From Crime to Competition Law Infringement: Wiretap Evidence in Romanian & EU Cartel Investigations

Key takeaways:

▸ Increased use of wiretap evidence, an EU-wide trend: competition authorities across Europe are increasingly relying on wiretap evidence to sanction anticompetitive activities. Romania is following this trend. The question is if sufficient safeguards required for compliance with human rights standards are ensured at the level of each Member State.

▸ Wiretap evidence declared null by the Romanian Constitutional Court was still used in competition proceedings in Romania: the High Court of Cassation and Justice of Romania ruled that wiretap evidence obtained through national security mandates could be used in competition proceedings, despite being previously declared null by the Romanian Constitutional Court, relaying mainly on the General Court case law.

▸ Goldfish ruling allows illegally obtained evidence by private parties to be admissible in EU competition cases: according to the ruling of the General Court in the Goldfish case (Case T-54/14), secret recordings made unlawfully by a private party can be admitted as evidence in competition law proceedings, as long as the evidence is lawfully collected by the competition authorities during inspections, it does not solely determine the infringement and does not compromise the defendant’s right to a fair trial.

▸ ECtHR allows transfer of wiretap evidence to antitrust agencies if safeguards are in place: in the Burado Case (2023), the ECtHR ruled that wiretap evidence obtained during criminal investigations can be lawfully transferred to antitrust agencies, provided sufficient safeguards are in place to protect privacy rights under Article 8 of the ECHR.

▸ Challenges in Romania’s legal framework: despite Romania’s use of wiretap evidence in competition cases, ongoing concerns about ensuring the necessary safeguards, including judicial oversight and protection against arbitrary interference with privacy, and compliance with Article 8 of the ECHR still remain, in the context of the current legal framework.

▸ Businesses must enhance compliance to address antitrust enforcement risks: companies need to thoroughly implement and update their competition compliance programs and governance frameworks to address effectively the increasing powers of the competition authorities in gathering evidence, deriving also from closer cooperation with the criminal law enforcement authorities.

Reference ruling of the High Court of Cassation and Justice of Romania on use of wiretap evidence for sanctioning anticompetitive activities 

The High Court of Cassation and Justice of Romania (“HCCJR”) delivered a decisive ruling[1] following an appeal against a 2019 decision of the Romanian Competition Council (the “RCC”). The case involved accusations of bid rigging in public procurement tenders for constructing natural gas pipelines. The RCC concluded that the involved parties colluded to ensure tenders were awarded through a rotational system, based on pre-agreed arrangements rather than legitimate competition.

The central focus in the appeal (the “Case“) was the use as cartel probes of intercepted communications that had been nullified by the Constitutional Court of Romania (the “CCR”)[2]. The CCR ruled that evidence obtained through national security mandates could only be used in criminal proceedings if safeguarded by a clear ex post facto legal procedure verifying its legality. This raised the critical question of whether or not the nullity of the wiretap evidence would affect the overall findings of anti-competitive behaviour. The transcripts, which documented the phone conversations, revealed discussions between the sanctioned companies’ representatives about coordinated actions aimed at ensuring pre-determined winners in public procurement tenders for the construction of natural gas pipelines.

However, in the Case, the HCCJR ruled that wiretap evidence could be used in competition proceedings, despite being previously declared null by the CCR as regards the criminal proceedings, since the RCC obtained the transcripts lawfully, the transcripts were made available to the parties, ensuring their right to defence, that wiretap evidence was merely one part of a larger body of evidence and the RCC can also rely on circumstantial evidence.

One of the key cases on which the HCCJR relied in its reasoning was the decision of the General Court of the European Union’s (“General Court”) in Case T-54/14, Goldfish and Others v Commission (the “Goldfish case”). This case explored the conditions under which secret recordings could be lawfully admitted as evidence in competition law proceedings.

Relevant considerations in Case T-54/14, Goldfish and Others v Commission 

The General Court considered whether secret recordings of telephone conversations made by a cartel member’s employee could be admitted as evidence in a case concerning infringement of Article 101 TFEU. The recordings were obtained during an inspection conducted by the European Commission under Regulation No. 1/2003 at the premises of a company involved in the North Sea grey shrimp cartel. The General Court ruled that, although the recordings were made secretly by a private party, they were lawfully collected by the Commission during its inspection and thus admissible as evidence. The General Court stated that EU law does not expressly prohibit the use of evidence obtained unlawfully by private parties, provided the Commission collected it legally.

The General Court further addressed whether evidence obtained in breach of Article 8 ECHR — which protects the right to respect for private life — could still be used. It concluded that, even when evidence is collected in violation of Article 8, it can remain admissible if the defendant's rights to a fair trial under Article 6(1) ECHR are not compromised, and if the evidence is not the sole basis for proving the infringement.

Application of the Goldfish Ruling in the Case 

The HCCJR concluded that the principles from Goldfish were applicable to the Case, affirming that the use of phone transcripts was lawful. The HCCJR ruled that the RCC obtained the transcripts lawfully in accordance with Article 34(3) of the Romanian Competition Law No. 21/1996 (the “Competition Law”), which provides that the RCC may use, under the conditions of the law, the information and documents collected by other public authorities and institutions in the performance of their specific activities, in order to fulfil the tasks provided by the law. Considering that the transcripts were provided by the criminal investigative bodies (DIICOT), their use in the Case was justified.

Furthermore, the HCCJR highlighted that the transcripts were made available to the parties, ensuring their right to defence, and noted that the appellant had the opportunity to challenge the contents of the transcripts and to provide contrary evidence, but failed to do so. Consequently, the recorded conversation, along with the additional evidence, upheld the presumption of anti-competitive behaviour.

Regarding the fact that the appellants argued that the wiretap was the primary evidence of their involvement in the cartel, the RCC argued it was merely one part of a larger body of evidence, including public tender documents, witness statements, and other circumstantial evidence. The HCCJR, relying on EU competition law jurisprudence, concluded that the totality of the evidence was sufficient to establish the anti-competitive behaviour.

In response to the appellant’s argument that there was no real impact on the market and that they had not won any public procurement contracts, the HCCJR noted that, as per competition law, certain practices — such as market allocation agreements — are deemed inherently anti-competitive and thus do not require proof of actual negative effects on the market.

The appellants claimed that the RCC had infringed the presumption of innocence by relying on insufficient evidence. The Court argued that, under EU competition law, the RCC is not required to rely solely on direct evidence. Circumstantial evidence, if consistent and indicative of anti-competitive practices, can meet the burden of proof.

More light into this matter was further made by the European Court of Human Rights (“ECtHR”) at a later moment in time compared to the ruling of the HCCJR in the Case. In our opinion, the ECtHR decision we will assess hereinafter could have had a significant impact on how the Case was analysed, particularly with regard to the use of wiretap evidence and the safeguards required to ensure compliance with human rights standards.

ECtHR reasoning in the case Burando Holding B.V. and Port Invest v The Netherlands (2023) 

In May 2023, the ECtHR reviewed the case Burando Holding B.V. and Port Invest v. The Netherlands, which raised concerns about the lawfulness of transferring wiretap evidence obtained during a criminal investigation to the Netherlands Competition Authority (NMA) under Article 8 of the ECHR. The applicants argued that the transfer of evidence from a criminal investigation to the NMA violated their right to privacy. The case originated when the Dutch intelligence service intercepted conversations during a criminal investigation into illegal waste disposal. These recordings suggested price-fixing and were subsequently transmitted to the NMA, which initiated an investigation under the Competition Act.

The main legal issue was whether the transmission of wiretap data, originally collected for a criminal investigation, violated Article 8 ECHR, which protects the right to privacy, and whether this interference was justified under Article 8(2) as being lawful and necessary to protect the country’s economic well-being. The ECtHR also examined whether the safeguards in place, both during the initial interception and the subsequent transmission of data, were sufficient to prevent arbitrary interference. There were no indications that the companies involved would have been unable to challenge the lawfulness of the wiretap itself, should they have wished to do so.

Importantly, the ECtHR noted that while the law requires foreseeability in secret surveillance measures, it does not mean that individuals must be able to predict when authorities will intercept their communications. The ECtHR pointed that it has consistently emphasized that any legal framework allowing secret surveillance must include robust safeguards to prevent abuse of power, as established in cases such as Bykov v. Russia, Dragojević v. Croatia, and Weber and Saravia v. Germany. These safeguards are particularly important when criminal data is shared with third parties.

In this case, the ECtHR found that Dutch law provided clear and detailed guidelines for when and under what conditions data could be transferred between authorities. The Dutch law set limits on the transmission of criminal data by the Public Prosecution Service, requiring a compelling general interest and ensuring that the recipient authority had a legal basis to receive the data. Additionally, the law required that data could only be transmitted if no less intrusive means were available, ensuring the necessary safeguards against arbitrary interference with privacy rights.

Notably, the ECtHR rejected the applicants' argument that the lack of ex ante judicial review of the data transmission was problematic. It found that the ex post facto judicial oversight, combined with the clear legal framework, was sufficient to ensure that the transmission complied with Article 8 ECHR. The ECtHR found that the transmission of data from the criminal investigation to the competition authority was lawful under Article 8 ECHR. The domestic legal framework provided adequate safeguards, and the transmission of data was necessary in the context of protecting the economic well-being of the country. Despite the absence of ex ante judicial review, the system in place was sufficiently robust to avoid any abuse of power, and the interference with the applicant companies' privacy rights was justified.

We will further assess whether the transmission of data from wiretaps to the RCC benefits from adequate safeguards, as established in ECtHR’s caselaw, and whether this transmission can be deemed lawful under Article 8 of the European Convention on Human Rights (ECHR).

Insufficient Safeguards for Wiretap Evidence in Romanian legislation 

The issue of insufficient safeguards in Romanian legislation regarding secret surveillance measures based on national security considerations was first highlighted by the ECtHR in the Rotaru decision and later reaffirmed in other ECtHR rulings, such as the rulings in the cases Dumitru Popescu (No. 2), Association “21 December 1989” and Others, and Bucur and Toma. All of these cases questioned the actions of the Romanian Intelligence Service (Serviciul Român de Informații, "SRI"). The ECtHR found that the legal foundation for surveillance activities, provided by Law No. 51/1991 on national security and Law No. 14/1992, which regulated the structure and operations of the SRI, failed to meet the requirements of a “law” under Article 8 of the Convention, as it lacked sufficient safeguards to protect against arbitrary action. The ECtHR also found violations of Article 13 of the ECHR due to the lack of legal remedies available to those affected by these measures.

Although reforms were introduced in the recent years to address some of the shortcomings, the Committee of Ministers of the Council of Europe has remaining questions concerning the general measures necessary to guarantee non-repetition of the violations of Article 8 and 13. The last Memorandum prepared by the Department for the Execution of Judgments of the European Court of Human Rights on 22 September 2023 for the Committee of Ministers (Memorandum) “shows that to address fully the legislative shortcomings identified by the European Court in this and in other relevant judgments, it remains necessary for the authorities to:

Despite the decision of the CCR No. 55/2020 annulling the wiretap evidence and the July 2023 amendments to the Code of Criminal Procedure, which reinstated the use of intercepted communications obtained through national security mandates, while giving the HCCJ the authority to review the legality of the surveillance measures, the Memorandum highlights that the concerns described above still remain despite the progress that has been made so far.

Conclusion 

While the HCCJR found parallels with the Goldfish case from the European Court to justify the admissibility of wiretaps as evidence for competition law infringement, in our view the broader issue of compliance with Article 8 of the European Convention on Human Rights (ECHR) remains unresolved. The ECtHR has stressed out the need for robust legal safeguards when handling intercepted information, as highlighted in the Burando Holding B.V. and Port Invest v. The Netherlands case. This raises the critical question of whether Romania's current legal framework provides sufficient protection against potential abuse in the transmission of wiretaps to the RCC, concern further underscored by the Committee of Ministers’ acknowledgment that the necessary safeguards are still not fully in place.

Recommendations

In order to address the wide powers of the competition authorities in gathering evidence, deriving also from closer cooperation with the criminal law enforcement authorities, and the risks related to failure to meet the human rights standards as regards protection of the privacy rights, we advise the companies to thoroughly implement and update their competition compliance programs and governance frameworks. Implementing robust compliance programs, including periodic competition compliance trainings and rules for proper conduct before or during dawn raids, is essential in order to ensure prevention and mitigate the risks related to competition law infringement. Also, under Romanian law, in case of infringement of the competition law, proper implementation of a competition compliance program could count as a mitigating circumstance and trigger reduction of up to 10% of the fine.

[1] Decision No. 4206 of 2022 of the High Court of Cassation and Justice of Romania;

[2] Decision No. 55/2020 of the Constitutional Court of Romania.