TAROM Company is firmly committed to conducting business in full compliance with competition rules.
As part of its business ethics policy, TAROM has implemented specific standards and procedures to comply with competition law, which are applicable to all business operations in which the company is involved.
TAROM Company expressly requests all its employees and collaborators to permanently observe in their activity the principles and rules established by the competition laws in Romania and within the European Union.
AIM OF THE COMPETITION LAW:
law aims to protect, maintain and stimulate competition and a normal competitive environment, in order to promote the interests of consumers, by:
1. prohibiting practices, agreements and understandings between undertakings which have as their object or effect the restriction, impediment or distortion of competition;
2. prohibiting the abuse of a dominant position;
3. controlling economic concentrations (mergers between undertakings, creation of joint ventures, acquisition of sole or joint control of an undertaking or part thereof).
WHAT ARE THE CONSEQUENCES OF NON-COMPLIANCE WITH THE COMPETITION LAW:
Failure to comply with the competition rules can have significant consequences for both companies and the individuals involved. These may include:
substantial fines of up to 10% of turnover
payment of compensation to parties adversely affected
criminal sanctions (incurring criminal liability of the legal person, respectively of any person exercising the position of administrator, legal representative or exercising in any other way management functions within an enterprise for the act of conceiving or organizing, intentionally, any of the practices prohibited by law – imprisonment from 6 months to 5 years or a fine and prohibition of certain rights)
excluding companies from public procurement procedures
image damage.
TO WHOM COMPETITION LAW APPLIES:
The competition rules cover the activity of any undertaking or association of undertakings – natural or legal persons, regardless of their citizenship or nationality – that is to say, any entity engaged in an economic activity consisting in offering goods or services on a given market, regardless of its legal status and/or method of financing.
Competition rules apply to all companies, regardless of their size.
Competition rules also apply to acts and facts of central or local authorities and institutions of public administration, in so far as they, through the decisions issued or the regulations adopted, intervene in market operations, directly or indirectly affecting competition, except in situations when such measures are taken by applying other laws or defending a major public interest.
ANTI-COMPETITION AGREEMENTS AND CONCERTED PRACTICES:
Agreements/concerted practices between two or more undertakings, whether competing or non-competing, which have as their object or effect the restriction, distortion or elimination of competition are considered to be anti-competitive.
The concept of “understanding” has a broad meaning and covers both formal and « informal » agreements, respectively any kind of agreement, whether written or verbal, express or tacit.
The concept of “concerted practices” refers, in accordance with the case law of the Court of Justice of the European Union, to a form of coordination between undertakings, through which, without having reached the stage of concluding an agreement, a practical cooperation between them intentionally replaces competition risks.
Examples:
“Cartel” agreements, i.e. agreements or concerted practices between competitors that seek to set prices, share markets, sources of supply or customer allocation, exchange sensitive business information (prices, customer lists, costs, business strategies, etc.), participate with rigged tenders in auctions.
The notion of competitor includes both current and potential competitors. An economic operator is considered a potential competitor in a relevant market if it could make additional investments in a short term or incur other necessary processing costs so as to enter that market.
Vertical agreements, i.e. agreements or concerted practices between undertakings operating at different levels of the production-distribution chain, such as fixing a minimum or fixed resale price, fixing trade additions or reductions which the distributor may practice or restrict the territory where the distributor, respectively the distributor’s customers may sell the goods or provide the services or the customers to whom the distributor or his customers may be addressed.
ABUSE OF THE DOMINANT POSITION:
Competition law does not incriminate the holding of a dominant position, but only the unilateral conduct of the undertaking occupying such a position and which has as its object or effect the restriction, distortion or elimination of competition.
Romanian legislation assumes that an undertaking with a market share of more than 40% is in a dominant position.
Examples:
Abusive use of a dominant position by imposing unfair trading conditions, applying unequal conditions to trading partners to equivalent services, thus creating competitive disadvantages, limiting production, marketing or technological development, conditioning the conclusion of unjustified additional service contracts or exploitation of the dependence state.
COMPETITION LAW AT NATIONAL AND EUROPEAN LEVEL
An anti-competitive practice may be examined by reference to both European Union and national rules, provided that the application of national law does not impede the useful effect of the European Union law.
The competition rules of the European Union apply directly in all Member States, but also in the other states that make up the European Economic Area, as well as in Switzerland.
The competition rules are also made explicit in the national and community secondary legislation issued by applying the norms provided in the Competition Law no. 21/1996, republished, with subsequent amendments, respectively those provided for in the Treaty on the Functioning of the European Union.
The national competition norms apply to acts and facts that restrict, prevent or distort the competition committed on the Romanian territory, as well as to those committed outside the territory of the country, when they produce effects on the Romanian territory.
European Union competition rules shall apply to acts and facts which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the common market.
RELEVANT EXTRACTS FROM THE NATIONAL LAW:
usage, are not related to the object of these contracts”.
Economic concentrations
Art. 9 of the Competition Law no. 21/1996, republished, with subsequent amendments:
“(1) A concentration is made if the change in the duration of the control results from:
a) the merger of two or more previously independent undertakings or parts of undertakings; or
b) the acquisition, by one or more persons already controlling at least one undertaking or by one or more undertakings, either by acquisition of securities or assets, or by contract or by any other means, of direct or indirect control over one or more undertakings or parts thereof.
(2) The creation of a joint venture that sustainably fulfils all the functions of an autonomous economic entity constitutes a concentration according to the provisions of para. (1) letter b).
(3) To the extent that the creation of a joint venture, representing a concentration according to the provisions of para. (1), has as object or effect the coordination of the competitive behaviour of the remaining independent undertakings, such coordination is assessed in accordance with the criteria provided in art. 5 para. (1) – (3), as well as with those of art. 101 para. (1) and (3) of the Treaty on the Functioning of the European Union, in order to determine whether or not the operation is compatible with a normal competitive environment”.
Anti-competitive agreements and concerted practices
Article 101 of the Treaty on the Functioning of the European Union (TFEU):
“(1) Any agreements between undertakings, decisions of associations of undertakings and concerted practices which are likely to affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the common market, are incompatible with the internal market and prohibited, and in particular, those which:
(a) establish, directly or indirectly, purchase or sale prices or any other trading conditions;
(b) limit or control production, marketing, technical development or investment;
(c) share markets or sources of supply;
(d) apply, in relations with trading partners, unequal conditions to equivalent services, thus creating a competitive disadvantage for them;
(e) condition the conclusion of additional services acceptance contracts by partners which, by their nature or in accordance with commercial usage, are not related to the object of these contracts”.
Abuse of a dominant position
Article 102 of the Treaty on the Functioning of the European Union (TFEU):
“The misuse by one or more undertakings of a dominant position held in the internal market or in a significant part of it, is incompatible with the internal market and prohibited, in so far as it may affect trade between Member States.
These abusive practices may consist in particular of:
(a) imposing, directly or indirectly, selling or buying prices or other unfair trading conditions;
(b) limiting production, marketing or technical development to the detriment of consumers;
(c) applying unequal conditions to equivalent services in relations with trading partners, thus creating a competitive disadvantage for them;
(d) conditioning the conclusion of additional services acceptance contracts by partners which, by their nature or in accordance with commercial usage, are not related to the object of these contracts”.
RELEVANT EXTRACTS FROM EUROPEAN UNION LAW:
Anti-competitive agreements and concerted practices
Article 101 of the Treaty on the Functioning of the European Union (TFEU):
“(1) Any agreements between undertakings, decisions of associations of undertakings and concerted practices which are likely to affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the common market, are incompatible with the internal market and prohibited, and in particular, those which:
(a) establish, directly or indirectly, purchase or sale prices or any other trading conditions;
(b) limit or control production, marketing, technical development or investment;
(c) share markets or sources of supply;
(d) apply, in relations with trading partners, unequal conditions to equivalent services, thus creating a competitive disadvantage for them;
(e) condition the conclusion of additional services acceptance contracts by partners which, by their nature or in accordance with commercial usage, are not related to the object of these contracts”.
Abuse of a dominant position
Article 102 of the Treaty on the Functioning of the European Union (TFEU):
“The misuse by one or more undertakings of a dominant position held in the internal market or in a significant part of it, is incompatible with the internal market and prohibited, in so far as it may affect trade between Member States.
These abusive practices may consist in particular of:
(a) imposing, directly or indirectly, selling or buying prices or other unfair trading conditions;
(b) limiting production, marketing or technical development to the detriment of consumers;
(c) applying unequal conditions to equivalent services in relations with trading partners, thus creating a competitive disadvantage for them;
(d) conditioning the conclusion of additional services acceptance contracts by partners which, by their nature or in accordance with commercial usage, are not related to the object of these contracts”.
INDIVIDUAL AND CATEGORY EXCEPTIONS:
The prohibitions provided by art. 5 para. (1) of the Competition Law, respectively by art. 101 para. (1) TFEU does not apply to agreements or categories of agreements between undertakings, decisions or categories of decisions of associations of undertakings, concerted practices or categories of concerted practices, where they cumulatively fulfil the following conditions:
a) contribute to the improvement of the production or distribution of goods or to the promotion of technical or economic progress, while ensuring to consumers an advantage corresponding to the one achieved by the parties to the agreement, decision or concerted practice in question;
b) impose on the undertakings concerned only those restrictions which are indispensable to the achievement of those objectives;
c) does not give undertakings the opportunity to eliminate competition from a substantial part of the market for the products concerned.
The categories of agreements, decisions and concerted practices, exempted by the application of the above provisions, as well as the conditions and criteria for classification by categories are those established in the regulations of the Council of the European Union or of the European Commission regarding the application of the provisions of art. 101 para. (3) of the Treaty on the Functioning of the European Union on certain categories of agreements, decisions of associations of undertakings or concerted practices (referred to as block exemption regulations).
Agreements, decisions and concerted practices that meet the conditions for individual exemption or that fall within the block exemption regulations are considered legal, without the need for notification by the parties and the issuance of a decision by the Competition Council or the European Commission, as appropriate.
The burden of proving that the above conditions are met lies with the undertaking or association of undertakings claiming the benefit of an individual exemption or a block exemption.
For details you can consult the block exemption regulations at the following address: https://ec.europa.eu/competition-policy/antitrust/legislation/block-exem…
COMPETENT COMPETITION AUTHORITIES:
Competition Council
Autonomous administrative authority, competent to apply national competition rules and European competition rules whenever the trade on the market in Romania or between Romania and other Member States of the European Union may be affected by anti-competitive practices.
European Commission
The community institution has the power to apply the competition rules of the European Union in the event of any agreement, decision of an association of undertakings or concerted practices which may affect trade between Member States.
OBLIGATION TO COOPERATE WITH COMPETITION AUTHORITIES:
Both the Competition Council and the European Commission have the right to request documents and information and have increased powers of investigation, being able to carry out unannounced inspections in any space, land or means of transport legally owned or used in the company’s activity, including at home, land or means of transport belonging to managers, administrators, directors and other employees.
Failure of companies to comply with the requests of the Competition Council or the European Commission is punishable by a fine, thus:
fine from 0.1% to 1% of the total turnover in the financial year preceding the sanction, applicable by the Competition Council, for the following acts, committed intentionally or through negligence by undertakings or associations of undertakings:
– the provision of inaccurate, incomplete or misleading information in an application, a confirmation, a notification or a supplement thereto, in the case of economic concentrations;
– the provision of inaccurate, incomplete or misleading information or incomplete documents or failure to provide the information and documents requested by the Competition Council in the case of complaints and notifications on economic concentrations;
– the provision of inaccurate or misleading information in response to a request made by competition inspectors in order to perform their duties ex officio;
– the provision of incomplete information, documents and records during inspections conducted by competition inspectors to investigate infringements of competition law;
– refusal to submit to an inspection carried out by competition inspectors.
fine of up to 1% of the total turnover of the previous financial year, applicable by the European Commission to undertakings or associations of undertakings where, intentionally or negligently, they:
– provide inaccurate, incomplete or misleading information or do not provide the information within the set time limit in response to a request for information from the Commission;
– present incomplete business registers and other documents relating to the business during the inspection carried out by the Commission;
– refuse to submit to inspections ordered by a decision adopted by the Commission;
– seals affixed by official representatives or other accompanying persons, authorized by the Commission, have been broken.
LENIENCY POLICY
The Competition Council and the European Commission apply a leniency policy in which a participant in an anti-competitive practice, independently of the other undertakings involved, cooperates with the authority within an investigation or in order to initiate an investigation, voluntarily providing the information it has about the anti-competitive practice and its role in it thus, receiving, in return, immunity from fines or a reduction of the fines that would be imposed for its involvement in the anti-competitive practice in question.
Undertakings applying for a leniency policy may enjoy immunity from a fine (exemption from the fine) or a reduction thereof.
Any undertaking wishing to apply for leniency should contact the Competition Council/European Commission, as appropriate.
The conditions and procedure for applying the leniency policy are established by the instructions issued by the Competition Council and the European Commission, respectively, and additional information can be identified on the websites of these authorities.