by Oana Strătulă (Partner)
In a difficult economic period, characterized as one of crisis, the survival on the market has become, for many merchants, a purpose and for its achievement they are willing to put in the fight any means, even some less “orthodox “1.
As such, buying commercial secrets without the owner’s legitimate consent, the spread on the market of deceitful information about competitors or their products, which are intended to mislead the customer, employing “key people” from competitors are just a few of the practices that some merchants, even though they know or at least intuit that are illegal, do not hesitate to use when it is in their interest.
Given that a fair competitive environment is both in the interest of consumers, who will benefit from quality products and services as a result of free and fair competition, as well as in the interest of merchants, the unfair competition practices have been sanctioned since 1991 through the Law no. 11, on the fight against unfair competition, which has undergone, over time, numerous changes and additions.
The most recent modification came into force on September 5th, 2014 and was brought by the Government Ordinance no. 12/2014, published in the Official Gazette, Part I, no. 586 of 6 August 2014 (“GO 12/2014”).
The new regulation provides a better definition of unfair commercial practices.
Unlike the previous regulation, that contained a general definition of unfair competition, which may consist of any act or fact contrary to fair practices in the industrial and marketing activities of the products, in the execution of works, as well as in the performance of services, the GO 12/2014 structures the practices of unfair competition in three categories.
Thus, the following represent unfair competition practices and, consequently, are prohibited:
– the denigration of a competitor or its products / services, made by a company or its representative / employee, by communicating or spreading information that is not real about the work of the competitor or of its products, able to damage its interests;
– the diversion of a company’s clientele by a current or former employee / representative or by any other person, by using some trade secrets, for which the company has taken reasonable measures to ensure their protection and the disclosure of which may harm the interests of that company;
– any other commercial practices which are contrary to fair practices or to the general principle of good faith and which cause or may cause damage to any market participants.
Note that the last category is the widest and includes any unfair commercial practices (obviously except the first two categories, namely the denigration of a competitor and the diversion of customers). In this last category, the legislator has provided an additional condition, namely that the concerned practices have to effectively, or be able to, cause damages not only to the targeted merchants, but also to any market participants, thus including consumers.
Sanctions applicable in case of unfair competition
The competent authority to establish and sanction unfair commercial practices remains the Romanian Competition Council, which may act ex officio in regards to committing such acts, or upon being notified of a certain unfair practice, by individuals or legal entities, to the extent that they have a legitimate interest. The Competition Council will follow the complaint received from individuals or legal entities only to the extent that they provide evidence about the possible unfair competition practice, the legitimate interest, as well as the risk of producing damages.
In order to be sanctioned, the acts of unfair competition identified by the Council must have a certain degree of social threat. Thus, the new regulation provides that, to the extent that the effects of an unfair competition practice are minor, the Competition Council has to decide, motivated, that its sanction is not necessary.
Unfair commercial practices committed by guilt represent a contravention and are sanctioned by a fine of 5,000 to 50,000 RON (approx. 1,100 to 11,000 Euro) if they were committed by legal persons, and a fine of 1,000 to 5,000 RON (approx. 200 to 1,100 Euro) if they were committed by individuals. The individualization of the fine shall be made by the Competition Council by taking into consideration the following criteria: the seriousness of the act, its effects, as well as the sanctions received in the last two years by the concerned person or entity. Also, besides the application of the fine, the Competition Council may decide and prohibit unfair competition practices.
The definitive decisions of the Competition Council which find and sanction, when necessary, the practices of unfair competition, shall have a proving power regarding the perpetration of an unfair competition practice, so that they can be used as evidence in a claim for compensation, if these practices have caused damages.
What represents and what is the role of the Inter-institutional Council in fighting unfair competition
The new regulation provides the establishment of an Inter-Institutional Council on fighting unfair competition, as a permanent body composed of the Ministry of Public Finances, the national competition authority, the authority responsible for the protection of rights in the audiovisual field, the National Authority for Consumer Protection, the authority responsible for the protection of industrial property, the authority responsible for the protection of copyright and related rights.
The role of this Council is to prepare an annual report on the implementation of the legislation regulating unfair competition, which will include the analysis of the main issues in the field of fighting unfair competition, as well as proposals concerning public policies in this field.
1.This is a translation of the article published on September 9th, 2014 in Business24.ro