Competition Law Risks And Priorities For Directors In Ireland

Author:Ms Kate McKenna
Profession:Matheson
 
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Introduction

The consequences of breaching competition law are severe, and can have very personal implications for directors who may be disqualified or prosecuted and fined in a personal capacity for competition law breaches. This means that internal company awareness of the consequences of competition law breaches, and how to mitigate them, is crucial.

Irish Disqualification Procedure

Under section 839(1) of the Companies Act 2014 (the “2014 Act”), individuals convicted on indictment of the competition law offences under sections 6 (entering into anti-competitive arrangements) and 7 (abusing a dominant position) of the Competition Act 2002 (as amended) (the “2002 Act”) are deemed automatically disqualified from being appointed or acting as a director, officer or being in any way concerned in company management for a period of 5 years (or for such other period as the court may order).

Four major cartel cases have been prosecuted in the criminal courts (Ford Dealer cartel; Citroen Dealers Association cartel; Home Heating Oil cartel; Commercial Flooring cartel), resulting in the conviction on indictment of 20 individuals. The penalties included imprisonment, fines, and in the most recently prosecuted Commercial Flooring Cartel case (discussed below) , disqualification.

DPP v Aston Carpets and Flooring Limited and Brendan Smith1

The recent “Commercial Flooring Cartel” case resulted in the automatic disqualification of a company director for engaging in bid-rigging in the procurement of flooring contracts for major international companies, which is a form of anti-competitive agreement contrary to section 6 of the 2002 Act.

Brendan Smith, former director of Aston Carpets, pleaded guilty to the offence before the Central Criminal Court, and was disqualified for a five-year period, as well as being fined €45,000 in a personal capacity.

Notably in this case, a director of Carpet Centre Contracts, another member of the cartel, avoided prosecution and therefore disqualification by cooperating with the Competition and Consumer Protection Agency (the “CCPC”) through the Cartel Immunity Programme. This Programme is operated by the CCPC in conjunction with the DPP, and provides immunity to the first member of a cartel to come forward to the CCPC and reveal their involvement in the illegal cartel activity.

Comparing the Irish and UK Regimes

The CCPC cannot itself disqualify directors. Rather, this can only be done through a court prosecution by the DPP.

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