The Emergency Ordinance No. 108/2023 amending and supplementing the Competition Law No. 21/1996 ("Competition Law") and other legislation ("GEO 108/2023"), modifying the foreign direct investment regime and transposing into national law Directive (EU) 2019/1 of the European Parliament and of the Council of 11 December 2018 on providing the means for the competition authorities of the Member States to be more effective in enforcing the law and ensuring the proper functioning of the internal market, entered into force on 6 December 2023.
The main amendments and supplements to the regime of the foreign direct investment in Romania and the competition legislation concern:
Foreign direct investments in Romania
The most relevant amendments brought to the Foreign Direct Investment ("FDI") regime in Romania, regulated by Government Emergency Ordinance No. 46/2022 on measures implementing Regulation (EU) 2019/452 of the European Parliament and of the Council of 19 March 2019 establishing a framework for examining foreign direct investment in the Union and amending and supplementing the Competition Law No. 21/1996, which was previosly amended in April 2022 and subsequently in June 2023, consist of:
▸ Expansion of applicability. One of the main changes introduced by GEO 108/2023 concerns the fact that the FDI regime now applies also to investments originating from the European Union ("EU"), despite the trend recently set by the Court of Justice of the European Union.
Investments from EU entities are now specifically defined as investments of any kind made by an EU investor with the purpose of establishing or maintaining lasting and direct links between the EU investor and the entrepreneur/enterprise to which these funds are addressed in order to perform economic activities in Romania. The definition also covers investments which allow an effective participation in the management or control of an enterprise engaged in an economic activity.
Moreover, the FDI definition has been updated to include investments that establish or maintain long-term and direct relationships between foreign investors and Romanian enterprises, including investments which enable an effective participation in the management or control of an enterprise engaged in an economic activity.
Also, the definition of new investments has been updated, covering the all investments (and not only the initial ones) in tangible and intangible assets for starting new enterprises, expanding existing ones, diversifying production, or fundamentally changing production processes.
▸ Priority of FDI clearance over merger clearance. Clarification is brought with regard to the priority of FDI clearance, in the sense that in the case of investments subject to both FDI clearance and merger clearance under the Competition Law, the latter procedure will be finalised after the resolution of the FDI clearance request, which may have an impact on the deadlines for completion of transactions.
▸ FDI examination fee. A fee of EUR 10,000 is required for the examination of the investment at the time the application for authorisation is submitted, which is refunded if the Foreign Direct Investment Screening Commission (“FIDSC”) finds that the conditions for examining the application for authorisation have not been met.
▸ Procedural terms. A period of 15 calendar days has been set for the provision of additional information requested by FIDSC for the purpose of deciding on the application for authorisation to foreign investors and, where appropriate, to EU investors, which period shall run from the date of the FIDSC's request and may be extended in duly justified cases.
It is clarified that the period of 60 days from the date on which the application for authorisation is declared complete, within which the FIDSC will issue an opinion, as well as the period of 30 days within which the Competition Council must issue a decision authorising FDI in case of a favourable opinion from the FIDSC, refer to calendar days.
A new provision is also introduced to the effect that, in the case of an investment from the European Union which has received a favourable opinion from the FIDSC, the Competition Council will notify the investor the solution to authorise the investment, by letter, within 10 calendar days of receipt of the FIDSC’s opinion.
Competition law
▸ Infringement of the competition regulations by public authorities and institutions. A new provision has been introduced in the Competition Law, according to which infringements of the provisions prohibiting any action or inaction by public authorities and institutions that restrict, prevent or distort competition will be ascertained by the Competition Council, by means of a decision, which will be able to oblige public authorities and institutions to comply, within a set time limit, with the measures ordered in order to restore the competitive environment. The decision may be appealed within 30 days as of publication or, where appropriate, of communication, according to the administrative dispute procedure before the Bucharest Court of Appeal.
If the entity under investigation applies for suspension of the measures laid down in the decision and the court, by means of a ruling, orders the suspension, the measures ordered shall be binding from the date on which the suspension ordered by the court ends.
▸ The principle of independence of the Competition Council. New provisions are introduced to ensure that the Competition Council performs its duties and exercises its powers without political interference or other outside influence. Furthermore, the Competition Council will not be able to seek and accept instructions from the Government or any other public or private entity in the performance of its tasks and the exercise of its powers, without prejudice to the right of the Government, where appropriate, to issue general policy rules that are not related to sectoral investigations or specific law enforcement procedures.
The Competition Council's competition inspectors are also independent in terms of the professional opinion they express in the exercise of their duties when acting as case handlers.
▸ Enforceable titles. Together with the decisions, the minutes issued by the Competition Council imposing fines or setting authorisation fees are enforceable titles, without any other formality, within 30 days from the date of communication of the decisions, respectively 15 days from the date of communication of the minutes.
▸ Expanding inspection powers. There is a new provision expanding and clarifying the scope of evidence that may be collected and used as evidence by the Competition Council, namely: documents, oral statements, electronic messages, recordings and any other object containing information, regardless of its form and regardless of the type of support on which the information is stored. Also, the inspection activity is not limited to traditional documents, any information stored or archived in electronic environment can be checked and retrieved, regardless of the support on which it is stored, such as mobile phone, tablet, Personal Digital Assistant, laptop, including personal ones used for business purposes or where they are stored/archived, such as external server, cloud.
The power of the Competition Council to summon any representative of an undertaking or individual to an interview is circumscribed to the situation in which he/she may have relevant information, with the proviso that the person interviewed cannot be obliged to admit an infringement of the law.
A new provision, according to which information obtained by the Competition Council from an individual in the course of an inspection, in response to a request for information or following an interview, may not be used as evidence to impose sanctions on that individual or his/her family members, as been also introduced.
An exception to unannounced inspections has been introduced, namely the Competition Council may carry out announced inspections at the premises of undertakings, with their consent, on the basis of an order of the President of the Competition Council, without prior judicial authorisation.
It expressly provided that, in the case of an unannounced inspection, the competition inspectors may enter the premises of undertakings in the presence of representatives of the police, and also of the representatives of the gendarmerie or other law enforcement officials and two witnesses who have reached the age of 18 if the undertaking under inspection refuses access to the representatives of the Competition Council in any of its premises.
The deadline for appealing the Competition Council's decisions ordering interim measures, in the context of the initiated investigations, to the Bucharest Court of Appeal has been modified from 30 to 20 days from the date of communication.
▸ Conducting inspections at the request of the Government. New provisions on the possibility for the Government to request the Competition Council to carry out case reviews if elements of potential distortion of the competitive environment are found in a given market have been introduced. Thus, the Competition Council may carry out inspections outside an investigation, on the basis of the order issued by the President of the Competition Council and a prior judicial authorisation, if there are indications that documents can be found or information deemed necessary can be obtained.
▸ Exchanges of declarations and information. New provisions are introduced on the conditions for exchanges of leniency statements that take place only between national competition authorities and the regime for the exchange of information, including confidential information, and its use as evidence in investigations into possible infringements in Romania of Articles 5-7 of the Digital Markets Regulation. For more details on the Digital Markets Regulation, please see our collegaues’ article Digital Markets Regulation: Obligations of the Main Online Platforms and Benefits of the DMA.
▸ Attorney-client privilege. The undertaking invoking the legal privilege as regards its communication with its attorney is obliged to provide the competition inspectors with an adequate justification and the relevant elements in the light of the arguments put forward for this purpose, without, however, having to disclose its content. As per the new provisions, if, in the course of an inspection, the competition inspectors find that the undertaking did not bring sufficient arguments to justify in fact and in law its claim that the document at hand is covered by the legal privilege, they are entitled to read the content of the communication with the lawyer without delay and to take a copy of it. We deem that these latter provisions are against the legal privilege principles already set by the case law of the Court of Justice of the European Union and they bring prejudice to the fundamental defence and private life rights.
If the competition inspectors are unable to reach a final conclusion on a communication with the lawyer, and the possibility of its being covered by the legal proviledge is not excluded, they shall seal and collect the communication in duplicate, and the President of the Competition Council shall decide, as a matter of urgency, whether or not to accept the protected nature of the communication, and the decision to reject the protected nature of the communication may be appealed to the Bucharest Court of Appeal within 15 days of the communication.
▸ Use of information. New provisions have been introduced on the use of information obtained by the parties in enforcement proceedings conducted by the Competition Council, relating to leniency applications and applications for admission of wrongdoing, respectively in the investigation procedure.
▸ Amendment of the types, amount and method of determining fines. The scope of the offences related to failure to provide information, supplying incorrect or misleading information, breaking seals, refusing to submit to an inspection, failure of the undertaking's representative to attend an interview or failure to comply with an obligation, a condition, a commitment which has become binding or a measure imposed by a decision of the Competition Council, and the related fines, are extended. Amendments are also made to the determination of fines imposed on undertakings and associations of undertakings.
More specifically, the fine imposed for failure to provide information, supplying incorrect or misleading information, breaking seals, refusing to submit to an inspection or failing to attend an interview with the undertaking's representative may not exceed 1% of the total worldwide turnover achieved in the financial year preceding the sanction, but not less than 0.1% of the total revenue achieved in Romania by the undertaking or association of undertakings in the financial year preceding the sanctioning.
Furthermore, in determining the maximum amount of the fine for anti-competitive conduct or infringement of the provisions on merger control, account may be taken of the worldwide turnover of all natural and legal persons constituting a single economic unit, as defined and applied in the case-law of the European Union. Persons forming part of the economic unit shall be personally and jointly and severally liable with the other legal persons constituting that economic unit for payment of the amount of the fine imposed for the infringement committed.
Enforcement of the fine may begin with priority on the assets in Romania belonging to the economic unit held liable for the offence, without the completion of the enforcement procedure against any of the persons forming the economic unit being conditional on the declaration as insolvent of the person against whom enforcement initially began.
It is now ascertained that, as an exception to the principle of personal liability, the Competition Council will apply the criterion of economic continuity and legal continuity as defined in the case law of the Court of Justice of the European Union.
▸ Acknowledgement of the offence. The Competition Council can reduce the amount of the fine for failure to provide information, for providing inaccurate or misleading information under certain circumstances by a percetnage between 10% and 30% of the basic level, but not less than 0.04% of the total revenue generated in Romania in the financial year preceding the sanctioning, if the undertaking expressly acknowledges to committing certain offences.
In addition, in the case of a reduction of the amount of the fine applied for anti-competitive infringement or infringement of the provisions on merger control between 10% and 30% of the basic level, which was already regulated, the fine may not be less than 0.2% of the total revenue earned on the territory of Romania.
▸ Leniency policy. Provisions on the application of the leniency policy and the corresponding procedure are introduced in the Competition Law, previously being provided only in the secondary legislation.
▸ Active cooperation. New provisions concerning the exemption from liability for active cooperation with criminal prosecution authorities of employees of undertakings which intentionally conceive or organise any of the practices prohibited by the Competition Law have been enacted.
▸ Mutual assistance. A new chapter on mutual assistance with competition authorities of another Member State of the European Union have been introduced.
