On 28 July 2011, the Irish Supreme Court ruled that an individual employee can be tried for a breach of Irish competition law even if his employer has not been convicted of an offence.
The defendant, a Mr Patrick Hegarty, had challenged the proceedings against him on the basis that the prosecution had not first issued proceedings against his employer and secured a conviction. The defendant’s case was that he could not be convicted unless his employer had first been convicted. The Supreme Court was responding to questions referred by the Galway Circuit Criminal Court relating to criminal cartel proceedings against Mr Hegarty, a manager of Rabbit Oil. Interestingly, the Circuit Court judge had agreed with Mr Hegarty's argument, but used the consultative “case stated” procedure to ask the Supreme Court for a ruling.
Section 8(6) of the Irish Competition Act 2002 (as amended) (the “Act”), provides that where an undertaking commits an offence under section 6 and the conduct in question was authorised or consented to by a person being a director, manager or other similar officer of the undertaking, that person as well as the undertaking shall be guilty of an offence. As the alleged breach of the competition rules occurred prior to the entry into force of the Act, the Supreme Court judgment was interpreting what is now section 8(6) of the Act. It was unclear prior to the judgement whether, before an individual may be convicted under section 8(6), it must be established that the undertaking in which he or she is involved is guilty of an offence.
In his judgment, McKechnie J. noted that an “undertaking” for competition purposes can be a person, a body corporate, or an unincorporated body. Further “[T]here is nothing surprising in the concept of both non-personal undertakings and their managers/officers and like persons being exposed to criminal prosecution arising out of the same abusive conduct. Such persons are separate and distinct legal personalities and therefore no question of double punishment arises.” McKechnie J. also pointed out that analogous provisions are contained in other Irish legislation (such as section 297 of the Companies Act 1963 as inserted by s. 137 of the Companies Act 1990 and the Safety, Health and Welfare at Work Act 2005).
Further, McKechnie J. noted that there is no reference to a “conviction” having been obtained in the relevant section of the Act, rather to an ‘offence’ having been committed, and that there was no interpretative basis for importing into the section such a condition. The Oireachtas could expressly have done so but did not.
To date, there have been seventeen convictions involving ten undertakings and seven individuals in connection with the heating oil cartel (including one suspended sentence). Fines have been relatively low (ranging from €1,000 to €15,000). Currently, there is no date set for the DPP’s case against Mr Hegarty in the Galway Circuit Criminal Court – he is the last remaining defendant in the investigation.
Regardless of the ultimate outcome of the case, the Supreme Court’s judgment evinces the risks which both companies and individuals face for breaches of the competition rules. Companies should carefully consider their internal compliance programmes and procedures to ensure that directors and other relevant employees fully understand the reach of the competition rules and the penalties which they potentially face for an infringement of those rules.