The Central Criminal Court has convicted and sentenced a company and its director for engaging in bid-rigging. This is the first criminal conviction for bid-rigging in Ireland. The conviction demonstrates how important it is for Irish companies to be aware of their obligations under competition law.
Details of the case
Following an investigation by the Competition and Consumer Protection Commission (CCPC), the Central Criminal Court convicted and sentenced both Aston Carpets & Flooring (Aston) and one of its directors, Brendan Smith, for engaging in bid-rigging in the procurement of flooring contracts for major international companies between 2012 and 2013.
Aston and one of its competitors set prices for certain tenders and agreed to over-bid on alternating tenders. The CCPC found that there had been collusion in respect of 16 contracts. Aston’s competitor blew the whistle on the illegal activity by making an application under the CCPC’s Cartel Immunity Programme. The Programme provides immunity from fines where a member of a cartel comes forward and fully co-operates with the CCPC’s investigation, despite the fact that the whistle blower also benefited from the cartel.
During its four year investigation, the CCPC carried out so-called dawn raids where they seized emails, quotations and telephone records. As a result, Aston’s director was arrested by An Garda Síochána and detained.
What did the individuals do wrong?
Bid rigging is a hard core cartel offence prohibited by the Competition Act 2002. A cartel is an illegal agreement between two or more competitors not to compete with each other. Bid-rigging involves competitors agreeing on who will win a tender. The director was also convicted of impeding a criminal prosecution (by trying to tip off his competitor).
The Central Criminal Court imposed a €10,000 fine on Aston and a €7,500 fine on Brendan Smith. In addition, Mr Smith was disqualified from acting as a company director for 5 years and given a 3-month suspended sentence.
What can companies learn from this case?
The case highlights the importance for Irish businesses and directors to be aware of their competition law obligations and the need to put in place effective competition law compliance programmes. Companies should also take note of the existence of the CCPC’s cartel immunity programme which grants immunity from fines for a company who reveals a cartel and fully co-operates with the CCPC’s investigation.