Ireland’s Competition and Consumer Protection Commission publishes annual report
Ireland's competition and consumer protection agency is the "Competition and Consumer Protection Commission" ("CCPC"). It began operations on 31 October 2014 after a long gestation over a number of years which involved the merger of the Competition Authority and the National Consumer Agency.
On 3 September 2017, the CCPC published its annual report for 2016. It is an interesting and useful account of the CCPC's second full year of operation.
In regard to competition law generally, the CCPC stated that, during 2016, it issued 12 witness summonses and 11 formal requirements for information in the course of investigating potential breaches of competition law. It is not clear from the report whether these procedural steps were in the context of the other investigations mentioned in the report but, either way, it is an impressive number. Equally, during 2016, the CCPC opened 24 new files and closed 13 files relating to potential criminal breaches of competition law. The CCPC opened two civil competition related investigations: one on potential price signalling in the motor insurance sector and one into the conduct of a landlords' association. During the year, it also closed three competition-related investigations and secured commitments in two of them. The report recalls that the Approved Tour Guides of Ireland was directed by the CCPC to remove minimum recommended rates/prices for its guides from the association's website. The report also recalls that a software services provider as well as five motor insurers entered into Agreements and Undertakings with the CCPC in relation to alleged information sharing. The number of complaints which the CCPC received relating to "suspected breaches of competition law" was 80 which is down on many previous years (in terms of the Competition Authority).
In terms of cartels and alleged cartels, the CCPC indicated that it worked during 2016 on (a) an alleged bid rigging case in the flooring sector which was due to come to trial in 2017 (and has done so resulting in convictions) and (b) an investigation into potential bid rigging in the procurement of publicly funded transport services in the south and east of Ireland including the impressive scale of searches in the case (20 locations in July 2016) (a case which is on-going).
In regard to motor insurance, the report recorded that it had received a significant number of complaints in regard to the motor insurance sector generally (some 1,204 complaints during 2016). It also mentioned that it had commenced "an investigation into potential anti-competitive price signalling in the market." The report also recalls that the CCPC engaged in October 2015 with Insurance Ireland (an association of insurers) with regard to concerns about price signalling; the report states that:
"[no] enforcement action was required at the time [ed., i.e., in 2015] but we implemented a strategy to more closely monitor the sector in order to establish whether there are grounds for suspecting a breach of competition law. Our market surveillance culminated in the commencement of an investigation in 2016. We noticed that a number of industry participants were openly announcing up-coming increases in motor insurance premiums in the State. The CCPC was concerned that this type of practice could allow competitors on the market to strategically alter their conduct in response. This type of practice, if proven, may amount to a form of anti-competitive conduct known as a 'concerted practice'. A concerted practice removes the uncertainty of market player's conduct, which is characteristic of competitive markets."
The report mentions briefly the on-going investigation into alleged anti-competitive practices in the bagged cement sector. The report recalls that an inspection was conducted in May 2015 but those subject to the inspection argued successfully in the Irish High Court that some of the emails seized were not related to the business being inspected. The report recalls simply that on "5 April 2016 the High Court ruled against the CCPC, following which in May of that year, we were granted leave to appeal to the Supreme Court." The CCPC did not comment further - perhaps because the case was sub judice. (The Supreme Court dismissed the CCPC's appeal in 2017 and it is hoped that the CCPC will issue guidance or commentary on how the CCPC will address the implications of the Supreme Court judgment and deal with the issue more extensively in next year's annual report as well as sooner.)
The report also mentions the CCPC's investigation into the activities of the Irish Property Owners' Association (an association of private rental accommodation landlords). Following a change in Government policy on rented accommodation, the association issued a press release stating that property owners were considering a range of potential measures including the introduction of a number of new charges to tenants and the withdrawal from certain State-sponsored rental schemes. The IPOA agreed to withdraw the press release, remind members of the need for independent action (i.e., not collective action) and to introduce a compliance programme.
Merger control continued to be a significant part of the CCPC's work during 2016. There were 67 merger notifications (Ireland operates a compulsory regime for transactions involving parties with turnovers above prescribed statutory levels). The number of 67 notifications in 2016 was down on the 78 notified in 2015. The CCPC made 70 merger determinations during 2016 (including on some notifications made in late 2015) with one of those 70 determinations being a Phase 2 determination (all the others were Phase 1 determinations). Some 65 transactions were cleared within 30 working days of the notification with four being dealt with in an extended Phase 1 investigation (Paddy Power/Betfair, Uniphar/Murray Medical, Bons Secours/Barringtons Hospital and INM/CML) and one other case (PandaGreen/Greenstar) being a full Phase 2 case. The shortest Phase 1 case was dealt with in 12 working days. There were two notifications involving commitments by the parties: one relating to Bons Secours/Barringtons Hospital and the other relating to PandaGreen/Greenstar. Five of the notifications were from the media sector where the minimum turnover thresholds do not apply. One merger notification was withdrawn and, interestingly, the CCPC's report stated that its "competitive assessment had been completed on the proposed transaction and therefore the parties forfeited the filing fees." Somewhat curiously, the "merger notifications" page was the second most visited webpage on the CCPC's website.
The report highlights that a "key priority for 2017 is to take enforcement action against firms engaging in information sharing and anti-competitive agreements."
The report also identifies bid-rigging and the need to prepare for the implications of Brexit and the need to keep Ireland attractive to foreign direct investment. On Brexit specifically, the CCPC makes the observation:
"The most fundamental challenge ahead for Ireland’s markets and for our work will be the impact of Britain’s exit from the European Union. From an economic point of view, most of the focus in Ireland to date has been on exports – understandably so, given that Ireland is a small open economy with a very high level of international trade. We also are concerned about the impact of Brexit on imports - in particular, the potential for both tariff and non-tariff barriers to raise prices and reduce choice for consumers. As an organisation, we will be ready to anticipate and react to the changing circumstances. Given Ireland’s history and geographic location, Brexit obviously raises serious issues regarding the free movement of people, the possible reinstatement of a hard border and the impact on competitiveness. The CCPC will have to be a strong advocate on behalf of consumers, as well as a respected enforcer against breaches of the law. To support our work we intend to commission research to quantify the potential impact of Brexit on everyday consumer goods."
Much of the report is about internal organisational matters. The report contains some interesting facts; for example, during 2016, some 33 new roles were filled during the year while around 40% of the CCPC's staff were new to the organisation or newly promoted within the organisation.
The 2016 report recalls some of the developments in 2017 which were positive from the CCPC's perspective including the opening of a major investigation in the ticketing sector, the closure of an investigation into a trade association, the on-going alleged price signalling case in the motor insurance sector, a conviction for bid rigging in the flooring sector and, from the consumer perspective, the first custodial sentence for car clocking.
The annual report reiterates the CCPC's long-standing call for the ability to impose sanctions by itself (i.e., without the need for a court to do so). (The Irish regime has the deliberate safeguard of having courts, rather than investigative or administrative agencies, impose serious criminal penalties.). The CCPC calls the fines which it would impose "administrative fines" but it is difficult to see how such penalties would differ, in reality, from the criminal fines which would be imposed by courts. The CCPC (like the Competition Authority did for many years) continues to call for the ability to impose "administrative fines" and not just rely on the established route of the CCPC instituting civil proceedings or the Director of Public Prosecutions instituting criminal prosecutions in the courts. It is quite likely that so-called "civil fines" imposed by the CCPC would be appealed to the courts so it is unlikely to be an efficient regime unless the addressee of the fine accepts the penalty (as happens with some sectors). It is a long-standing call by the Competition Authority/CCPC which does not attract widespread support and may even require, according to some commentators, a change in the Irish Constitution which would involve a referendum among Irish voters.
The report also shows that the CCPC takes an active part in the international networks involved in competition law enforcement including attending 24 European Competition Network meetings, 6 OECD meetings and 4 International Competition Network meetings.
In the area of consumer protection, the report identifies telecommunications, motor vehicles/personal transport and clothing/footwear/accessories issues as being the top three issues in terms of consumer contacts with the CCPC.
The CCPC was established in 2014 by way of a combination of the Competition Authority and the National Consumer Agency. The report just published indicates that the CCPC is still working on the integration of the agencies. This arduous integration process must be a distraction for the CCPC so hopefully this report will mark the last which deals with the integration process. It is a fortunate agency to have a growing number of staff.
No enforcement agency is always successful. If it is entirely successful in bringing civil or criminal cases then it is only taking the easy cases. So the CCPC should not be deterred from taking the more difficult cases. It has suffered setbacks (including since the publication of this report (e.g., the Irish Cement judgment of the Supreme Court in 2017) but there is a great deal in this report to indicate hope and progress in terms of competition and consumer protection enforcement in Ireland.
The 2016 report shows an impressive and sustained increase in the activity level of the CCPC. There were some years when it underachieved compared to its previous and potential performance levels. The CCPC still suffers from being ranked in the lowest grouping of competition agencies internationally according to the Global Competition Review and having been criticised by various politicians (which, according to some, may be a badge of honour for a competition agency!) but this report indicates that there is a real sense of increased and sustained activity and a "turning of the corner" by the Irish agency.
Date Published: 11 September 2017