Cartel Regulation: Irish Chapter - Getting the Deal Through 2012

Author:Mr John Kettle, Anthony Burke and Niall Collins
Profession:Mason Hayes & Curran

1 Relevant legislation

What is the relevant legislation and who enforces it?

The Competition Act 2002 (as amended) (the Act) sets out the statutory basis for competition law in Ireland. The Competition Authority (the Authority) is an independent statutory body responsible for applying Irish and European Union competition law in Ireland, as well as informing government, public authorities, businesses and the wider public about competition issues. The Authority investigates alleged breaches of the Act and recommends prosecution to the director of public prosecutions (the DPP). The Authority has also been assisted by two detective sergeants seconded from the Irish police force. Since 2007, in telecommunication matters, the Authority has shared enforcement responsibility with the Irish sectoral regulator (ComReg).

2 Proposals for change

Have there been any recent changes or proposals for change to the regime?

In October 2010, section 10 of the Act was commenced. The section provides measures to assist juries in considering complex financial and economic evidence during trials for breaches of competition law. Section 10 provides that in a trial on indictment, the trial judge may order that copies of any or all of the following documents shall be given to the jury in any form that the judge considers appropriate:

any document admitted in evidence at the trial; the transcript of the opening speeches of counsel; any charts, diagrams, graphics, schedules or agreed summaries of evidence produced at the trial; the transcript of the whole or any part of the evidence given at the trial; the transcript of the closing speeches of counsel; or the transcript of the trial judge's charge to the jury. In September 2011, the minister for jobs, enterprise and innovation (the minister) published the Competition (Amendment) Bill 2011 (the Bill). The Bill is primarily aimed at meeting the terms of the EU/IMF Programme of Financial Support (which mandates the introduction of legislation to strengthen the enforcement of competition law in Ireland). The proposals in the Bill include, among other things:

an increase in the maximum level of fines across all categories of competition law offences (including an increase from e4 million to e5 million for indictable offences); an increase in the maximum prison sentence that can be imposed for indictable offences (from five to 10 years); the disapplication of the Probation of Offenders Act 1907 to competition law offences; a requirement that convicted persons will, except in exceptional circumstances, pay the investigation, detection and prosecution costs of the Authority; an amendment to the Companies Act 1990 to permit the disqualification of directors for competition law offences; and the application of the principle of res judicata to competition law offences, which will, if adopted, make it easier for private competition litigants to prove an action for damages on foot of successful enforcement proceedings. Although the Bill is intended to strengthen the enforcement of Irish competition law and to more effectively tackle white-collar crime, it remains to be seen whether it will have any influence on the, heretofore, low levels of criminal sanctions imposed by the Irish courts in competition matters.

The Bill must now pass through both Houses of the Oireachtas (the Irish parliament) and be signed by the president of Ireland before it can be enacted into law. It should be noted that the Bill may be the subject of amendment during this process.

2012 will also see the amalgamation of the Authority with the National Consumer Agency (the Agency) with the unified regulators' mandate to cover both competition and consumer law matters. It also appears that the Authority will publish its revised Cartel Immunity Programme (the CIP) (which is currently being considered by the DPP) during early 2012. It is generally acknowledged that the CIP is working well, but that some tweaks may be required in order to provide enhanced clarity on how the CIP operates.

3 Substantive law

What is the substantive law on cartels in the jurisdiction?

Irish competition law is broadly derived from, and applied by analogy with, the competition rules in the Treaty on the Functioning of the European Union (TFEU). Section 4(1) of the Act, broadly, reflects article 101 TFEU and prohibits and renders void 'all agreements between undertakings, decisions by associations of undertakings and concerted practices which have as their object or effect the prevention, restriction or distortion of competition in trade in any goods or services in the State or in any part of the State'. The Act lists certain types of behaviour which are expressly prohibited and includes arrangements that:

directly or indirectly fix purchase or selling prices or other trading conditions; limit or control production or markets; share markets or sources of supply; apply dissimilar conditions to equivalent transactions with other trading parties; or attach supplementary obligations to a commercial contract that have nothing to do with the subject of the contract (eg, tying). Under section 6 of the Act, a breach of section 4 (or of article 101 TFEU) is a criminal offence. Furthermore, such a breach gives rise to a civil right of action. In the case of hard-core cartels, breach of section 6 can result in serious penalties, including imprisonment. 'Hardcore cartel' is defined in section 6(2) of the Act as an agreement or decision made by competing undertakings or a concerted practice the purpose of which is to directly or indirectly fix prices with respect to the provision of goods or services, limit output or sales, or share markets or customers. The legislation defines 'competing undertakings' as undertakings providing, or capable of providing, goods or services to the same applicable market. Accordingly, section 6(2) is designed to catch horizontal anti-competitive arrangements.

4 Industry-specific offences and defences or antitrust exemptions

Are there any industry-specific offences and defences or antitrust exemptions?

In the context of cartel-type activity, no industry-specific offences or defences exist. However an offence under section 4(1) of the Act or article 101(1) TFEU can be proved only if the efficiency criteria in section 4(5) or article 101(3) TFEU are not met. In this context, it is a good defence to show that the alleged anti-competitive arrangement contributes to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit. Section 6(5) of the Act also provides that, in the context of proceedings under 6(1), it shall be a good defence to prove that acts done were done pursuant to a determination or direction by a statutory body. However, it is difficult to imagine circumstances whereby an Irish statutory body would condone cartel activity.

5 Application of the law

Does the law apply to individuals or corporations or both?

Section 4 applies to an 'undertaking', which is defined in the Act as an individual, a body corporate or an unincorporated body of persons engaged for gain in the production, supply or distribution of goods or the provision of a service. In this context, 'gain' does not equate to profit, rather, the concept encompasses activities carried out in return for a charge or payment. In EU law, the concept of 'undertaking' is not defined by legislation, but through jurisprudence of the EU courts as including natural persons that engage in 'economic activity', regardless of its economic form or its ownership (see, for example, Case C-49/07 MOTE [2008] ECR I-4863). Accordingly there is a subtle difference between the definition of undertaking as applicable under Irish and EU law.

Section 8(6) of the Act provides that where an undertaking commits an offence under section 6 and the conduct in question was authorised or consented to by a person being a director, manager or other similar officer of the undertaking, that person as well as the undertaking shall be guilty of an offence.

In the recent case of DPP v Hegarty, the defendant challenged proceedings taken against him on the basis that the prosecution had not first secured a conviction against his employers. The defendant's case was that he could not be convicted unless his employer had first been convicted. In July 2011, the Irish Supreme Court ruled that an individual employee can be tried for a breach of Irish competition law even if his employer has not been convicted of an offence.

The Court noted that an 'undertaking' for competition purposes can be a person, a body corporate, or an unincorporated body. Further, 'there is nothing surprising in the concept of both non-personal undertakings and their managers/officers and like persons being exposed to criminal prosecution arising out of the same abusive conduct. Such persons are separate and distinct legal personalities and therefore no question of double punishment arises.' The Supreme Court also noted that there is no reference to a 'conviction' having been obtained in...

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