In 2022, the antitrust authority focused on concluding important investigations, recorded the largest number of permitted economic concentrations in recent history, and created a legislative framework for new areas of activity and analysis.

In 2023, we are going through a turning point. Changes at the level of the antimonopoly body will determine the direction of the body’s actions in the coming years. The Competition Council may remain a powerful market surveillance and control body, which will require an increase in the number of new investigations and analyses, as well as strict monitoring of anti-competitive practices. This scenario will require even more active participation in the promotion of competition rules, will require the support of institutional expertise and the involvement of specialized personnel.

Expectations for 2023 also relate to ensuring consistency in the application of the Competition Authority’s new powers, particularly in digital, food retail and unfair competition. It is also vital that the authority provides clarity to the business environment regarding the control of economic concentration and its role in the analysis of foreign direct investment.

In terms of options, the competition authority could identify ways to get economic actors to cooperate to stop certain illegal conduct, either by developing a leniency program or by applying significant mitigation of sanctions to those actors that cooperate with the authority on competition issues and contribute to the improvement of the competitive environment.

Finally, we expect the antitrust authority to continue its industry analysis in key sectors of the economy.

A. Antitrust investigations. New powers of the Competition Council

In 2022, the antimonopoly authority focused on completing investigations, the analysis of which lasted several years, and the total amount of applied fines indicates a decrease in sanctioning activity. Emphasis was placed, in particular, on cases where there were confessions.

Although the competition authority’s activity report shows that a large number of new investigations have been launched (16), the number of ongoing investigations is actually lower than in the pre-pandemic period.

In 2023, we are expected to have a two-fold phenomenon: i) a series of important, older investigations will be completed (areas that may be targeted are IT&C, building materials, consumer goods, auctions) and ii) new investigations will start in economically important areas (for example, in the field of energy, pharmaceuticals, food retail, services of interest to consumers, industrial sector).

In terms of timing, the competition authority could use the first period of the year to finalize some of its existing reviews and subsequently step up efforts in new reviews. Human resources are also an important factor at the moment, as the government is at a stage where it needs to bring in expertise (legal, technical and economic) to support more analyzes being carried out simultaneously. For this, the antimonopoly body will have to determine the most effective ways of attracting human resources, including from the private sector.

In addition, the authority’s success will be determined by how well it responds to appeals and complaints from the market. It is expected that in periods of economic instability (especially as a result of tariff increases, inflation, the emergence of certain problems with solvency and solvency, etc.), the number of business disputes will increase, and the number of complaints and appeals to authorities will increase. .

In terms of new investigations and analyses, we expect the key areas of economic activity to be focused on will be, in particular, the energy sector (spanning various industries), the pharmaceutical sector, the food segment, key services, and auction floor publicity for new development projects (especially as a result of the intensification of the use of PNRR).

We anticipate intensifying the presence of the Competition Council regarding new control prerogatives. Thus, in the field of unfair competition, some analyzes of possible abuses of bargaining power can be foreseen. Also in the field of food trade, an analysis of the implementation of the new rules is expected, including selective analyzes of relations between large grocery chains and suppliers with little bargaining power.

B. Branch studies

2022 was very active in the field of industry investigations. With almost 40% of current industry investigations launched in 2022, this mechanism helps the competition authority identify potential risk areas and initiate targeted sanctions. The main sectors targeted were the pharmaceutical sector (marketing and promotion of over-the-counter medicines and dietary supplements), the automotive sector, including alternative transport, the construction industry (especially aspects of maintenance and repair) or the financial services sector.

In 2023, we expect these analyzes of market information to continue, possibly looking at elements of a purely local nature or even being inspired by analyzes carried out by other competition authorities in the region or by the European Commission.

Sectors that have an impact on the population (electricity, natural gas, fuel, medicine and medical services, banking, online trade, transport services) will remain under the control of the authorities in 2023. The expected increase in costs in these market segments will lead to a cautious analysis by the competition authority, in particular to be able to verify and prevent the appearance of coordination of behavior that goes beyond the limits permitted by law.

C. Penalties

The system of sanctions applied in Romania in matters of competition allows the application of sanctions in the amount of up to 10% of the total turnover achieved in the year preceding the sanctions. One can observe the phenomenon of an increase in the proposed base fines, which has caused an increase in the number of confessions in the recent period. It is very important to have a balance in the process of determining fines, so that they do not become an indirect form of pressure on the business environment and, implicitly, a mechanism of limiting access to court.

If we analyze the situation with the fines applied in 2022, we will notice that they are placed at a relatively low level compared to other years (although the total amount of fines remains important, exceeding the amount of 36 million euros).

As the approach to increasing fines continues, we expect the number of competition disputes to increase, particularly in situations where the evidence presented is insufficient to support a significant sanction. A disproportionate increase in the percentage of fines applied to investigated companies, especially in cases where the charges are unclear or the evidence is unsatisfactory, is a dangerous and irreversible process, it seriously affects the markets where such sanctions will be applied (for example, some companies will be removed from the market or face with serious difficulties as a result of the application of sanctions).

Although small steps were taken in 2021 to identify non-punitive solutions to the situations under investigation (for example, through commitments or measures), this process was not continued in 2022. In the current economic context, the antitrust authority should also analyze such alternative penalty mechanisms, since in many situations the significant sanctions that will be applied to certain companies will ultimately fall on the end consumer, who will be compensated through price increases.

D. Economic concentrations

The year 2022 was intensive in terms of economic concentration transactions, 94 such transactions were analyzed, which is the highest figure in the last 16 years. The number of transactions analyzed by the Competition Council is expected to decrease in 2023 as the mergers and acquisitions market is affected by external factors such as the global recession, rising inflation and energy prices or the conflict in Ukraine. .

The competition authority has shown an openness to dialogue with the parties involved and we hope that this will continue in 2023. A very important area where the expertise of the competition authority plays a key role is the analysis of foreign investments. Although foreign investment controls are of strategic importance, they should not create blockages at the level of the economic concentration approval process.

E. Unannounced Inspections

The increase in the number of unannounced inspections will take place in the context of the competition authority deciding to open new investigations. Although it is difficult to estimate the number of unannounced inspections, it will certainly increase compared to 2022, as inspections are expected to remain the main means of information gathering by the competition authority. At the same time, the antitrust authority is expected to continue to develop the tools at its disposal for surprise inspections, such as procedures forensic or checking personal equipment.

F. Appealing the decisions of the Competition Council

It is important to note that there are certain trends where courts overturn some decisions of the antitrust authority, which is a normal phenomenon that will bring real benefits to competition analysis and, at the same time, greater predictability in this area of ​​competition. the body is obliged to devote more time to ensuring the fulfillment of the standard of evidence established in competition cases.

Considering that a large part of the investigations in 2022 were concluded with some confessions, we expect a decrease in the number of court cases in the near term. On the other hand, some key decisions are expected regarding (i) the way in which the courts analyze the determination of the amount of fines based on the principle of proportionality and (ii) the completed analysis of the standard of proof in certain cases. by the Competition Council several years ago.

The article is signed by Cătălin Suliman and Silviu Vasile