LVA and VFI in contempt of court
Outcome of the Court Action
The Competition Authority (the Authority) initiated legal proceedings against the Licensed Vintners Association (LVA) and Vintners’ Federation of Ireland (VFI) alleging that their December 2008 “price freeze” announcement was in breach of High Court Orders. These Orders had resulted from previous legal proceedings between the Authority and the two trade associations.
On 24 July 2009, the Court found the VFI and LVA to be in contempt of court because the December 2008 announcement by the associations amounted to a recommendation on price.
Outline of case
A trade association can harm consumers by eliminating competition among its members. They can do this by effectively fixing the prices at which its members sell their services. This is a breach of competition law. In 1998 the Authority initiated legal proceedings against the LVA and VFI in relation to allegations of price-fixing in the sale of alcoholic drinks.
The Authority agreed settlement terms with the LVA and VFI in December 2003 and May 2005 respectively. The two associations undertook, among other things, not to recommend to their members prices for alcoholic drinks consumed on licensed premises that are owned, managed or controlled by the members of either association.
In 2009 The Authority began legal proceedings against the LVA and VFI alleging that their December 2008 “price freeze” announcement was in breach of High Court Orders that resulted from the previous legal proceedings.
On 24 July 2009, the Court found the VFI and LVA to be in contempt of court because the December 2008 announcement by the associations amounted to a recommendation on price. Mr Justice Liam McKechnie stated:
“The entire thrust of the release was a communication to the public regarding prices: it could not be said that the reference to prices was incidental, secondary or subordinate to another topic. It was at the core of the communication. I therefore cannot see how it can avoid being captured by the undertaking. … A member of the public would certainly feel that the recommendation related to the price they would pay.
There is therefore no doubt in my mind but that this was a recommendation by the defendants to their members on the prices on the sale to the public of alcoholic beverages for consumption on licensed premises owned, managed or controlled by their members. I thus find that the defendants have breached their first undertaking and are guilty of contempt of court in that regard.”
The LVA and VFI took the following action to purge their contempt:
- In open court, an unqualified apology was given to the Court in relation to their contempt
- A joint press release was issued announcing an immediate end to the price freeze
- Their members were informed in writing of the withdrawal of the recommendation and were requested to remove all posters and public advertising of the price freeze
Mr Justice Liam McKechnie also instructed the associations to publish their press release in three Sunday papers.
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