On 30 May 2011, the jury in the Irish Rail “hedgecutters” bid-rigging trial returned a not guilty verdict against Mr John Joe McNicholas, Mr Oliver Dixon and Oliver Dixon (Hedgecutting & Plant Hire) Limited (the “Defendants”). The case, taken by the Director of Public Prosecutions, was heard by Mr Justice Cooke in the Irish Central Criminal Court.
The central allegation was that the Defendants had entered into an anticompetitive arrangement to fix prices in the context of a competitive Irish Rail tender process, contrary to section 4(1) of the Competition Act, 2002 (the “Act”), which is based on, and applied by analogy with, Article 101(1) of the Treaty on the Functioning of the European Union. An arrangement is anticompetitive where it has as its “object or effect” the prevention, restriction or distortion of competition or trade in any goods or services in Ireland. In particular, the Act prohibits agreements which directly or indirectly fix purchase or selling prices.
In charging the jury in the case, Mr Justice Cooke highlighted that such agreements constitute a criminal offence under Section 6 of the Act and that the criminal standard of proof had to be met (i.e. proof beyond reasonable doubt). On conviction, the Act provides for criminal penalties of up to five years in prison (for individuals) and fines of up to €4 million or 10 per cent of aggregate turnover (whichever is the greater) for individuals and undertakings. Whilst a number of criminal convictions have been recorded in this jurisdiction to date, no custodial sentences have been imposed, although recent judicial comment strongly supports the use of custodial prison sentences in competition law cases (in particular the comments of Mr Justice McKechnie in the case of D.P.P. v Patrick Duffy).
During the trial, the jury heard evidence that Irish Rail had launched a tender process in 2006 for the award of a contract for the provision of vegetation clearance services along parts of the then disused Ennis, County Clare to Athenry, Country Galway railway line, which was to be brought back into use as part of a “western rail corridor”. Ten companies, including the Defendants, were invited to submit a tender. However, the tender process was suspended following the receipt by Irish Rail of widely varying bids. This prompted Irish Rail to convene a meeting of the relevant bidders at Athenry railway station in early 2007 in order to review the tender specifications.
The prosecution alleged that, at the conclusion of this meeting, and after the departure of the Irish Rail official, further discussions took place between the bidders. During the course of these discussions, the Defendants allegedly sought to agree to fix prices by instructing the others not to bid below a certain level and threatening violence against any of the bidders who failed to comply. The alleged discussions were said to have been concluded with a series of handshakes to signal a concluded agreement.
In the days immediately following this meeting, four of the bidders withdrew their tenders and reported what had happened to Irish Rail. The tender process was subsequently terminated. These four bidders were ultimately successful in the award of the contract.
In their defence, the Defendants denied the accusations alleging that the four “reporting” bidders had in fact concocted those accusations specifically to ensure that they would secure the contracts in question. Irish Rail’s procurement policy in this instance also came under attack for breach of guidelines issued by the Irish Competition Authority (broadly that potential tenderers for contracts should not be allowed to know who their competitors were).
The jury acquitted the Defendants on a majority verdict.