On 18 December 2012, commitments given to the Irish Competition Authority (the “Authority”) by a party under investigation were, for the first time, made an order of the court by the Irish High Court. This was made possible by the insertion of section 14B into the Competition Act 2002 (the “Act”) by the Competition (Amendment) Act 2012.
Section 14B of the Act applies to an agreement entered into by the Authority and an undertaking following an investigation referred to in section 30(1)(b) of the Act and which requires that undertaking to do or refrain from doing such things as are specified in the agreement in consideration of the Authority agreeing not to bring proceedings under section 14A of the Act.
Following the receipt of complaints, the Authority carried out a year-long investigation into the business activities of Brazil Body Sports (“BBS”), the exclusive distributors of the FitFlop brand of footwear in Ireland, with respect to its supply of those products to retailers. Following this investigation, the Authority formed the preliminary view that BBS had infringed section 4 of the Act and Article 101 TFEU, through resale price maintenance (“RPM”) and the placing of restrictions on the making of passive sales, in particular by:
- imposing on retailers minimum or fixed resale prices for the products in issue and/or agreeing with retailers that the products be sold by retailers at a certain price or not below a certain price;
- requiring that retailers not make sales of the products through mail order, internet or other electronic media without the prior written consent of BBS; and
- requiring that retailers only resell the products to third parties within their allocated territories.
Such practices are considered ‘hard core’ restrictions of competition under both the Irish and EU antitrust rules. However, under a commitment agreement between BBS and the Authority dated 14 November 2012 (the “Agreement”), BBS agreed not to restrict retailers from deciding their own pricing policy in relation to the sale of FitFlop products. In particular, retailers would be free to decide the following at their own discretion:
- the retail price of FitFlop products;
- the time of year when FitFlop products can be discounted; and
- the level of discount retailers can apply to FitFlop products.
In return, the Authority agreed not to pursue legal action under Section 14A of the Act against BBS. With the consent of BBS, the Agreement was then made an order of the court on 18 December 2012 whereby any infringement of the Agreement by BBS will be a contempt of court. However, in accordance with section 14B, the order did not take effect until 2 February 2013, 45 days from the making of the order.
The implementation of section 14B has equipped the Authority with further ammunition in its enforcement proceedings, as it makes the consequences of breaking the commitments much more serious. More importantly, it further protects consumers from anticompetitive pricing practices.