Legal & Tax Alerts

The enforcement of the new presumption on cartel damages of 20% increase in price, in question.

The law on the approval of the Government Emergency Ordinance no. 39/2017 on actions for damages in cases of infringements of competition law, as well as for amending and supplementing the Competition Law no. 21/1996 (the “Law”) was sent to the President of Romania for promulgation on April 21, 2020.

The Law brings in important changes regarding damage claims in competition law private enforcement actions related to cartels, as well as in relation to the appointment and organization of the members of the Romanian Competition Council and the decisive bodies thereof.

As concerns the cartel damage claims, the Government Emergency Ordinance no. 39/2017 for transposing into the national legislation Directive 2014/104/EU on actions for damages in the case of infringements of competition law, as well as for amending and supplementing Competition Law no. 21/1996 (the “GEO 39/2017”) has already provided a rebuttable presumption that cartel infringements cause harm. Unless the infringer would have proved otherwise, rebutting this presumption, the quantum of the damage should have been evidenced by the claimant, making use of the favourable tools made available to it by GEO 39/2017.

Following the trend of a few other Member States of the European Union, such as Hungary and Latvia, the Law brings as a novelty of significant importance the rebuttable presumption according to which the infringement of the competition law in form of a cartel results in harm consisting in an increase of 20% in the price of the goods or services covered by the cartel. The infringer can demonstrate to the satisfaction of the court that the actual loss was less than 20%, rebutting the presumption. But practically the burden of proof as regards the quantum of the damages produced by cartels has been switched from the claimant to the infringer, making it much easier for the claimant to exercise its right to compensation.

The Law also establishes another rebuttable presumption according to which the abuse of a dominant position in the relevant market results in harm. The infringer can rebut such presumption by proving that no loss or damages were incurred. Even though recital 47 of the Damages Directive 2014/104/EU does not prohibit the extension of presumption of harm to other competition law infringements than cartel-related ones, it does state that it is appropriate to limit such presumptions to cartels considering their secret nature. Therefore, the compatibility of these new provisions with the requirements of the Damages Directive 2014/104/EU is debatable.

But since the Law has been sent for promulgation, exceptions to unconstitutionality in relation to the Law have been raised by the President, the Government and the Senate to the Romanian Constitutional Court. The Law has been criticized in particular with respect to non-observance of procedural rules for its approval in Parliament and its new provisions amending and supplementing Competition Law no. 21/1996. The Romanian Constitutional Court will debate on June 3, 2020, with respect to the constitutionality of the Law.

Following the issuance of the decision of the Romanian Constitutional Court, it will be clarified if the rebuttable presumptions regarding the damage caused by competition law infringement established by the Law may become enforceable, after the promulgation and publication in the Official Gazette of the Law, changing the rules of the game in the private enforcement actions in relation to infringement of the competition law.

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