Declaration and guidance on exclusive purchasing agreements for cylinder liquefied petroleum gas
The Competition Authority Cylinder LPG Declaration has expired
Section 4(3) of the Competition Act 2002 (Act) permitted the Competition Authority (and now permits the CCPC) to declare in writing that a specified category of agreements complies with certain conditions set out in section 4(5) of the Act. The effect of such a declaration is that agreements within the category in question are not prohibited by section 4(1) of the Act.
In March 2005, pursuant to section 4(3) of the Act, the Competition Authority issued a Declaration in respect of Exclusive Purchasing Agreements for Cylinder Liquefied Petroleum Gas (D/05/001) (“Cylinder LPG Declaration”). This Declaration entered into force on 15 April 2005 and was stated to expire on 14 April 2015.
The Cylinder LPG Declaration has accordingly now expired. Agreements between suppliers and resellers of cylinder LPG which previously fell within the scope of the Cylinder LPG Declaration should now be assessed in the first instance under the Competition Authority’s Declaration in respect of Vertical Agreements and Concerted Practices (D/10/001) (“Verticals Declaration”). Where an agreement does not meet the conditions for exemption set out in the Verticals Declaration, it will fall for assessment under sections 4(2) and 4(5) of the Act on an individual basis.
Previous declaration in brief
In 2005 the Competition Authority (the Authority) issued a Declaration Dealing with Exclusive Purchasing Agreements for Cylinder Liquefied Petroleum Gas (LPG). The main purpose of the declaration is to provide clarity and promote compliance among firms on these agreements.
The declaration stated that provided the relevant exclusives agreements satisfy certain requirements, they would not be prohibited by competition law.
Outline of previous declaration
The Competition Act 2002 permits the Competition and Consumer Protection Commission (the Commission) to declare in writing that a specified category of agreements, decisions or concerted practices are not prohibited by Irish competition law. The agreements must however comply with certain conditions.
Following consultation and assessment, the Authority issued a declaration in 2005 dealing with exclusive purchasing agreements for cylinder LPG.
The declaration provides that cylinder LPG exclusive purchasing agreements not exceeding two years are exempted from competition law, provided that certain conditions are met. For instance:
- The agreements are not entered into between competing firms
- The agreements do not contain exclusive purchasing obligations for goods other than cylinder LPG
- The agreements do not impose any restriction on the reseller after the date of expiry etc.
The Authority reviewed the declaration in 2010. Following a public consultation, the Authority decided it would be appropriate for the declaration to continue in existence.
To learn more on this topic please read:
- Guidelines on the Application of Article 101(3) TFEU (Formerly Article 81(3) TEC)
- EU Commission‘s Block Exemption Regulation (BER). The declaration closely resembles the EU Block Exemption Regulation.
- The EU Commission’s Guidelines on Vertical Restraints give practical assistance on assessing whether vertical agreements conflict with the BER. This may also be referred to for guidance in assessing whether an agreement is likely to be compliant with Irish competition law.
Paragraphs 8-11 of the EU Guidelines on Vertical Restraints refer to the Commission’s Notice on Agreements of Minor Importance (“the de minimis Notice”) and explain that because the de minimis Notice provides that such agreements are not caught by Article 101 at all, the BER does not apply to them. Because there is no de minimis notice in force under Irish law, these paragraphs cannot be relied upon as guidance for the purpose of the declaration.
In addition, the Authority also issued a Declaration Notice dealing with Vertical Agreements and Concerted Practices in 2010.