The European Court of Justice (ECJ), on 16 July, backed Romania’s Competition Authority over its actions against a number of pension funds sharing out clients at the start of the country’s second-pillar system.
Initial applications for the second pillar, obligatory for those aged 35 years and under, took place between 17 September 2007 and 17 January 2008.
Under Romanian law, workers had to conclude an agreement personally with a single fund or, if they failed to make a choice, be allocated to one on a random basis by the National fund for pensions and other benefits (CNPAS).
Duplicate applications were deemed invalid and were likewise allocated by the CNPAS.
In September 2010, the Competition Authority fined 14 pension companies a total €1.2m for concluding agreements to share, on a 50-50 basis, clients who had signed more than one affiliation, thus avoiding CNPAS’s allocations.
The following month, ING Pensii, which received the biggest fine, sought to annul (or alternatively partially annul) the Competition Authority’s decision before the Court of Appeal, Bucharest.
ING argued that the agreements did not breach Romania or the EU’s competition regulations.
Specifically, it argued that the sharing of clients registered as duplications fell outside the definition of “agreements, decisions and concerted practices”.
It also claimed that, over the initial application period, the funds remained in competition with each other.
In 2012, the Court dismissed the appeal, after which, in 2014, ING took the case to Romania’s High Court of Cassation and Justice.
ING’s arguments included the issue that the small number of duplications (less than 1.5% of the market) was not the subject of competition; that ING had no practical or economic reasons in the allocations as it already had, as of October 2007, the biggest market share; and that the agreements made the signing procedure more efficient because participants had a greater chance of joining a fund of their choice than would have been the case with a random allocation.
The cassation court stayed proceedings and asked the ECJ for a preliminary ruling on whether the number of clients involved was relevant in deciding whether EU competition law – specifically Article 101(1) TFEU – was distorted.
The ECJ ruled that the number was irrelevant.
It deemed that the client-sharing agreements were collusive, made ahead of the affiliation process in anticipation of some people signing up to more than one company, contrary to the statutory rules applicable and thus detrimental to other companies operating in the market.
Distortions of Article 101(1) TFEU require that the agreements in question affect trade among EU member states.
The ECJ deemed that, although the pension funds were registered in Romania, members, their employers and the pension funds owners could be registered in another member states.
Additionally, the agreements made it more difficult for companies outside Romania to penetrate the Romanian market, essentially restricting EU internal market competition.