Romania: Exchange of Sensitive Information - Romanian Perspective
Undertakings exchanging sensitive information may be faced with significant fines imposed by national competition authorities scrutinising such practices.
Compliance with competition legislation has become a priority for all businesses in Romania. This is much more important nowadays given the fact that the Romanian Competition Council (“RCC”) is very active. In 2015 alone, the RCC finalised 21 investigations and launched another 13 in various sectors, ranging from energy to retail. In its newly launched investigations, the RCC is looking at the potential exchange of sensitive information as one of its priorities, viewing the exchanged data in a larger context.
Exchange of sensitive information
The mere exchange of sensitive information may lead to restrictions in terms of competition legislation. As an example, where information with respect to future prices was ex-changed, the RCC needs to prove that such exchange took place, without the need to further prove any (anticompetitive) effects on the competition environment.
Although it is clear that such practices will continue to be sanctioned in the future, the simple exchange of sensitive information, even without aiming to set prices or other hard-core infringements, might lead to competition legislation infringements. This is due to the fact that the exchange of sensitive information may have anti-competitive effects without leading to a hard-core infringement. In particular, such effects would be related to the facilitation of coordination between the market participants or by foreclosing the market for other players.
This was also the opinion of the European Commission (and General Court) which, in one of its cases (see UK Agricultural Tractor Registration Exchange, OJ 1992 L68/19), considered that, although transparency in the market may lead to an intensification of competition, in a concentrated market, regular and frequent sharing by the main suppliers of strategic information has the adverse effect of revealing to the market positions and strategies of the individual undertakings to their competitors. This trend also seems to be followed by national competition authorities (see Hotel le Bristol v Minister of the Economy, Finance and Industry).
On a local level, the RCC seems to take a more aggressive approach when dealing with potential exchanges of information, thoroughly analysing the context of the exchange, the type of information exchanged and its nature (historic, aggregated etc).
Therefore, in order to minimise any risks of fines for the exchange of sensitive information, one should make sure that the information disseminated outside the company does not concern: future prices, quantities or output, the undertaking’s future market conduct, and strategic information (eg future promotions, relationships with suppliers etc). The risk of such information being considered sensitive increases if such information is not public, and if it is disseminated in a non-aggregated fashion. Nonetheless the potential harmful effect of exchanging this kind of information varies depending on the industry in question.
An important aspect regarding the exchange of sensitive information concerns the occasions on which it takes place. The RCC focused on trade associations and, apparently, this trend continues. In meetings of trade associations, undertakings should analyse whether the information requested by the association is made public (beforehand), to what extent (as is, in an aggregated form, etc), who receives and compiles the data, and whether there is a real need for the exchange (eg, the assessment of data is instrumental for the association / market activity).
In addition, a clear methodology is mandatory for the disclosure of information and its communication to other parties. This methodology should include rules of disclosure, procedures to safeguard the confidentiality of the raw data, rules for publishing and other key elements that would mitigate any risk in case of control by the RCC.
Given the above, due care is recommended when participating in such meetings where incidental exchanges of information may occur. In some recent cases, the RCC considered the contacts in the association that led to disclosure of future conduct in the market and led to collusion. Thus, considering that these meetings might be attended by company representatives, who are not necessarily aware of the applicable competition legislation, each undertaking needs rules for participation in meetings of associations.
In order to reduce the risk of a potential exchange of sensitive information by commercial representatives during meetings within trade associations, a prior agenda should be set, and any deviation which may have a potential anticompetitive impact, should result in the representative expressly dissociating from the deviation, and he/she should leave the meeting.
Another instance that may lead to an exchange of sensitive information and is not necessarily taken into consideration relates to the hub-and-spoke. In terms of this practice, two (or more) competitors might exchange sensitive information through a common customer or supplier who gathers such information from both parties and then retransmits it, thus acting as an indirect means for exchange. Although there are few practical examples in this respect at EU level, some national competition authorities have taken this into consideration. Even though the RCC has not yet finalised any hub-and-spoke cases, it closely analyses constant exchanges of information using a joint channel.
In conclusion, since the RCC has embarked on investigating several cases where the ex-change of sensitive information is core, it is advisable for undertakings operating in Ro-mania to take additional security measures in order to avoid exposure to such practices. This could be covered by implementing specific safeguard measures and providing specific training to individuals with representative functions.