Trade Associations' statements need to comply with Competition Law
Trade Associations’ statements need to comply with Competition Law
On 20 January 2017, Ireland's Competition and Consumer Protection Commission ("CCPC") announced that it had concluded its investigation into an association of landlords which had issued a statement about proposed Government legislation.
The CCPC is Ireland's primary competition agency. It has powers to investigate possible breaches of competition law but does not have the power to impose fines because such a power is reserved to courts only (and not administrative bodies such as the CCPC) as a matter of Irish constitutional law.
The Irish Property Owners Association ("IPOA") is a national association representing approximately 5,000 providers of private rented accommodation (i.e., property landlords) across Ireland.
The Irish Government proposed legislation introducing rent controls in the private residential rental sector. In December 2016, the IPOA released a press statement in response to this proposal. In the statement, the IPOA stated that following a meeting of its members, property owners were considering a range of potential measures, including the introduction of a number of new charges to tenants and the withdrawal from State-sponsored rental schemes. The CCPC then initiated an investigation.
While details of the investigation have not been published, presumably, it was based on section 4 of the Competition Act 2002 (the "2002 Act") – this is the Irish equivalent of Article 101 of the Treaty on the Functioning of the European Union. The section states that “…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 are prohibited and void …” Section 4 prohibits, as a general rule, a trade association (e.g., as an association of undertakings) from co-ordinating the business conduct of its members (including the terms and conditions under which they are prepared to supply a product or service) where the practice would have the object or effect of preventing, restricting or distorting competition.
The investigation was closed when the IPOA agreed to enter into an Agreement and Undertakings with the CCPC, under which the IPOA has given binding commitments:
(a) to retract the press statement and to make no further reference to the contents of the press statement, whether publicly or to members of the IPOA;
(b) to inform, in writing, members of the IPOA that the IPOA has retracted the press release and to remind, in writing, members of the IPOA that the setting of rents and charges in the private rental sector are matters for individual landlords and their tenants;
(c) to introduce a competition law compliance training programme to members of the IPOA Committee by the end of June 2017 and report details of it to the CCPC; and
(d) not to issue recommendations or suggestions to, or otherwise seek to influence decisions of, members of the IPOA or other landlords in the private rental sector with respect to the setting of rents and charges and terms and/or withdrawal from State-sponsored rental schemes and/or any recommendations that have similar effect.
The CCPC Chairperson, Isolde Goggin, said on 20 January 2017: "the CCPC views any attempt to co-ordinate business conduct very seriously as invariably consumers will suffer. Following the release of the IPOA’s media statement in December 2016, we opened an investigation and we have worked with the IPOA to bring about an effective and efficient resolution. The commitments provided by the IPOA allow for a swift conclusion of our investigation and importantly, ensure the IPOA’s commitment to fostering a culture of competition law compliance within its organisation and membership. While trade associations have the right to represent the interests of their members, it is important that they not only take an active role in ensuring their own compliance with competition legislation, but they must not allow or facilitate commercially sensitive discussions between their members. This investigation sends a warning to all trade associations and businesses that they must comply with competition legislation.”
It is clear that the CCPC believed, quite understandably, that private residential landlords are undertakings within the meaning of section 3 of the 2002 Act and under EU competition law. This is interesting because many of the landlords might be part-time or small landlords (e.g., employees who are also letting out a single property) but they are still subject to competition law.
The conduct of trade associations has been the subject of several competition related investigations. This appears to be an unusual example of a trade association settling a case in return for, among other things, agreeing to establish and implement a competition law compliance programme.
For further information, contact Dr Vincent Power or any member of the EU, Competition & Procurement Group at A&L Goodbody.