- The Competition Acts 2002 and 2006
Enforcement and administration of the Competition Acts, 2002 and 2006 (Act) is the responsibility of the Competition Authority. However, only the Irish Courts can award damages or impose fines for anti-competitive practices.
- Anti-competitive Agreements
The provisions of the Act addressing anti-competitive arrangements are modelled on Article 81 of the EC Treaty. It prohibits, as a general principle, anti-competitive arrangements between undertakings, decisions by associations of undertakings and concerted practices involving undertakings which prevent, restrict or distort competition in Ireland or any part of Ireland, unless they comply with certain specific conditions set out in Section 4 of the Act or are the subject of a declaration.
The Act sets out the conditions which must be fulfilled for an individual agreement to benefit from the exemption. These conditions also constitute the test for the granting of a declaration:
- the arrangement must contribute to improving the production or distribution of goods or the provision of services or to promoting technical or economic progress;
- the arrangement must allow consumers a fair share of the resulting benefit;
- the arrangement must not impose on the undertakings concerned any terms which are indispensable to the attainment of those objectives;
- the arrangement must not afford undertakings the possibility of eliminating competition in respect of a substantial part of the product or services in question.
An arrangement is not prohibited under the Act if it falls within a category of agreements which the Competition Authority has declared complies with these conditions. Such declarations will be granted for a period of time and will be subject to conditions imposed by the Competition Authority. The Competition Authority has adopted a number of declarations relating to such arrangements, for example, vertical agreements.
- Abuse of Dominance
The provision of the Act relating to abuse of dominance is primarily based on Article 82 of the EC Treaty. The Act prohibits, as an absolute principle, the abuse of dominance by any undertaking having a dominant position in Ireland or in any part of Ireland. The Act does not seek to define an abuse of a dominant position, but it does indicate that the following matters may be regarded as an abuse:
- directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions;
- limiting production, markets or technical development to the prejudice of consumers;
- applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;
- making the conclusion of contracts subject to the acceptance by other parties of supplementary obligations which by their nature or according to commercial usage have no connection with the subject of such contract.
- Penalties
Breaching the provisions of the Act relating either to anti-competitive agreements or abuses of dominance carries substantial penalties. In practical terms, the most serious penalty is that the practice or arrangement is void (i.e. legally unenforceable), which may have very serious commercial consequences for the parties. Other penalties include (a) fines of up to the greater of €4 million or 10% of world-wide turnover on the undertakings in breach of either of these provisions and on the officers of such undertakings (e.g. directors, managers and company secretaries); as well as (b) civil sanctions on undertakings and the executives of undertakings in breach of the Act. In addition, a finding of the existence of an anti-competitive arrangement may result in criminal sanctions, with potential imprisonment of officers of the undertaking for up to five years in the event that cartel offences have been committed (e.g. price fixing).
- Competition Authority’s Powers of Enforcement
The Competition Authority has a number of statutory powers to enforce Irish competition law. One such power is the ability to conduct on-the-spot investigations (known as dawn raids) on companies, located in Ireland, where the Competition Authority believes that evidence may exist in relation to anti-competitive practices. In addition, the Competition Authority can summon individuals to provide evidence on oath and also to produce documents concerning such anti-competitive practices.
- Rights of Civil Action
Anyone aggrieved as a result of any action prohibited under the Act has a right of civil action for relief. If the court should find for the aggrieved person it may grant either an injunction restraining the continuance of the matter complained of or it may impose a declaration. It may also grant damages (including exemplary damages). In addition, the court may make an order for restitution which is designed to put the parties back in the position in which they would have been, had an anti-competitive arrangement or practice not occurred. Where the court has decided that an undertaking has abused its dominant position contrary to the Act, it may also require the dominant position to be discontinued or adjusted, for example, by ordering the dominant undertaking to sell some of its assets.
- Application of EC Competition Law
In addition to applying Irish competition law, the Competition Authority and the Irish Courts (in conjunction with the European Commission and EU Courts) apply Articles 81 and 82 of the EC Treaty where trade between Member States of the EU is affected. Prior to 1 May 2004, the Competition Authority and the Irish Courts could prohibit arrangements that affected trade between Member States and could prohibit abuses of dominance if they had an effect on trade between Member States.
However since May 2004, the Competition Authority and the Irish Courts may also authorise otherwise anti-competitive agreements if have counter-balancing pro-competitive effects.
The Competition Authority and the Irish Courts have the dual responsibility to apply Irish and EC competition law in Ireland. All other competent national competition authorities of the EU must also enforce Articles 81 and 82 within their own jurisdiction as of 1 May 2004. The Competition Authority is also able to use its statutory powers to enforce Articles 81 and 82 (such as conducting dawn raids on companies in Ireland, summonsing individuals to provide evidence on oath and requiring disclosure of documents concerning anti-competitive practices suspected to be in breach of Articles 81 or 82).
- The Competition Act 2006
The 2006 Act makes changes to the Irish Competition law regime. In essence it removed a ban in place since 1987, chiefly affecting retailers, on the selling of groceries to consumers below “net invoice price” (i.e. cost price). The 2006 Act sets out several additional prohibitions in respect of grocery goods undertakings (GGUs), i.e. sellers of food and drink (including alcohol). For example, it is now illegal for a GGU to coerce another into paying advertising allowances. Similarly it is illegal for a retailer to coerce a GGU into paying "hello money" for stocking a product in certain outlets. Notwithstanding the 2006 Act, all other competition law continues to apply in full to the grocery sector.
- Merger Control
The definition of ‘merger’ or ‘acquisition’ contained in the Act has largely been adopted from the EC Merger Regulation. It provides that a notifiable merger arises once control (essentially the capability of exercising decisive influence) over an undertaking is acquired, regardless of how such control is acquired. Asset acquisitions, as well as full function joint ventures, are also notifiable.
- Thresholds for Notification
The Act obliges undertakings to notify the Competition Authority of any merger or acquisition which exceeds the relevant thresholds. The notification thresholds under the Act are as follows:
- the world-wide turnover of each of two or more of the undertakings involved in a merger must be not less than €40 million; and
- each of two or more of the undertakings involved in the merger must carry on business in any part of the island of Ireland (including Northern Ireland); and
- the turnover in Ireland of any one of the undertakings involved in the merger must be not less than €40 million.
In relation to these thresholds, conducting business in any part of the island requires a physical presence on the island (e.g. a registered office, subsidiary, branch representative agency) AND sales and/or supply of services to customers on the island of Ireland; or sales made into the island of Ireland of at least €2 million in the most recent financial year. Turnover figures are calculated on data from the most recent financial year.
- Consequences of Failure to Notify
It is an offence, punishable by a fine of up to €250,000, for certain individuals of companies to fail to notify such a merger in time. In addition, any merger put into effect without being given clearance by the Competition Authority is void as a matter of Irish law.
- Voluntary Notifications
Parties may also voluntarily notify a merger to the Competition Authority (together with any ancillary agreements) to allow the mto seek immunity from subsequent challenge to their merger on the grounds of a suspected anti-competitive agreement or abuse of dominance.
- Competition Test Used to Assess Mergers
The Competition Authority will make its decision on the basis of whether or not the merger or acquisition will substantially lessen competition in Irish markets for goods or services.
- Procedures for Assessing Mergers
The Act aligns the procedure for analysing mergers closely with that contained in the EC Merger Regulation. There are two possible stages in the examination process, varying from one month to 45 days for the first, up to four months in the event of an extended investigation.
- Penalties for Breach of a Decision
Breach of any prohibition decision of the Competition Authority or any commitments or conditions attached by the Authority to a clearance may lead to fines of up to €10,000 and/or two years’ imprisonment (including daily default fines).
- Media Mergers
The Act contains special provisions which apply in respect of media mergers, i.e. mergers or acquisitions where at least two of the parties involved are ‘media businesses (one of which is in the State)’. These provisions effectively allow the relevant Government Minister to reverse decisions by the Competition Authority in relation to media mergers on public interest grounds. If, following a Phase I investigation, the Competition Authority determines that the media merger may take effect, the Minister may, within 10 days, direct the Competition Authority to proceed to a Phase II investigation for its consideration of competition and public interest implications of the media merger. If the Authority proposes to clear, or to conditionally clear, the merger after the Phase II investigation, the Minister may, having regard to public interest criteria, overrule the Competition Authority’s decision within a further 30 day period. The public interest criteria include the strength and competitiveness of media businesses indigenous to the State and the extent to which ownership or control of media businesses in the State is spread amongst individuals and other undertakings.