NOERR

  |  05.06.2015

Unfair Competition & Commercial Practices Under the Spotlight of the Competition Council

The regulations regarding unfair competition and commercial practices have undergone a series of changes and updates over the past years, aiming to create a new, more efficient and modern legal framework.

The role and powers of the Competition Council have been strengthened, whereas its monitoring and sanctioning activities are becoming more and more visible on the Romanian market.

 

According to the Competition Council 2014 Annual Report, its activity against unfair competition practices has been significantly increased from 2011 (i.e. following the takeover of attributes by the Competition Council from the Ministry of Public Finances), showing not only the authority’s close consideration of these matters, but also the increased awareness of companies, making use of such legislation in order to defend their rights regulated herein.

 

The recent amendments, entered into force as of end of May 2015, are deemed to have completed the complex modernization process of the main piece of legislation regulating this field, i.e. Law No. 11/1991.

 

To this end, the Competition Council issued its first guidelines on actions and procedures against unfair competition practices (Nb. available on the official website of the authority and under public debate until 26 June 2015) in view of establishing and developing a normal competitive environment.

 

The rule of thumb when dealing with unfair competition matter remains the civil liability that might be triggered by an infringement of the provisions set forth by Law No. 11/1991. In this regard, any person which proves a legitimate interest may address a damage claim directly to the competent courts of law, without being necessary or mandatory the fulfilment of the procedures in front of the Competition Council.

 

This is mainly due to the fact that civil liability generally entails individual rights and interests, whereas the Competition Council competency regards rather a public interest and infringements that might have an impact on the overall economic environment of the market.

 

The criteria that the Competition Council needs to observe when evaluating a claim brought for its assessment are set forth very clearly (i) the degree of social danger, (ii) the circumstances in which the relevant infringement has occurred and (iii) the significance of the economic sector where the unfair competition practice has taken place, evaluated within the wider context of the national economy (e.g. relevant market, number of involved undertakings and duration of the infringement, potential effects and affected parties).

 

For a rational and efficient allocation of resources, the Competition Council has the possibility conferred by law to prioritize the claims submitted for its review based on the potential impact on effective competition, the general interest of consumers or the strategic importance of the respective economic sector. Thus, the Competition Council is expected to pay special attention to claims regarding unfair competition practices with potential material adverse effects on the market.

 

Besides the payment of fines (i.e. RON 5,000-50,000 for legal entities and RON 5,000-10,000 for natural persons) and the obligation to cease the unfair competition practice (either at the end of the investigation or during the indepth analysis of the case), the involved undertaking faces also a high reputational risk, as the final decision taken in this respect by the Competition Council needs to be published on the website of the authority and in a largely spread newspaper.

 

Moreover, final decisions of the competition authority are irrefutable proofs of the infringement during follow-on actions in court. Thus, payment of fines does not preclude or exonerate the liability in tort of the sanctioned undertaking.

 

Against this background, companies are encouraged to have a closer look at their commercial practices and related behaviour towards other participants on the market and avoid any actions that might denigrate competitors, divert their clientele, imply the use of trade secrets or any other commercial actions that are contrary to fair practice and the general principle of good faith in business.
 

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