The Competition (Amendment) Act 2012 (the Act) came into effect in Ireland on 3rd July 2012. The Act forms part of the Irish Government’s strategy to strengthen competition law enforcement in Ireland in line with its commitments under the EU/IMF Programme for Financial Support for Ireland.
In providing for increased sanctions and penalties, Richard Bruton, Minister for Jobs, Enterprise and Innovation has stated that the legislation “will provide a more effective deterrent and punishment for individuals or organisations who engage in price-fixing, cartels, abuse of a dominant position and other anti-competitive practices”.
Increased Penalties and Better Enforcement
The Act amends the Competition Act 2002 (the 2002 Act) by, amongst other things, doubling the maximum prison sentences available from 5 to 10 years, and increasing the minimum fines payable from €4m to €5m, for a conviction on indictment for hard core offences. It also adds breaches of competition law to the list of circumstances under which a court may make a disqualification order against a person under section 160 of the Companies Act 1990 (including restricting that person from acting as auditor, director or other officer or being in any way concerned in the promotion or management of a company).
What is likely to be of particular interest to those that suffer losses as a result of anti-competitive practice carried out by others is that where a court finds as part of a final decision that an undertaking has breached Irish competition law then the Act specifically provides that the finding shall be res judicata (cannot be raised again) in any subsequent proceedings (other than proceedings for an offence) whether or not the parties to any such subsequent proceedings are the same as the parties in the first-mentioned proceedings. This should substantially ease the burden of proof for plaintiffs taking ‘follow-on’ cases.
The potential for personal liability being incurred by a director, manager or other officer of a company (or any person who purported to act in such a capacity) has also been expanded on. Where it is proved that an undertaking is or was party to an anti-competitive agreement or has done any act that constitute an abuse, then it shall be presumed (until the contrary is proven) that each director of the undertaking and person employed by it whose duties included decision making that could affect the management of the undertaking consented to such (and so is potentially personally liable under the 2002 Act). In addition, where a person is convicted of an offence under the 2002 Act the court, unless it is satisfied there are special reasons for not so doing, must order that person to pay all the competent authority’s costs and expenses incurred in the investigation, detection and prosecution of the offence.
A more effective deterrent and punishment
Ireland is noted as being the first European county to secure a criminal conviction of a cartelist before a jury. The increased penalties and enforcement powers provided for under the Act are likely to bring Irish competition law sharply within the focus of directors, managers and officers of companies who may previously have viewed fines levied by competition authorities as being a mere cost of conducting businesses. Furthermore, the provisions in respect of ‘follow-on’ actions are noteworthy, and it will be interesting to see how they are employed in practice.
With the most recent cartelist having been convicted in Ireland in May of this year, the increased sanctions provided for under the Act, together with the new enforcement provisions, only act to emphasis the importance of having an effective competition compliance programme in place so as to mitigate against the risk of inadvertently falling foul of competition laws. The stakes are being raised !