2021 was above all a year of consistency and transition in the Covid-19 pandemic. The competition authority has finalized some of the oldest investigations and launched a few new ones, either against certain economic agents, or with a view to exploring the functioning of certain sectors of activity or markets concerned.
In 2022, we will most likely see the conclusion of older investigations at an accelerated pace and the launch of new investigations. Additionally, we anticipate that the focus will be on investigative means that focus on electronic tools. In addition, the Competition Council is currently taking on more responsibilities, particularly in the area of digital and commerce. The authority remains a leading institution and will continue to play an active role in competition matters, in particular by using the sanction instruments at its disposal.
Furthermore, with regard to merger control, we expect the number of transactions to increase, and we hope that the Autorité will further facilitate the analysis of these transactions by reducing the bureaucracy and the time of analysis to a minimum, in particular for transactions which do not raise competition concerns.
Finally, in 2022, the Competition Council has the possibility to also focus on other policy instruments, apart from sanctions, thus guaranteeing the stability of certain economic sectors (for example, an over-investigation and, implicitly, a over-sanctioning of the active in certain relevant markets may lead to negative economic effects for these markets, with consequences for competition itself and for end consumers). Moreover, the competition authority has shown that it is open to dialogue and increased transparency will further help the business environment.
A. Investigations of competition law infringements
After a very good year in terms of penalties applied (year 2020) due to a very high number of ongoing investigations being completed, 2021 was a year with a lower overall amount of fines applied.
A contributing factor that will continue to be felt in 2022 is that in the first year of the pandemic, the Competition Council (just like other competition authorities) did not open a very high number of new surveys.
Thus, we expect a series of older but important investigations, postponed until late 2021, to be completed in 2022 (the competition authority’s typical investigative activity may experience a slight shift from finalizing most of its cases at the end of the year to sunsetting throughout the year). In addition, we expect an increase in the number of new surveys compared to those of 2021, with some analyzes carried out at the EC level being taken up at the local level, but there will also be surveys with a regional or national flavor.
We expect the number of new surveys to increase significantly, probably more strongly from 2n/a quarter of the year, following certain measures to ease the restrictions imposed by health rules.
Another phenomenon to take into account is the increase in the number of claims and complaints, in particular due to the increase in the number of commercial disputes generated by an unstable business environment (in particular due to the increase in prices and tariffs , inflation, solvency and payment problems, etc. ).
With regard to new investigations and analyses, we anticipate that key business sectors that will be targeted will include the pharmaceutical sector, public tenders for major development or infrastructure projects, the financial sector, the building materials sector and the technology, digital and IT fields. In addition, certain legislation and economic measures will have to be examined by the competition authority, which will present its own point of view on the question (we anticipate sustained activity around the measures intended to limit the impact of the rise in the price of energy, certain support measures for the business environment, as well as within the framework of the transposition of certain European rules).
B. Sector inquiries
Sector inquiries have been and remain the most effective means for the competition authority to acquire knowledge of a given market. This mechanism, used quite often by the European Commission, has also been taken up at national level, with an upward trend in the number of sector inquiries. In 2022, the number of sector inquiries is expected to increase, with the areas most likely to be targeted being the financial sector, the IT sector, the pharmaceutical market at all levels, and the new technology and innovation segments.
In addition, sectors with an impact on the population (electricity, natural gas, fuels, medicines and medical services, e-commerce, transport services) will be under the control of the authority, at least during the first part of the year.
The sanction system applicable in Romania in competition cases allows the application of sanctions of up to 10% of the total turnover of the year preceding the sanction. Although the turnover considered in recent years is the turnover achieved in Romania by the entities surveyed, there is a tendency to extend this analysis, in certain situations, to the total turnover of the company or even to the turnover total group business.
The competition authority has gained a reputation as an authority that applies significant fines, and 2021 is no exception, although the level of fines was lower than in 2020. However, it is very important to achieve the right balance between the level of fines and the effects of the practices on the relevant markets. A significant increase in the percentage of fines imposed on the entities under investigation, especially if the allegations are less obvious or the evidence is not satisfactory, is dangerous and irreversible and can seriously affect the markets in which the sanctions are taxed (e.g. some entities will be unable to pay, others will stop large investments to meet the penalties).
Moreover, the opening of the competition authority to alternative methods of settling cases heard without the application of fines (for example, by accepting commitments or measures) can bring stability or balance to certain segments of the economy. (very often, the significant sanctions applied to certain companies have been recovered by price increases which are ultimately borne by the end customer).
B. Economic concentrations
The year 2021 was intense in terms of economic concentrations, with more than 90 transactions analysed. The number of transactions analyzed by the Competition Council should remain at a similar level or even increase in 2022, given that the mergers and acquisitions market is very active.
The competition authority has shown openness and willingness to dialogue with the parties concerned and we hope that it will follow the same approach in 2022.
C. Dawn Raids
Although the number of dawn searches is difficult to estimate, it will certainly increase compared to 2021, and should remain the main means for the competition authority to collect information. We are also anticipating certain developments in the conduct of searches at dawn, by maximizing the use of electronic means of control and investigation.
D. Challenge of the decisions of the Competition Council
It is important to note that there are cases in which certain authority decisions have been overturned, and this phenomenon is becoming normalized, and it will bring real benefits to competition analyzes and more predictability in this area. – the competition authority being required to devote more time to ensuring that the high standard of proof imposed in competition cases is respected.
The upward trend in the number of court cases is expected to continue in 2022, especially if the evidence presented by the authority is not convincing. It is expected that the Bucharest Court of Appeal will deliver some key decisions reflecting how courts examine the method of establishing the amount of fines by reference to the principle of proportionality, as well as an important analysis on the standard of proof by reference to certain decisions made by the authority a few years ago.