After more than 10 years of litigation, 2 procedural cycles and a preliminary referral to the CJEU, RTPR competition litigation team made of Valentin Berea (Partner), Andrada Rusan and Ana Popa (Senior Associates) managed to reduce by over 85% a fine imposed by the Competition Council on a media agency, the subsidiary of a large international group based in Paris.
Valentin Berea, the coordinator of the Disputes and Investigations practice at RTPR, declared: “It was an extremely spectacular case, a real legal roller coaster, because the victory came after the Competition Council had previously won in an overwhelming proportion in the other cases that concerned the same decision to sanction the main media agencies groups in the market. Fortunately, at the hearing where our appeal was scheduled, with chances that seemed minimal considering the jurisprudence that had already been created at the level of the High Court of Cassation and Justice (HCCJ), we managed to convince the judges to send a preliminary ruling request to the CJEU in order to solve a EU law matter that was incidental in our case. It was not an easy task, as until that moment, the HCCJ had not sent any other preliminary ruling request in the area of European competition law at the request of a sanctioned company (there were only 2 other precedents in which the preliminary ruling requests had been sent upon the request of the competition authority). From that moment on, we turned the tide of our case (as well as for other media agencies whose appeals had not been definitively resolved) because after another (almost) 2 years in which we argued our client’s case at the CJEU, the EU court issued a binding interpretation for all Member States through which it confirmed our arguments. Of course, the CJEU could not rule on the merits in a preliminary ruling procedure, so we took the case back to the national courts to obtain, after a new procedural cycle, the correct solution.”
“This historical solution reminds us that competition law is (still) being created, before our eyes, through the CJUE jurisprudence, which is a source of European law. We are honoured that we have also contributed to this process, through a small part, by adding a new successful preliminary ruling to our track record. We are also pleased that this case has “broken the ice” of preliminary rulings and we have then noted, at the level of the HCCJ, an increasing openness to this instrument in competition law disputes. In fact – as a premiere and for the moment without too many details – I take this opportunity to announce that we are preparing for a new challenge: we have recently once again managed to convince the HCCJ to send a preliminary ruling request to the CJEU, in a case where the Competition Council has imposed record fines of tens of millions of euros, on the insurance market. This time, we hope to bring more clarity regarding the legal standard applicable to the analysis of concerted practices through information exchange”, said Andrada Rusan, Senior Associate.
“In addition to the legal challenges, the complexity of the case was also accentuated by the need to manage the technical aspects related to the calculation of the actual income of a media agency, excluding the amounts re-invoiced to its clients. Since such a calculation could only be made through an accounting expertise report - which could not be administered by the HCCJ - it was necessary to resume the trial on the merits and to go through a new procedural cycle, which was mainly focused on determining the real revenues of the media agency we represented, to reflect the principles set through the CJEU ruling. The challenge was even greater because the documents proving these revenues were older than 10 years (as of the date of the Competition Council’s fine), and their number was considerable.
Although we are extremely happy that after more than a decade of litigation we have a favourable final ruling, our work does not stop here, as we continue to assist the client in the legal proceedings through which it can obtain the compensation to which it is entitled for being deprived of a significant amount of money for a very long period of time”, added Ana Popa, Senior Associate.
In 2022, RTPR won a historic victory at the Court of Justice of the European Union on the principles of how the fines applied by the competition authorities are calculated. Following a request from RTPR for a preliminary ruling in a national case concerning the court challenge of a fine imposed by the Competition Council on a media agency, the Court of Justice of the European Union ruled that proportionality and substance over form principles will prevail in the calculation of the percentage fines applied by reference to turnover.
What is the stake of this historic decision? For certain companies (such as media agencies, travel agencies, bookmakers, ticket offices, labour recruitment companies, auction houses etc.), the nature of their business requires that various amounts transit the company accounts temporarily and for operational purposes (e.g., advertising budgets, tourist packages, other amounts reimbursed to clients). Depending on the accounting approach chosen, this may mean that the balance sheets of the respective companies will also reflect all these amounts in their turnover.
Against this background, the Court ruled that the formalistic approach whereby when applying the fine (which for competition law infringements is calculated as a percentage of the total turnover of the sanctioned company) the national competition authority takes into account in all instances only the accounting turnover of the undertaking, without analysing the company’s arguments that prove that the turnover mentioned in the balance sheet does not reflect the real economic situation of the company, is contrary to EU law.
The decision strongly contributes to the clarification of the rules regarding the calculation of fines for competition law infringements and will have long-term effects for all companies sanctioned for competition law infringements, whose turnover does not reflect their real revenues. The jurisprudence of the Court is binding and constitutes a source of law for all EU Member States.
RTPR litigation practice focuses on fields such as competition law, intellectual property, information technology, tax and administrative litigation, energy law, insurance law, corporate law, disputes arising from mergers and acquisitions or financings, insolvency, national and international arbitration, corporate investigations, or labour law litigation. “The added value that our Disputes & Investigations team tries to bring to clients is the specialisation in certain niche areas, which pose significant legal risks for a company’s activity. This way of working requires in-depth knowledge and practical experience in the respective subject matter and involvement in assisting the client from the earliest moments of a sensitive situation, which could become litigious, often as part of multidisciplinary teams. For example, in the case of an investigation by the Competition Council, one or two RTPR partners, together with a team of competition lawyers, will assist the client from the moment of the authority’s dawn raid until the stage of the final proceedings in front of the HCCJ or CJEU, even 10 years later, if necessary (as in the media agencies case). This way, we ensure that all the information, evidence and arguments of the case, built over time, are fully exploited in the client’s defence”, added Valentin Berea.
RTPR is one of the most experienced and appreciated law firms in Romania, recognised as such by the Legal 500, Chambers and IFLR 1000 – the most reputed international legal directories – which constantly include RTPR on top tiers in their rankings for various practice areas, such as Banking and Finance, Corporate/M&A, Capital Markets, Dispute Resolution, Competition, Energy and natural resources, Real Estate and Construction, Employment and Intellectual Property.