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What is the general attitude of business and the authorities to competition compliance?
Compliance with competition law is an important issue for businesses operating in Ireland today. This is particularly the case given the active role the Competition and Consumer Protection Commission (CCPC) has taken in respect of competition enforcement since its establishment in 2014. According to its most recent annual report, the CCPC received 80 allegations of competition breaches in 2016 (the most recent year for which data is available). The CCPC also recently initiated a number of investigations across a wide range of industry sectors, including private motor insurance, concert and event ticketing, bagged cement and rural transport among others. In addition to the CCPC’s enforcement remit, the Irish Competition Act 2002 (the 2002 Act) provides for criminal penalties for infringements of competition law, so there is a strong incentive for businesses to ensure that their conduct and compliance programmes are in order.
Government compliance programmes
Is there a government-approved standard for compliance programmes in your jurisdiction?
There is no government-approved standard for competition compliance programmes in Ireland - essentially it is a matter for individual businesses to decide how best to structure and manage their own compliance programmes. However, the CCPC strongly encourages businesses to have in place robust compliance programmes and, to assist in that aim, has published guidance for businesses and trade associations on complying with competition law. This guidance outlines steps for designing competition law compliance programmes and suggests topics that a compliance programme should cover.
Applicability of compliance programmes
Is the compliance guidance generally applicable or do best practice and obligations depend on a company’s size and the sector of the economy it operates in?
Irish competition law applies across all sectors, irrespective of the size of individual businesses or the overall scale of relevant markets. The CCPC has recently conducted investigations into some of the largest companies in the state (eg, in relation to bagged cement) as well as small local operators of public transport services. As the CCPC can investigate any area of commerce in Ireland to ensure protection of consumer welfare, it is important for all businesses, irrespective of scale, to be aware of their obligations under applicable competition rules and have in place an appropriate compliance policy.
If the company has a competition compliance programme in place, does it have any effect on sanctions?
The existence of a competition compliance programme may be a mitigating factor in relation to sanctions were a criminal prosecution to be successfully brought. The importance of a compliance programme has recently been demonstrated in the cases of the Irish Property Owners Association (2017) and Nursing Homes Ireland (2018), where the CCPC closed its investigations on receipt of a commitment, among others, from the relevant association to put in place a competition compliance programme, in particular relating to matters that may and may not be discussed by its members.
Implementing a competition compliance programme
Commitment to competition compliance
How does the company demonstrate its commitment to competition compliance?
The ‘tone from the top’ is important for a successful compliance programme - it is vital that senior managers adopt a clear policy of compliance for their company in relation to competition law, and apply that policy rigorously and consistently in their business dealings, commercial contracts, interactions with competitors and customers and their internal review and audit procedures. Businesses that adopt the correct tone and follow through on compliance policies are likely to be able to identify and minimise competition risks, while at the same time demonstrating commitment to compliance.
What are the key features of a compliance programme regarding risk identification?
A successful compliance programme will ensure that company employees are aware of their obligations under competition law, can identify when issues are likely to arise (or when an issue has arisen) and have a clear and effective way of reporting concerns to the legal team (or other function within the business) designated to deal with the issue.
It is, therefore, very important for companies to have an effective and tailored competition compliance programme in place, which focuses on the areas of potentially higher risk for the company (eg, sales personnel who are involved in pricing or personnel that interact on a regular basis with competitors) and sets out in clear practical terms what employees can and cannot do in relation to competition. Regular training sessions for relevant staff that are tailored to address how the rules apply in practice to their day-to-day activities are also an important means of maintaining awareness of the relevance of competition law to the business and, overall, to nurturing a culture of competition law compliance.
What are the key features of a compliance programme regarding risk assessment?
Compliance programmes can feature greater or lesser degrees of sophistication when it comes to identifying risk within the business. The key thing is that compliance checks are done regularly, recorded accurately and that compliance monitoring is tailored to the particular features and areas of risk of the business, if necessary in conjunction with external lawyers. It is also important that key decision makers within the business are familiar with the company’s compliance obligations, so that risks can be assessed and decisions taken at the appropriate level in an efficient manner.
Companies can choose many different ways to test compliance, such as via audits by in-house compliance specialists or external counsel. Internal reviews and audits are an effective way for a business to ‘look under the bonnet’ and check whether the business is operating in a manner that does not give rise to antitrust risk. Similarly, simulation dawn raids provide an insight into how the business would cope with a real dawn raid and allows the business to test run its procedures in practice. We see increasing use of these compliance tools by clients across all industry sectors.
What are the key features of a compliance programme regarding risk mitigation?
Generally speaking, the features of the compliance programme relevant for risk identification will be important in mitigating substantive risk. In particular, a tailored and effective compliance programme with appropriate training is essential to mitigating competition risks arising within the business. Of equal importance is the ability for the company to identify problems and react quickly and appropriately (including by putting an end to the relevant conduct in advance of an investigation by a regulatory authority, or by assisting in considering what further steps to take with the CCPC or another authority, such as the European Commission).
Compliance programme review
What are the key features of a compliance programme regarding review?
The basic principles relevant to ensuring effective risk assessment will also be highly relevant to review. It is important that the results of compliance programmes and reviews are made available to relevant decision makers and that any recommended actions are acted upon promptly and their implementation reviewed on a regular basis.
Dealings with competitors
Arrangements to avoid
What types of arrangements should the company avoid entering into with its competitors?
Section 4 of the 2002 Act, which is based on Article 101 of the Treaty on the Functioning of the European Union (TFEU), prohibits agreements and concerted practices that have as their object or effect the prevention, restriction or distortion of competition in the state (ie, the Republic of Ireland), or any part of the state. Section 4 contains a non-exhaustive list of agreements that are prohibited in particular, namely those that (i) directly or indirectly fix purchase or selling prices or any other trading conditions; (ii) limit or control production, markets, technical development or investment; (iii) share markets or sources of supply; (iv) apply dissimilar conditions to equivalent transactions with other trading partners (thereby placing them at a competitive disadvantage); and (v) make the conclusion of contracts subject to acceptance by other parties of supplementary obligations that have no connection with the subject matter of the contracts.
While certain forms of collaboration between industry players (such as in relation to research and development) may lead to more efficient use of resources, or benefits for consumers, businesses operating in Ireland need to exercise caution when entering into agreements with competitors. As such, they should review carefully with their legal advisers any agreements with competitors to ensure the agreements are compatible with competition law.
What precautions can be taken to manage competition law risk when the company enters into an arrangement with a competitor?
As noted above, companies should obtain legal advice before entering into any form of agreement with a competitor to ensure that the terms of the agreement are in compliance with applicable competition rules. This is the clearest means of avoiding difficulties at a later stage.
Even in circumstances where the agreement raises no issues under competition law, businesses need to be careful to ensure that interactions with competitors (either under the guise of the agreement or more generally) do not stray beyond acceptable boundaries. They therefore need to be kept under careful review. In addition, there are a number of practical precautions that can be taken - for example, by ensuring that (i) appropriate training and guidance is in place for employees that may be required to interact with competitors; and (ii) any interactions between the company and its competitors are fully documented with the terms of any interaction clearly set out and keeping clear of any discussions relating to areas such as pricing and sales strategy.
What form must behaviour take to constitute a cartel?
Section 6(1) of the 2002 Act provides that a company that enters into, or implements an agreement or decision, or engages in a concerted practice that is prohibited by section 4(1) (or by article 101 TFEU) is guilty of an offence. Section 6(2) of the 2002 Act provides for a presumption that an agreement, decision or concerted practice between competing undertakings the purpose of which is to directly or indirectly fix prices, limit output or sales or share markets or customers has as its object the prevention, restriction or distortion of competition in the state (or the EU as the case may be).
There is no requirement under the 2002 Act for an anticompetitive agreement to be documented in writing in order to be prosecuted as a cartel. Section 4 applies equally to concerted practices and decisions by associations of undertakings as it does to more formal agreements between competitors. While the 2002 Act requires that the parties involved have actually entered into an agreement that infringes section 4, this is not a ‘bright line test’ and the exchange of competitively sensitive information between competitors can be sufficient to give rise to a finding of a breach of section 4 of the 2002 Act.
Under what circumstances can cartels be exempted from sanctions?
Membership of a cartel is regarded as a hardcore breach of competition law and a serious criminal offence. Potential sanctions include substantial fines, potential imprisonment for individuals and disqualification as a company director. With the exception of the Cartel Immunity Programme (described in more detail below), there are no general exemptions or derogations available under Irish law to allow companies to participate in an otherwise unlawful cartel.
However, a number of defences are available to companies prosecuted under the cartel offence in the 2002 Act, namely where the defendant can prove that:
- the agreement, decision or concerted practice did not contravene the prohibition set out in section 4(1) because the ‘efficiency’ criteria set out in section 4(5) were met. These criteria, which are identical to those set out in article 101(3) TFEU, apply to agreements that contribute to improving the production or distribution of goods or services or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit, and do not;
- impose on the undertakings concerned terms that are not indispensable to attaining these objectives; and
- afford undertakings the possibility of eliminating competition in respect of a substantial part of the products or services in question;
- the agreement did not contravene article 101(1);
- there was in force, at the time of the alleged infringement, an exemption for the relevant agreement granted by the European Commission under article 101(3) TFEU; or
- the relevant agreement benefited from the terms of an exemption granted provided for by, or granted under, a regulation made by the European Commission or Council under article 101(3) (ie, a block exemption).
In practice, these defences are of limited benefit, as hardcore breaches of competition law (eg, with respect to price fixing among competitors) are highly unlikely to benefit from the ‘efficiency defence’ under section 4(5) of the 2002 Act or article 101(3) TFEU. Likewise, hardcore infringements are expressly excluded from the scope of the various European block exemption regulations and their Irish equivalents.
The 2002 Act was recently amended by the Competition (Amendment) Act 2017 to provide that section 4 of the 2002 Act does not apply to collective bargaining and agreements in respect of certain categories of self-employed worker.
Can the company exchange information with its competitors?
The exchange of commercially confidential and competitively sensitive information between competitors has been found to infringe section 4 of the 2002 Act. There is no hard and fast rule as to what comprises competitively sensitive information, but generally any information regarding current or future pricing intentions, current or future commercial strategies or detailed breakdowns of sales, suppliers or customers would be regarded as highly inappropriate to share between competitors.
The issue of direct and indirect information exchange between competitors has been the focus of a number of recent investigations by the CCPC, with price signalling and other forms of tacit information exchange an area of particular focus.
Cartel leniency programmes
Is a leniency programme available to companies or individuals who participate in a cartel in your jurisdiction?
In conjunction with Ireland’s Director of Public Prosecutions (DPP), the CCPC operates a Cartel Immunity Programme (CIP). Under the CIP, the CCPC and DPP will consider applications for immunity from prosecution for criminal cartel offences from the first participant in a cartel to come forward that satisfies the CIP requirements. Companies that have taken steps to coerce another party into participating in a cartel are not eligible for immunity under the CIP.
Can the company apply for leniency for itself and its individual officers and employees?
A company may apply on its own behalf and on behalf of its employees, directors and officers who agreed to or were directed on the part of the applicant to enter into the cartel. However, the CIP states that CCPC will not recommend blanket requests for personal immunity to the DPP, so the company should identify a core list of individuals who may require individual immunity as part of its full application for immunity. Individuals who are not identified in the application but are subsequently identified as requiring immunity may be added to the list.
Can the company reserve a place in line before a formal leniency application is ready?
The CIP includes a marker system, which holds the applicant’s place pending submission of its full application for immunity. An application for a marker can be made anonymously and orally. The company will be given a short period of time to prepare its full application and ‘perfect’ the marker. If this period expires before the application is made or if the CCPC or DPP refuses the application, the company will lose its place in the queue to any other party that has made a subsequent application.
If the company blows the whistle on other cartels, can it get any benefit?
The CIP is available only to the first cartel member to blow the whistle on the cartel. Given the nature of the enforcement regime in Ireland, the CIP does not provide for a reduction in the scope of fines to subsequent applicants, as is the case with leniency programmes in other countries. This is obviously an important factor to be taken into account when deciding whether or not to come forward, as is the fact (mentioned already) that immunity is not available to a party that coerced other parties to participate in the illegal cartel activity. A further factor is the requirement to reveal any and all cartel offences in which the applicant may have been involved and of which it is aware and not just the activity that it is blowing the whistle on.
Dealing with commercial partners (suppliers and customers)
What types of vertical arrangements between the company and its suppliers or customers are subject to competition enforcement?
Section 4 of the 2002 Act applies to agreements between parties at different levels of the supply chain. Distribution agreements which have as their object or effect the prevention, restriction or distortion of competition in Ireland are prohibited by section 4.
In practice, the CCPC’s approach to the enforcement of competition rules regarding vertical agreements is very similar to that of the European Commission. In particular, the provisions of the Vertical Agreements Block Exemption Regulation (VABER) and related guidelines are of general application in Ireland, and are, in effect, restated in a Declaration on Vertical Agreements and Concerted Practices (the Declaration) issued by the CCPC’s predecessor, the Competition Authority, in 2010. The Declaration and its associated Notice sets out guidelines for the assessment under Irish law of exclusive and non-exclusive distribution agreements, selective distribution, agency, single branding, exclusive purchasing and non-compete restrictions.
Would the regulatory authority consider the above vertical arrangements per se illegal? If not, how do they analyse and decide on these arrangements?
As is the case under article 101 TFEU and VABER (which can also apply to anticompetitive agreements in Ireland), certain restrictions are regarded as ‘hardcore’ infringements of the 2002 Act and do not benefit from the exemption set out in the Declaration, irrespective of the market shares of the participants involved. In particular, restrictions on the buyer party’s ability to determine its own sales price (ie, resale price maintenance); and subject to certain limited exceptions, the territory into which, or the customers to whom, the buyer party to the agreement may sell the contract goods or services, will not benefit from the exemption and are highly unlikely to be justifiable as a matter of Irish competition law.
The CCPC has taken a strict approach to the issue of resale price maintenance in particular in a number of cases over the past several years, notably Determination E/03/002 Statoil (concerning price support agreements in the motor fuels sector), E/03/003 Independent Newspapers and Determinations E/03/004 Irish Times (concerning the distribution of newspapers) and E/13/001 FitFlop (concerning the distribution of footwear in Ireland). In each case, the CCPC obtained commitments from the parties involved to bring the relevant practices to an end. In FitFlop, the CCPC also required territorial restrictions set out in relevant distribution agreement (including a ban on sales outside Ireland) to be brought to an end.
Under what circumstances can vertical arrangements be exempted from sanctions?
The Declaration is equivalent to the European Commission’s block exemption as set out in the VABER. The exemption set out in the Declaration applies to agreements in circumstances when the market shares of the supplier and the buyer do not exceed 30 per cent. For buyers and sellers falling outside this ‘safe harbour’, the agreements in question need to be examined on their individual merits, to determine whether they give rise to any anticompetitive effects.
However, as noted above, ‘hardcore’ restrictions of competition law, such as price fixing and certain types of sales restrictions, do not benefit from the exemption. In addition, section 4(3) of the 2002 Act (which is in equivalent terms to article 101(3) TFEU) is highly unlikely to apply to these agreements, as their anticompetitive effects outweigh any alleged efficiencies that may arise. However, unlike the VABER, there is no specific exemption for retailer buyer pools in the Declaration and there is no de minimis exemption for so-called agreements of minor importance under Irish law.
How to behave as a market dominant player
Determining dominant market position
Which factors does your jurisdiction apply to determine if the company holds a dominant market position?
The assessment of dominance under section 5 of the 2002 Act necessitates as a first step the defining of the relevant product and geographic market, by examining both demand-side and supply-side substitutability. The form of analysis is, in all material respects, identical to the assessment of dominance under article 102 TFEU.
A number of factors must be taken into account in assessing whether a particular company has a dominant position on a relevant product or geographic market. While not determinative, the CCPC and the courts will take into account the company’s market shares. In general, dominance is unlikely where the company in question has a share of 40 per cent or less of the relevant market. Above that level, the higher the market share the greater the likelihood of being held to be dominant. However, the CCPC and the courts will also look at market share trends over time and the strength of the other players in the relevant market. Other relevant factors include evidence of low barriers to entry and expansion (with recent actual examples of such entry or expansion being particularly persuasive), as well as the countervailing bargaining strength of the company’s customers.
Abuse of dominance
If the company holds a dominant market position, what forms of behaviour constitute abuse of market dominance? Describe any recent cases.
Section 5 of the 2002 Act prohibits any abuse by one or more undertakings of a dominant position in trade for any goods or services in the state. Section 5(2) sets out a non-exhaustive list of abuses that the 2002 Act prohibits in particular. These comprise: 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); and making the conclusion of contracts subject to the acceptance by other parties of supplementary obligations that by their nature or according to commercial usage have no connection with the subject of such contracts. The abuse of a dominant position is a criminal offence pursuant to section 7 of the 2002 Act.
While the CCPC has not pursued the prosecution of any companies for abuse of a dominant position under criminal enforcement powers to date, it has been very active in the area of civil enforcement with respect to such abuses. The CCPC (and its predecessor the Competition Authority) has taken action in cases involving tying and bundling, margin squeeze, predatory pricing, rebates and discounts leading to foreclosure of rivals and refusal to supply, among others.
In general terms, the CCPC adopts a similar approach to investigations to the European Commission and will typically focus its attention on the economic effect of particular behaviours by dominant companies. The CCPC has also examined in some detail allegations of abuse of dominance against state bodies (such as the Health Service Executive) and semi-state companies (such as the national public service broadcaster RTÉ and the state postal service provider An Post), and taken civil enforcement actions against these bodies in certain cases.
Under what circumstances can abusing market dominance be exempted from sanctions or excluded from enforcement?
While there are no blanket exemptions applicable to section 5 of the 2002 Act, the CCPC will examine the object and effect of an alleged abuse in order to determine whether a breach of section 5 has arisen. In undertaking this assessment, the CCPC will look to develop a coherent ‘theory of harm’ as to whether the behaviour in question damages consumer welfare. Consistent with the approach adopted by the European Commission, the CCPC will also consider whether there is an objective justification - such as enhanced efficiency - underlying the behaviour in question (other than being commercially advantageous for the dominant company), but it is for the company itself to establish evidence of this objective justification, which the CCPC can then balance against the potential harm arising.
Competition compliance in mergers and acquisitions
Competition authority approval
Does the company need to obtain approval from the competition authority for mergers and acquisitions? Is it mandatory or voluntary to obtain approval before completion?
Where the relevant thresholds are met, approval of the CCPC must be obtained prior to completing any of the following transactions:
- a merger of two or more previously independent undertakings;
- the acquisition of (direct or indirect) control over the whole or part of one or more undertakings by another undertaking or by one or more individuals who already control one or more other undertakings;
- the acquisition of assets (including goodwill) that constitute a business to which turnover can be attributed (which can include a property generating rent); or
- the creation of a joint venture to perform, on a lasting basis, all the functions of an autonomous economic entity.
The relevant thresholds under Irish law are met if, in the last financial year:
- the aggregate turnover in the state of all of the undertakings involved is not less than €50 million; and
- the turnover in the state of each of two or more of the undertakings involved is not less than €3 million.
All ‘media mergers’ that fall under the scope of the 2002 Act must be notified to the CCPC, whether or not the financial thresholds are met. Following approval by the CCPC, ‘media mergers’ must also be notified to the Minister for Communications, Climate Action and Environment for approval under a plurality of media test.
Each of the undertakings involved bears a responsibility for making a filing, but they can choose to submit a joint filing and usually do so. A filing can be made when one of the undertakings involved has publicly announced an intention to make a public bid or a public bid is made but not yet accepted; when the undertakings involved demonstrate a good faith intention to conclude an agreement or a merger or acquisition is agreed; or in relation to a scheme of arrangement, when a scheme document is posted to shareholders.
How long does it normally take to obtain approval?
At Phase I, the CCPC has up to 30 working days from the ‘appropriate date’ in which to review the notified transaction, which can be extended to 45 working days if the notifying parties offer commitments. If the CCPC decides to open a full Phase II investigation, it has up to 120 working days from the appropriate date to issue its determination, which can be extended to 135 working days if the notifying parties offer commitments.
Generally speaking, the ‘appropriate date’ for the purposes of the review timetable will be the date of notification of the completed Merger Notification Form. However, during Phase I, the CCPC has the ability to issue a formal ‘requirement to produce information’ (RFI), which has the effect of resetting the appropriate date (and thus the review timetable) to the date on which the RFI has been complied with. The CCPC generally uses this tool sparingly, in cases where it requires more time to assess the competitive effects of a transaction, without necessarily resorting to a full Phase II review. The CCPC can also issue an RFI during the early part of Phase II, which suspends the running of the clock until the RFI is complied with.
If the company obtains approval, does it mean the authority has confirmed the terms in the documents will be considered compliant with competition law?
Where a transaction, and any ancillary restraints, has been approved under Irish merger control rules, putting the transaction, and the ancillary restraints as the case may be, into effect cannot be held to breach sections 4(1) or 5 of the 2002 Act.
Notifying parties are required to give details of any ancillary restraints as part of the Merger Notification Form. The CCPC will assess these contractual provisions as part of its review of the overall merger, and will generally speaking adopt the same approach in relation to this review as set down in the European Commission’s Notice on Ancillary Restraints.
To the extent any contractual provisions (such as non-compete or non-solicitation clauses) go beyond what is necessary for the implementation of the notified transaction, the CCPC can require the parties to modify the relevant provision before granting its approval. There are a number of examples of the CCPC doing this in recent years. For example, in Determination M/12/023 DSM/Fortitech, the CCPC did not accept the parties’ submission that a five year non-compete period was an ancillary restraint necessary for the implementation of the proposed transaction. The parties agreed to reduce the period of the non-compete to three years. On that revised basis, the CCPC considered the restriction to be directly related and necessary to the implementation of the proposed transaction.
Failure to file
What are the consequences for failure to file, delay in filing and incomplete filing? Have there been any recent cases?
Failure to notify the CCPC of a notifiable transaction before it is put into effect (or failure to supply information required by the CCPC within the specified period) is a criminal offence under the 2002 Act. A company or individual found guilty of an offence is liable on summary conviction to a fine not exceeding €3,000, or on conviction on indictment, to a fine not exceeding €250,000. The 2002 Act also provides that for each subsequent day that the offence continues, the parties are liable to a fine not exceeding €300 on summary conviction or up to €25,000 on conviction on indictment.
Closing a transaction prior to receipt of clearance from the CCPC is not in itself a criminal offence. However, a notifiable merger or acquisition put into effect prior to clearance is void as a matter of Irish law, meaning it is legally unenforceable.
In terms of recent cases, in August 2017, the CCPC became aware that Armalou Holdings Limited, through Spirit Ford Limited, may have acquired Lillis O’Donnell Motor Company Limited without notifying the acquisition to the CCPC. The CCPC opened an investigation into a suspected breach of the notification requirements under section 18(1) of the Act in relation to this acquisition, which was put into effect in December 2015. The CCPC accepted a notification of the transaction in February 2018 under section 18(12A) of the 2002 Act, which provides that the CCPC may accept notification of a merger or acquisition that is required to be notified to the CCPC pursuant to section 18(1) of the 2002 Act but which was purported to have been put into effect without having been notified to the CCPC. The transaction was cleared by the CCPC in March 2018 but the CCPC’s investigation into the alleged breach of the notification requirements remains ongoing.
Investigation and settlement
Under which circumstances would the company and its officers or employees need separate legal representation? Do the authorities require separate legal representation during certain types of investigations?
Both companies and individual directors can be prosecuted for infringements of the 2002 Act, and there have been a number of cases in which individual company directors were prosecuted for their role in cartels. While the High Court has previously held that an absolute ban imposed by the Competition Authority on lawyers representing multiple parties in cartel proceedings was unconstitutional, there are no specific rules (other than the usual rules in relation to lawyer conflicts of interest) regarding the circumstances in which companies and their officers or employees require separate representation. It is for individual companies and officers or employees to establish whether their interests are aligned or not, and whether separate representation may be appropriate. This assessment may evolve as the CCPC’s investigation moves forward.
For what types of infringement would the regulatory authority launch a dawn raid? Are there any specific procedural rules for dawn raids?
As can be seen from the wide variety of sectors in which the CCPC (and its predecessor) has initiated dawn raids, there are no restrictions as to either the type of infringement or the industry sector in which the CCPC can conduct unannounced inspections. While dawn raids have not been used as frequently in recent years (potentially due in part to a legal challenge to the CCPC’s inspection of the premises of Irish Cement Limited in May 2015, which has been successfully upheld by the Irish Supreme Court), dawn raids remain an important part of the CCPC’s regulatory enforcement toolkit. Some 20 unannounced inspections took place in April 2017, all in connection with the CCPC’s investigation into the procurement of public transport services in the Munster and Leinster regions of Ireland. CCPC officials also assisted the European Commission in carrying out unannounced inspections at the premises of companies active in motor insurance in Ireland in July 2017.
What are the company’s rights and obligations during a dawn raid?
Section 37 of the Competition and Consumer Protection Act 2014 (the 2014 Act) sets out the legal basis for dawn raids. Section 37 provides that pursuant to a valid warrant issued by a district court judge, authorised officers of the CCPC may conduct searches of, and seize evidence from, companies and individuals at business premises or, if authorised to do so, in private homes. Dawn raids can only be conducted on foot of a warrant. Before issuing a warrant, a district court judge must be satisfied by information on oath from an authorised officer that there are reasonable grounds for suspecting that evidence of, or relating to, the commission of an offence under the 2002 Act is to be found in the target location of the raid. The sworn evidence of the authorised officer, therefore, has to set out the factual basis underpinning the request for the warrant (although it should be noted that the CCPC’s stated position is that companies that are the subject of a raid do not have the right to see this sworn evidence at any point prior to, or during, the dawn raid itself).
The CCPC may be accompanied by members of the Irish police force (An Garda Síochána) during the dawn raid, and may use reasonable force if necessary to enter premises. The scope of the raid is circumscribed by the terms of the search warrant; however, these will usually be issued in relatively broad terms. The 2014 Act provides that authorised officers are permitted to:
- seize and retain any books, documents or records (including electronic data) relating to an activity found at premises under inspection and take any other steps that appear to the officer to be necessary for preserving, or preventing interference with such material;
- require any person engaged in the carrying on of business at the premises under inspection to state his or her name, home address and occupation, and provide to the authorised officer any books, documents or records relating to that activity that are in that person’s power or control, and to give to the officer such information as he or she may reasonably require in regard to any entries in such books, documents or records, and where such books, documents or records are kept in a non-legible form to reproduce them in a legible form;
- to inspect and take copies of or extracts from any such books, documents or records, including in the case of information in a non-legible form, copies of or extracts from such information in a permanent legible form; and
- to require a person to provide any information the authorised officer may require about individuals carrying on business at the premises or any other information about the activities being carried on at the premises that the authorised officer may reasonably require.
Companies and individuals that are the subject of a dawn raid are required not to obstruct the CCPC (see question 38), and can be compelled to answer questions legitimately put to them by authorised officers. However, the CCPC cannot compel the disclosure of legally privileged material and cannot use in evidence any information obtained by way of a self-incriminating statement.
On 29 May 2017, the Supreme Court gave judgment in relation to an appeal by the CCPC of a successful High Court challenge brought by CRH plc and others in relation to the exercise by the CCPC of its search and seizure powers during a dawn raid at Irish Cement Limited in May 2015. The Supreme Court unanimously rejected the CCPC’s appeal. The Court held that the CCPC’s proposed approach to reviewing documents seized during the dawn raid, including irrelevant and private material, would contribute to a breach of article 8 of the European Court of Human Rights (ECHR) if it were to proceed. The Supreme Court ordered that the CCPC be restrained from reviewing unrelated electronic documents other than in accordance with agreement between the parties and in accordance with article 8 of the ECHR. The case was the first challenge to the exercise by the CCPC of its powers under section 37 of the 2014 Act, and the outcome provides welcome guidance on the scope of those powers.
Is there any mechanism to settle, or to make commitments to regulators, during an investigation?
Unlike many other competition authorities across the EU, the CCPC does not have the power to impose sanctions (such as fines) for infringements of competition law. Sanctions can only be imposed by the Irish courts following successful criminal prosecution; civil fines are not available in Ireland.
For that reason, the CCPC has, in many cases, sought undertakings or commitments from parties that address competition concerns arising from an investigation. From the CCPC’s perspective, the acceptance of commitments has the benefit of addressing market behaviour without having to go to court, in particular where the conduct under investigation does not involve alleged cartel behaviour and is therefore not likely to be subject to criminal prosecution. From a company’s perspective, agreeing commitments is a way of bringing a swift and clear conclusion to the CCPC’s investigation (which is otherwise not time-limited).
What weight will the authorities place on companies implementing or amending a compliance programme in settlement negotiations?
As noted in the response to question 4, the existence of a competition compliance programme may be a mitigating factor in relation to sanctions were a criminal prosecution to be successfully brought. In addition, it may be taken into account by the CCPC in the context of agreeing commitments to address particular competition concerns raised by the CCPC. As we previously noted, the closure of the CCPC’s recent investigations into the Irish Property Owners Association and Nursing Homes Ireland was in part due to commitments by the relevant associations to put in place a competition compliance programme.
Are corporate monitorships used in your jurisdiction?
Owing to the structure of the enforcement regime in Ireland, corporate monitorships are not a feature of the system. Commitments given by companies to address competition concerns raised by the CCPC can be made an order of Court; companies are therefore under a duty to comply with the terms of the commitments or face the risk of further sanction from the High Court. In practice, the monitoring of commitments offered by parties is handled directly by the CCPC, which has the power to pursue enforcement through the High Court for non-compliance.
Statements of facts
Are agreed statements of facts in a settlement with the authorities automatically admissible as evidence in actions for private damages, including class actions or representative claims?
The rules on disclosure in competition law cases in Ireland are founded on the traditional rules of discovery, a process whereby a litigant in civil proceedings may obtain prior to the trial disclosure of documents in the possession, custody or power of another party, or occasionally from a non-party, which are both relevant to the matters in dispute and necessary to dispose fairly of the case or to save costs. While there is no definition of ‘document’ set out in court rules, the term ‘document’ is broadly defined in case law as meaning anything that contains information.
There are no specific rules regarding the admissibility of an agreed statement of facts, but it is not the case that any such statement would automatically be admissible as evidence in actions for private damages.
While there are no class action mechanisms available to potential litigants in Ireland, the Irish courts have recently seen a significant surge in private enforcement litigation, most notably following the European Commission’s decision in the Trucks cartel.
The European Commission’s Damages Directive was recently transposed into Irish law by means of statutory instrument and provides for greater clarity on the admissibility of leniency and settlement materials in the context of follow-on damages actions. However, the regulations apply only in respect of infringements that occurred after 27 December 2016 and, for that reason, are unlikely to apply directly to any cases for at least several years to come.
Invoking legal privilege
Can the company or an individual invoke legal privilege or privilege against self-incrimination in an investigation?
Legal privilege may be asserted over certain types of documents, including confidential communications passing between a lawyer and client created for the purpose of providing legal advice and documents produced in contemplation of or during legal proceedings for the sole or dominant purpose of those proceedings. The 2014 Act sets out the general principle that no person or company can be compelled to disclose privileged legal material, and the CCPC is not generally authorised to take privileged legal material. Under Irish law, communications between in-house counsel as well as external legal advisers and their clients are legally privileged.
Section 33 of the 2014 Act sets out a specific procedure for dealing with legally privileged material that may come into the possession of the CCPC during a dawn raid. This section provides that the disclosure of information generally may be compelled, or possession of it taken under the provisions of the 2014 Act, notwithstanding that the information contains privileged legal material, provided that the compelling of its disclosure or the taking of its possession is done by means whereby the confidentiality of the information can be maintained (as against the person compelling such disclosure or taking such possession) pending the determination by the High Court of the issue as to whether the information is legally privileged. As such, the 2014 Act stipulates that there be a process by which legally privileged material is identified and kept confidential with disputes settled by the High Court if necessary.
As noted in question 31, companies and individuals can be compelled to answer questions legitimately put to them by authorised officers of the CCPC. However, self-incriminating statements cannot be used by the CCPC in evidence in relation to any prosecution of an offence under the 2002 Act. It is clear from case law that the privilege against self-incrimination is protected by the Irish Constitution for individuals (ie, natural persons) in certain circumstances. Whether a corporate entity can also assert the privilege under Irish law is currently unclear. Certain legislative amendments suggest that the Irish parliament has taken the view that companies cannot avail of the privilege. The courts have not to date dealt directly with this question, but some statements by the courts suggest that they are unlikely to take an expansive view of the rights of companies in this context.
What confidentiality protection is afforded to the company or individual involved in competition investigations?
Section 25 of the 2014 Act prohibits the unauthorised disclosure by any person of confidential information obtained by him or her in their capacity as, or while performing duties as, a member of the CCPC, a member of the CCPC staff, an authorised officer or otherwise engaged by the CCPC in any other capacity. However, there are a wide range of exceptions to this general rule, notably permitting disclosure where it is authorised by the CCPC or by a member of the staff of the CCPC duly authorised to permit the disclosure; it is required by law; the disclosure is a communication made by such persons ‘in the performance of any of his or her functions under [the 2014 Act], being a communication the making of which was necessary for the performance by [such person] of any such function’; or the disclosure constitutes information, provided to any person or body listed in section 24(1), which in the opinion of the CCPC member, staff member or authorised officer, may relate to the commission of an offence whether under the 2014 Act or not.
Information obtained by the CCPC during a dawn raid may be subject to further onward disclosure in two circumstances in particular.
First, section 24 lists 16 other agencies within the Republic of Ireland, including the police, the Office of the Director of Corporate Enforcement, the Revenue Commissioners, and the Central Bank of Ireland, to whom confidential information in the possession of the CCPC may be disclosed. While the 2014 Act does not impose a positive duty on the CCPC members, staff or authorised officers to disclose such information, it authorises them to do so where they believe it may relate to the commission of an offence unrelated to competition law. Section 24(2) provides ‘notwithstanding any other law’ for reciprocal disclosure to the CCPC of confidential information held by the agencies listed in section 24 where they consider the information may relate to an offence under the Competition Acts.
Second, section 23 of the 2014 Act provides the CCPC may, with the consent of the Minister for Jobs, Enterprise and Innovation, enter into arrangements with a ‘foreign competition or consumer body’ whereby the CCPC may furnish to the other agency ‘information in its possession’ if the information is ‘required by that agency for the purpose of performance by it of any of its functions’. The CCPC is a member of the European Competition Network and cooperates closely with other competition agencies across the EU. Article 12 of EC Regulation 1/2003 provides that, for the purposes of applying articles 101 and 102 TFEU, the European Commission and national competition authorities (including the CCPC) shall have the power to provide one another with and use in evidence ‘any matter of fact or of law, including confidential information’. However, with regard to the use in evidence of that information, this power is expressly limited to being ‘for the purpose of applying articles 101 or 102 TFEU and in respect of the subject matter for which it was collected by the transmitting authority’.
Refusal to cooperate
What are the penalties for refusing to cooperate with the authorities in an investigation?
Failure or refusal to cooperate with a CCPC investigation is a serious matter and can result in criminal sanctions being imposed. Section 35 of the 2014 Act makes it a criminal offence for any person to: obstruct or impede an authorised officer (of the CCPC) in the exercise of his or her powers under the 2014 Act in relation to an investigation; without reasonable excuse, fail to comply with a request or requirement of an authorised officer under the 2014 Act; or give information that is false or misleading in any material respect in purported compliance with a request or requirement from an authorised officer. A person found guilty of an offence under this section is liable to potential fines and, on indictment, to imprisonment for a term not exceeding three years.
Is there a duty to notify the regulator of competition infringements?
As noted in the response to question 15, the CIP allows for a mechanism by which a participant in a cartel can blow the whistle on a cartel in order to avail of potential immunity from prosecution.
While there is no general duty under Irish law to report or notify the CCPC of a competition infringement, it should be noted that the offence under section 6 of the 2002 Act of engaging in an agreement to fix prices, limit output or share markets (ie, a serious cartel offence) is designated a relevant offence under the Criminal Justice Act 2011. This means that it is a criminal offence for any person to fail to disclose to An Garda Síochána, as soon as practicable, information that he or she knows or believes might be of material assistance to An Garda Síochána in relation to the prevention of the commission or investigation of a serious cartel offence by another party or parties. This offence is punishable by fines of up to €5 million or imprisonment, or both.
What are the limitation periods for competition infringements?
There is no limitation on the CCPC’s ability to initiate an investigation into alleged anticompetitive conduct and there is no statutory time frame in which the CCPC must complete an investigation. In respect of private enforcement actions, in general a six-year limitation period starts to run from the date of accrual of the cause of action. The regulations implementing the EU Damages Directive in Ireland have introduced new rules on limitation periods, including when these begin to run and when they can be suspended. However, as noted above, the regulations apply only in respect of infringements that occurred after 27 December 2016.
Are there any other regulated anticompetitive practices not mentioned above? Provide details.
Companies operating in regulated industries (such as telecoms, aviation, energy, broadcasting etc) in Ireland are subject to sectorial regulation. The competent sectorial regulators take competition law principles into account in their assessment, for example, in relation to whether particular operators have significant market power, and have substantial enforcement powers in their own right. Companies operating in these sectors should be conscious of their obligations.
Are there any proposals for competition law reform in your jurisdiction? If yes, what effects will it have on the company’s compliance?
Competition law in Ireland was substantially overhauled as a result of the 2014 Act, with the amalgamation of the then Competition Authority and National Consumer Agency into a single authority, the CCPC. While the CCPC continues to keep its activities under review, and press for legislative changes where appropriate, at the time of writing there are no firm plans for further reform in Ireland in the near future.
In relation to competition investigations, the Supreme Court’s decision in CRH plc and Others v CCPC is likely to have significant implications for the way in which the CCPC exercises its powers of search and seizure in the context of a dawn raid. In light of the Supreme Court finding against the CCPC in its decision, we would expect to see additional guidance from the CCPC in setting out its approach to the exercise of its powers under the 2014 Act, although no such guidance has been issued as at the time of writing. Any such guidance, in turn, will have implications for companies in relation to their response to dawn raids and competition compliance programmes generally.
As noted in question 35, the EU Damages Directive was transposed into Irish law in 2017. The overall impact of the Directive is likely to be limited, as most of the key provisions relating to disclosure and limitation periods in particular were already provided for under Irish law. Moreover, while the provisions of the Directive have largely been transposed verbatim, an interesting feature of the implementing regulations is that they apply only in respect of infringements that occur after 27 December 2016. Given the length of time it is likely to take for such infringements to come to light and be determined, it is likely to be several years before the regulations take effect in practice in Ireland.
As regards proposals for reform, in September 2017, the Department of Business, Enterprise and Innovation launched a public consultation on a review of certain provisions under the 2002 Act relating to mergers and acquisitions. The consultation closed in November 2017. While the consultation focused on specific aspects of the merger control regime, in particular the financial thresholds, respondents were also invited to comment on any other aspects of the merger control provisions of the 2002 Act that they wished to raise. The outcome of this consultation could generate proposals for further reform of the Irish merger control regime.