On 22 December 2020, the Department of Enterprise, Trade and Employment (the “Department”) announced its intention to grant the Competition and Consumer Protection Commission (the “CCPC”) and Commission for Communications Regulation (“ComReg”) greater competition law enforcement powers through the Competition (Amendment) Bill 2021 (the “Bill”).1 The purpose of the Bill is to give effect to the European Union’s ECN+ Directive2, which requires Member States to ensure that national competition authorities (“NCAs”) are effective enforcers of competition law in the EU, such as by ensuring that NCAs can impose fines for breaches of EU competition law.
On 11 January 2021, the Department opened a Public Consultation on Aspects of the Competition (Amendment) Bill 2021 (the “Consultation”).3 The Consultation forms part of a review of a number of elements of Irish competition law, which do not come within scope of the ECN+ Directive, but which, if changed, would complement the aims of the ECN+ Directive.
On 13 January 2021, the Irish government published its Spring Legislative Programme, which includes the Bill on a list of priority legislation to be published in the Spring Legislative Session.4
The Consultation seeks views on (i) designating bid-rigging as a specific offence, (ii) changes to the prosecution of gun-jumping, (iii) covert surveillance powers for the CCPC, and (iv) a number of changes to merger control (including the power to unwind certain deals).
The Consultation seeks submissions on these topics by 5pm on 29 January 2021.
We consider each topic in further detail below.
The Hamilton Review of the Structures and Strategies to Prevent, Investigate and Penalize Economic Crime and Corruption (the “Hamilton Review”), published in December 2020, recommended that bid-rigging should be elevated to a specific offence in Irish competition law5.
As the Consultation notes, bid-rigging may take more than one form and that at present bid-rigging is considered to be a form of price fixing or market sharing, both of which are prohibited anti-competitive practices. Notwithstanding this, the Consultation states that this approach has led to difficulties in certain court cases as bid-rigging was deemed to be a separate concept outside the scope of existing anti-competitive practices prohibited by the Competition Act 2002 (the “Competition Act”).
A new provision in the Competition Act would ensure that bid-rigging is a specific prohibited anti-competitive practice, and could grant the CCPC new powers to review any competitive tendering process to determine whether bid-rigging has taken place.
Prosecution of gun-jumping
Failing to notify the CCPC of a merger or acquisition which meets the applicable turnover thresholds is an offence under the Competition Act. At present, the Director Public Prosecutions (the “DPP”) may prosecute such an offence on a summary basis or on indictment for more serious offences. However, the CCPC has no power to bring summary prosecutions for gun-jumping.
It is proposed that the CCPC would be granted the power to bring summary prosecutions, which according to the Consultation would alleviate the burden on the DPP and aim to increase enforcement of gun-jumping offences generally. In this regard, the Consultation states that, internationally, competition authorities are stepping up their efforts to combat gun-jumping by taking an increasing number of prosecution cases so as to ensure compliance with merger filing rules.
If the CCPC is granted the power to prosecute gun-jumping on a summary basis, it would align with the CCPC’s existing competition enforcement powers which currently allow the CCPC to take summary prosecution cases for certain breaches of competition rules such as in relation to cartels.
Surveillance powers for the CCPC
A further recommendation of the Hamilton Review was that bodies such as the CCPC should be granted surveillance powers similar to those granted to the Gardaí and Revenue Commissioners.
In this regard, the Department’s Bill contains provisions which would allow the CCPC to “undertake covert surveillance and consider relevant evidence, irrespective of the form in which it exists” in order to allow the CCPC to gather evidence concerning cartels and bid-rigging. This is considered necessary to combat cartels which by their nature are secretive and which now use electronic and mobile communications to operate.
In particular, it is proposed that the CCPC would have the power to:
- intercept and record electronic communications; and
- undertake video and audio surveillance of suspects.
Furthermore, the CCPC would be able to obtain a warrant at short notice for the purposes of such evidence gathering exercises.
The Consultation asks for views on the types of safeguards which should be put in place to ensure protection of rights guaranteed by the European Convention on Human Rights and the EU’s Charter of Fundamental Rights.
The Consultation seeks views on a number of proposed changes which would impact on the operation of merger control in Ireland.
First, the Department intends to clarify that the CCPC may accept voluntary notifications for completed transactions.
Secondly, it is proposed that the CCPC be given powers to make interim orders, which would prevent any action, such as integration of merging businesses, which could impede its review of voluntary notifications.
Next, it is proposed that should the CCPC find that an already implemented merger leads to a substantial lessening of competition, it may require that transaction is unwound and that there be a restoration of the pre-transaction status quo. This provision would also apply to voluntary notifications.
In relation to requirements for information and third parties, several changes are proposed. In particular, the Bill would clarify that the CCPC may make mandatory information requests (or receive information voluntarily) from a party not directly involved in the merger proceedings but which the CCPC considers may be in possession of information relevant to the CCPC’s review.
Lastly, the Bill would clarify the circumstances for when a merger clock restarts following a request for information (an “RFI”) and set out specified periods for the CCPC to determine that an RFI response is compliant.
Implementation of ECN+
The Department’s Consultation also includes an Appendix on Background Material to Forthcoming Competition (Amendment) Bill – ECN+ Directive Transposition Elements. This document summarises at a high level how the Department intends to implement the ECN+ in Ireland. In particular, the Appendix states that:
- The Department intends to harmonise aspects of Irish competition law with EU competition law. It states, “[t]he powers and sanctions that will be available arising from the transposition of the ECN+ Directive will be incorporated into national law, in so far as is possible, in order to avoid a divergence of outcomes depending on whether national or EU competition law is being applied.” In other words, Irish competition law powers will, insofar as constitutionally permissible, be ‘beefed up’ in the same way as the ECN+ provides that EU competition law powers will be.
- The legislation will:
- amend the CCPC’s dawn raid powers;
- give the CCPC the power to impose interim measures to protect competition while an investigation is ongoing;
- provide for fines (one-off and periodic) for non-criminal breaches of competition law (currently fines can only be levied following criminal prosecution); and
- put cartel immunity and leniency programmes on a statutory footing in Ireland.
Interestingly, the Appendix does not state explicitly whether the CCPC itself, or the courts, will be given the power to impose non-criminal sanction (i.e. fines) for breaches of competition law, although it states that the imposition of periodic payments “will require confirmation by the appropriate court”. The CCPC has stated clearly, publicly that it wishes the power to impose such fines itself (which the European Commission can do).
The changes proposed by the Department’s Consultation together with implementation of the ECN+ Directive have the potential to significantly alter both procedural and substantive competition rules in Ireland. The envisaged changes are broad and should assist the CCPC in its efforts to combat anti-competitive conduct.
Any changes will need to be both carefully considered and crafted. For example, a provision granting the CCPC surveillance powers would need to take account of the Supreme Court’s approach in CRH v CCPC which demonstrated that exercise by the CCPC of its enforcement powers will be subject to close scrutiny by the Irish courts.
The possibility of the CCPC being granted powers to unwind mergers that have been implemented and which were not mandatorily notifiable to the CCPC at the time of their being put into effect is a potentially very significant development in Irish competition law.
Moreover, the scope of the CCPC’s power to request information from third parties in merger proceedings will need to be precisely delineated so as to avoid any undue administrative burdens being placed on third parties to merger proceedings.
The Department’s Consultation is therefore a welcome opportunity for all stakeholders to make known their views and to help shape the future contours of Irish competition law.