Presentation on theme: "Competition Law Association What do I need to know about Competition Law in Ireland and what can we learn from 20 years of its operation? Dr Vincent Power,"— Presentation transcript:
1 Competition Law Association What do I need to know about Competition Law in Ireland and what can we learn from 20 years of its operation?Dr Vincent Power, PartnerA&L Goodbody25 February 2010
2 Outline of the Presentation Task is to brief you on competition law in IrelandAn overview of competition law and practiceIrish regimeAnti-competitive practicesMergers and acquisitionsCase lawWhat have been the interesting cases and lessonsfrom the two decades?
3 Why Ireland?Ireland has been connected with some interesting competition cases…United BrandsMagillHB/MarsHolyhead I and II as well as RoscoffCharleroiRyanair/Aer LingusIrish BeefSome pending State Aid decisions in the financial services sector33 convictions, first jury conviction in Europe for cartels, first jail sentences and some interesting civil cases
4 Ireland, like England & Wales, is a common law jurisdiction in the EU IntroductionIreland, like England & Wales, is a common law jurisdiction in the EUTraditional approach to competition law issues but changes in the late 1980s/early 1990sFirst Regime: Competition Act 1991 and Competition (Amendment) Act 1996Second Regime: Competition Act 2002 and Competition (Amendment) Act 2006Other legislation already in place and new legislation on the wayMixture of successes and failuresIreland is a little different!
5 Competition Act 1991 Introduction Establishment of the Competition AuthorityPrivatisation of Enforcement: Private ActionsCompetition Authority was not given the power to impose fines but could take civil cases (but no dawn raid powers)Competition law breaches were civil but not criminal wrongsMerger control was still a Ministerial decision but mergers could be supervised under the Mergers Acts and the Competition ActNotification regime for arrangements
6 Competition (Amendment) Act 1996 IntroductionCompetition (Amendment) Act 1996Public Enforcement of Competition LawCriminalisation of BreachesCompetition Authority still not given the power to dawn raid and impose finesProsecutions had to be taken in courtEvidential and enforcement difficulties
7 Competition (Amendment) Act 2006 IntroductionCompetition Act 2002The Acts were not workingAbolition of notifications – “washing clean linen in public”Criminalisation of breaches of EU competition lawBefore the 2002 Act, merger control was still a Ministerial decision but mergers could be supervised under the Mergers Acts and the Competition Acts (risk of divergence)Evidential presumptions put in placeCompetition (Amendment) Act 2006Grocery sector
8 Competition Authority Irish RegimeCompetition AuthorityFocused entirely on competition lawDoes not have the power to impose fines – so extra rigour required for court cases to succeed (not just review of decisions)Anti-competitive arrangementsAbuse of dominanceConcentration controlStudies and advocacyCourtsExtremely importantEconomistsJuriesNo CAT
9 Anti-Competitive Arrangements Irish RegimeAnti-Competitive ArrangementsCivil breachesCriminal breachesA breach of Art.101 TFEU is a criminal offence under Irish lawImprisonment for up to five years and/or fines of €4m/10% of worldwide turnoverFocus on cartelsAbuse of DominanceCivil and criminal breachA breach of Art.102 TFEU is a criminal offence under Irish lawDifference in penalties
10 Concentration Control Competition Authority is centre-stage with Ministerial involvement limited to media mergers and emergency financial mergers“Substantial lessening of competition” testNotification and publication regimeSome interesting cases
11 Concentration Control two or more previously independent undertakings merge; orone or more undertakings, who or which control one or more undertakings, acquire direct or indirect control of the whole or part of one or more other undertakings;the result of an acquisition by one undertaking (the first undertaking) of the assets (including goodwill) (or a substantial part of the assets) of another undertaking (the second undertaking) is to place the first undertaking in a position to replace (or substantially replace) the second undertaking in the business or, as appropriate, the part concerned of the business in which that undertaking was engaged immediately before the acquisition;a full function joint venture is formed (i.e., one which performs, on an indefinite basis, all the functions of an autonomous economic entity)
12 Concentration Control Notifiable if:The worldwide turnover of each of at least two of the undertakings involved in the transaction is not less than €40 million; andEach of at least two of the undertakings involved in the transaction carries on business in any part of the island of Ireland (i.e., the Republic and Northern Ireland); andThe turnover in the Republic of any one of the undertakings involved is not less than €40m or it is a media merger(Voluntary filing regime possible for other transactions)
13 Concentration Control “Carries on Business” is a critical conceptNon-binding notice published by the Authority in 2006 defines “carries on business” as meaning that the undertakings have either:Have a physical presence on the island of Ireland and make sales or supply services to customers in the island of Ireland; orWithout having a physical presence on the island, have made sales into the island of Ireland of at least €2 million in the most recent financial year
14 Concentration Control Media MergersSince 1 May 2007, a “media merger” is a merger or acquisition in which either: (1) two or more of the undertakings involved carry on a defined media business in the State; or (2) one or more of the undertakings involved carries on a media business in the State and one or more of the undertakings involved carries on a media business elsewhereA media business is defined as: (1) publication of newspapers or periodicals consisting substantially of news or periodicals consisting substantially of news or current affairs; (2) sound and/or audio broadcasting (except over the internet); or (3) the provision of a broadcasting services platformThresholds do not apply – media mergers are automatically notifiableCumbersome procedure in theory but works in practiceHowever, what if a Group (which happens to include a media business) buys something which is clearly not media-related?
15 Concentration Control Financial MergersThe pre-existing regime and the Credit Institutions (Financial Support) Act 2008 regime both operateSection 7 of the 2008 Act has a special regimeMaintenance of the stability of the financial system v. competition law?2008 Act transactions are notifiable to the Minister rather than the Competition AuthorityClearance of an otherwise anti-competitive deal is possible where it is necessary to maintain the stability of the financial system in the State, to avoid a serious threat to the stability of credit institutions and to remedy a serious disturbance in the economy of the State
16 Concentration Control Notification Process under the Competition ActNotification within one month of concluding the agreement or the making of the public bid – can that be circumvented?The “one month” is calculated by including the date after which the month commences so the month expires on the day before the corresponding date the following monthFailure to notify has consequences
17 Concentration Control €8,000 filing feeCalendar days not working day timetableFirst Phase procedure: typically, one month but can be 45 days with proposals from the partiesSecond Phase procedure: can be longer – up to four months normally with conditions imposable by the AuthorityVast majority of cases are first phase decisionsOpening a second phase is not necessarily a problem
18 Concentration Control Clearance is a precondition to closing concentrationsClearance without approval in IrelandAviva/CGU/GreshamRadio 2000/Newstalk 106Topaz/StatoilThird party involvement
19 Concentration Control Three deals blocked:IBM/Schlumberger (high market share)Kingspan/Xtratherm (competitor evidence)Kerry Foods/Breeo (no credible alternative constraining brands)One appeal, successful at High Court level but now on appeal to the Supreme Court (Kerry Foods/Breeo)Britvic/C&CHeineken/Beamish & CrawfordJohnston Press/Clonnad
20 Criminal Enforcement Criminal Enforcement To date, 33 convictions How? Leniency and transparency of some trade association activitiesAre juries willing to convict?What are the guidelines on sentencing?What are the lessons?Little guysProceduresLeniencyCartels
21 Some Interesting Cases For example:West of Ireland Home Heating CasesCompetition Authority v DuffyLaw Society v Competition AuthorityMayo WastePandaIrish BeefCompetition Authority v LVA and VFI
22 Some Interesting Cases Law Society v Competition AuthorityLegal representation of suspects in cartel investigationCompetition Authority stated that it could veto the choice of lawyer where several suspects chose the same lawyerLaw Society was concerned from a general policy perspectiveForced to institute proceedings in the High CourtHigh Court annulled the Competition Authority’s “notice”
23 Some Interesting Cases Irish Beef“Rationalisation”Government involvement and McKinsey Report“Stayers” and “Goers” with compensationCompetition AuthorityHigh Court not concerned under Article 101(1)Supreme Court appeal by the AuthorityArticle 267 reference to the CJEUSupreme Court decision and reference back to the High CourtHigh Court to consider application of Article 101(3)European Commission intervention
24 Some Interesting Cases Mayo WasteControversial caseJuryDecision-making by the jury“Theory of harm” issueFarmers’ blockade of Drogheda port caseConcerns by the Competition Authority
25 Some Interesting Cases Competition Authority v LVA and VFIRecession and declining on-trade drink salesTwo vintners’ associations announce a “price freeze”Competition Authority reacts with concernAssociations refuse to withdraw itBut associations had some years earlier given undertakings not to do anything with pricingCompetition Authority invoked those undertakings and sued the associationsCourt found the associations were in breach of those commitments
26 Some Interesting Cases PandaApplication of Competition Acts to the Local AuthoritiesDecision by the High CourtCompetition Authority v Avonmore Waterford Group/Athboy Co-operativeBallina Mineral Water v HeinekenIrish Dental AssociationCivil damages actionsDonovan v ESBFollow-on actions
27 Key Differences in the Irish System Different law and legal regimeStrong written Constitutional protection of human rightsCompetition Authority deals only with competition (not consumer matters) but this is scheduled to changeHistorically, strong international team in the Authority but constant changeCompetition Authority does not have power to impose fines – the court is where the real enforcement laysA strong but intermittent US dimension to Irish competition lawHigh market shares are not an issueHold separate/fix-first arrangements are unusual
28 Do not rely on the private enforcement of competition law LessonsDo not rely on the private enforcement of competition lawStreamline merger controlAbolition of notifications but community still needs guidanceMerger of the Competition Authority and Consumer Body?Competition enforcement by lower courts is not easyCompetition enforcement by some juries may not be easyHigh market shares not necessarily a problem in concentration control
29 Be careful of open-ended and wide studies LessonsBe careful of open-ended and wide studiesValuable international experience and expertiseBut “chopping and changing” of personnelTrade associationsAuthority is subject to the vagaries of political “respect”Cartel enforcement has been against the “little guys”BIDS and the State elementPublic understanding and acceptance or is “competition” something you can have in a boom but not in a bust?
30 Competition Law Association What do I need to know about Competition Law in Ireland and what can we learn from 20 years of its operation?Dr Vincent Power, PartnerA&L Goodbody25 February 2010