists: the company that benefited from full leniency can be held jointly liable towards its own indirect and direct suppliers and buyers, and other injured parties, but only in cases where full compensation cannot be obtained from the other undertakings that were involved in the same infringement of the competition law. As regards the infringing parties, the division of liability should be made on a pro rata basis according to the seriousness of each party's fault. When one of the companies has benefited from a fine exemption, its contribution cannot be higher than the prejudice suffered by its direct or indirect suppliers or buyers.
XV FUTURE DEVELOPMENTS AND OUTLOOK
The Romanian parliament is currently debating amending the Ordinance.16 The aim of the proposed amendment is to facilitate private enforcement claims from two perspectives:
First, the proposed amendment sets up a rebuttable presumption according to which abuse of a dominant position causes harm. Thus, like in cartel cases, the defendant is the one who must demonstrate that no harm was caused.
Second, the proposed amendment intends to shed more light on the quantification of prejudices caused by cartels. In this sense, it would set up another rebuttable presumption according to which the harm caused by cartels consists of price increases of 20 per cent to the products or services subject to the cartel.
We do not expect significant changes in the extent to which private enforcement tools are used, at least in the short term. Nonetheless, as mentioned above, we expect to see more cases in which parties from Romania will bring private enforcement claims before jurisdictions more experienced in private enforcement matters – the 'preferred' forums for private competition law enforcement matters.
Moreover, from our perspective, it would be useful for the following additional amendments to be brought in order to clarify and ensure the effectiveness of the private enforcement legal framework:
- as the Ordinance include only general guidelines, precise and clear guidelines with respect to the proportionality principle should be further developed to protect the confidential information subject to disclosure claims;
- as there is no pre-action disclosure procedure independent of a trial already brought before a court under the Ordinance or under general civil rules, it would be useful to regulate these specific issues. Otherwise, providing evidence to bring a private enforcement claim may be hindered; and
- it should be clarified whether decisions issued by the Competition Council accepting the commitments proposed by alleged infringers may serve as a basis for follow-on claims as the existence of the infringement is not expressly ascertained by the Council, which only states the competition concerns identified.
1 Mihaela Ion is a partner and Laura Ambrozie is a managing associate at Popovici Nițu Stoica & Asociații.
2 Government Emergency Ordinance No. 39/2017, published in the Official Journal of Romania, Part 1,
No. 422 of 8 June 2017, which transposed the provisions of the Directive 2014/104 on private enforcement (Directive 2014/104 of 26 November 2014, L349/1)
3 Court of Appeal of Bucharest, Decision No. 1701/2015 of 30 October 2015.
4 High Court of Cassation and Justice, Decision No. 1979/2016 of 23 November 2016.
5 https://www.untrr.ro/comunicate-untrr/comunicat-de-pres-04-04-2018-prima-actiune-de-masa-din- romania-de-recuperare-a-daunelor-provocate-de-o-intelegere-anticoncurentiala-transportatorii- rutieri-se-pot-inscrie-pana-la-31-mai-2018-pe-www-cartelcamioane-ro-pentru-a-solicita- despagubiri-din-partea-cartelului-camioanelor.html#.XeeIQlQzYdU; https://cartelcamioane.ro/.
6 Approved by Order No. 499/2010 of the President of the Competition Council.
7 The current Civil Code entered into force on 1 October 2011.
8 The current Civil Procedural Code entered into force on 15 February 2013.
9 Approved by Order No. 499/2010 of the President of the Competition Council..
10 In accordance with the provisions of Article 6(3) of the Competition Act, it is presumed, until proven otherwise, that one or several undertakings are in a dominant position if the accumulated market share on the relevant market, registered for the analysed period, is over 40 per cent.
11 Council Decision No. 51/2011, Council Decision No. 99/2011, Council Decision No. 44/2013, Council Decision No. 58/2013.
12 Article 294, Civil Procedure Code.
13 Article 29(f) of the Government Emergency Ordinance No. 80/2013.
14 The Council's standpoint on quantification of harm suffered because of an infringement of Article 101 or Article 102 of the TFEU.
15 Law No. 98/2016 on public acquisitions, published in the Official Gazette, Part I No. 390 of 23 May 2016.