The High Court of Cassation and Justice has recently upheld a decision of the Timisoara Court of Appeal, with significant relevance for transfer pricing disputes based on the re-qualification of the functional profile of a company within a multinational group from independent producer to producer under the full control of the group. It has been confirmed that elements specific to the operation of a multinational group, such as providing support services by global cooperation structures or the existence of common directors, do not prove the existence of a transaction between the parent company and the controlled entity that would justify reconsidering the functional profile of the company, even in cases where the controlled entity experienced periods of losses.  Specifically, although the tax authorities invoked the existence of an unwritten understanding – not reflected in invoices or contracts - based on which the audited company was allegedly controlled by the group, acting in concert, with the aim of making sure the company continued to operate at a loss, which would result in the entire activity of the entity concerned (including that carried out with independent third parties) being regarded as that of a contract manufacturer, the evidence produced, including a complex tax expert report, did not reveal the existence of such an understanding.  The court confirmed that an adjustment cannot be based on a presumed understanding. On the contrary, to make an adjustment, it is first necessary to identify and delineate the transaction to be adjusted.

Schoenherr successfully assisted Allianz-Țiriac Asigurări in litigation seeking the annulment of a competition sanctioning decision of more than EUR 8.6m.  In 2018, following an investigation conducted by the Romanian competition authority into the Romanian insurance market, nine insurance companies (including Allianz-Țiriac Asigurări) were fined a total of over EUR 50m for allegedly breaching competition rules. The companies were accused of engaging in concerted practices to raise RCA (motor third-party liability) tariffs through the exchange of competitively sensitive information on intended future tariff increases.  Assisted by Schoenherr, Allianz-Țiriac Asigurări challenged the sanctioning decision and successfully obtained its annulment in the first instance before the Bucharest Court of Appeals. The litigation involved complex issues both on the merits, considering the applicable national and EU competition laws, and on a procedural level.  "We are delighted to have successfully represented Allianz-Țiriac Asigurări in this competition litigation," said Georgiana Bădescu, Partner and Head of the firm's EU, Competition & Foreign Trade practice in Romania, who led the Schoenherr team.