Competition and consumer protection law
Competition and Consumer Protection Law
What is the legislation establishing the Competition and Consumer Protection Commission?
What are the CCPC’s statutory functions?
The CCPC has a dual competition and consumer protection mandate. The statutory functions of the CCPC are set out primarily in section 10 of the 2014 Act. They include:
- Promoting competition
- Promoting and protecting the interests and welfare of consumers
- Carrying out investigations into suspected breaches of competition or consumer protection law
- Enforcing competition and consumer protection law
- Encouraging compliance with competition and consumer protection law, including by publishing practical guidance on how to comply with the law
The CCPC is also responsible for promoting compliance with a new regulatory regime in the grocery sector.
Irish competition law is contained in various pieces of legislation, most importantly the Competition Act 2002, as amended by the Competition (Amendment) Act 2006, by the Competition (Amendment) Act 2012 and by Parts 3 and 4 of the Competition and Consumer Protection Act 2014. This legislation is referred to collectively as the Competition Acts 2002 to 2014.
EU competition law is contained primarily in Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU).
What conduct is prohibited by competition law?
The Competition Act 2002, as amended (Competition Act) contains two main prohibitions:
- Section 4(1) of the Competition Act prohibits and renders void “all agreements between undertakings, decisions by associations of undertakings and concerted practices which have as their object or effect the prevention, restriction or distortion of competition in trade in any goods or services in the State or in any part of the State”. The Competition Act lists some specific types of behaviour which are expressly prohibited. These include agreements which:
- Fix prices
- Limit or control production or markets
- Share markets or sources of supply
- Apply dissimilar conditions to equivalent transactions with other trading parties
- Make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which by their nature or according to commercial usage have no connection with the subject of such contracts (e.g. tying).
- Section 5 of the Competition Act prohibits the abuse by a firm of a dominant position. Importantly, it does not prohibit a firm from having a dominant position – only the abuse of that dominant position. Generally a firm is considered to be dominant if it is able to act without taking account of the reaction of its customers or its rivals, e.g. a firm which can increase its prices unilaterally because it knows that its customers have few, if any, satisfactory alternative sources of supply and therefore little choice but to pay the higher price. Section 5 is not breached when a firm’s vigorous competition takes sales away from less efficient rivals, since this is competition working properly.
Articles 101 and 102 of the TFEU prohibit the same kind of conduct as that prohibited by sections 4 and 5 of the Competition Act, provided it can be shown that the conduct in question may have an effect on trade between Member States of the EU.
It is the CCPC’s role to enforce Irish and EU competition law by investigating suspected breaches of these prohibitions.
Part 4A of the Competition Act (as inserted by the Communications Regulation (Amendment) Act 2007 and amended by the Competition and Consumer Protection Act 2014) gives the Commission for Communications Regulation (ComReg) a limited power to enforce sections 4 and 5 of the Competition Act and Articles 101 and 102 of the TFEU in the field of electronic communications networks, services and associated facilities.
What are the penalties for breaching competition law?
In Ireland, businesses or individuals that breach competition law may be subject to civil or criminal sanctions.
As regards civil sanctions, section 14A of the Competition Act gives the CCPC the power to apply to the Circuit Court or the High Court to seek a declaration (i.e. a court ruling that a particular arrangement or behaviour is unlawful) or an injunction (e.g. a court ruling requiring a particular arrangement or behaviour to be terminated) in any case involving an alleged breach of section 4 or 5 of the Competition Act or Article 101 or 102 of the TFEU. Irish law does not currently allow the courts to impose any form of civil financial penalty on persons found to have breached competition law. Nor does the CCPC itself have the power to impose administrative fines on persons it believes to have breached competition law.
As regards criminal sanctions, sections 6 and 7 of the Competition Act make it an offence to breach section 4 or 5 of the Competition Act or Article 101 or 102 of the TFEU. The CCPC investigates alleged breaches of the Competition Act and can either itself bring a summary prosecution in the District Court or, in more serious cases, refer a case to the Director of Public Prosecutions (DPP) for prosecution on indictment. Section 8 of the Competition Act sets out the penalties for those found guilty of offences under section 6 or section 7.
The most serious types of anti-competitive conduct are often referred to as ‘hardcore’ breaches of competition law. The following are examples of hardcore breaches of competition law and are subject to the most severe criminal sanctions:
- Fixing or agreeing prices with competitors for goods and services, including the level of price increases or discounts
- Sharing markets among competitors by dividing up territories or sharing out customers
- Agreeing with competitors to limit production/supply by controlling the quantity of goods or services to be supplied in a given market
- Rigging bids among competitors so that one particular person or company wins the contract
In the case of these hardcore breaches of competition law, the criminal fines and prison sentences are as follows:
- A business can be fined up to €5 million or 10% of its annual business turnover, whichever is greater, if convicted on indictment.
- An individual found guilty of an offence on indictment can be fined up to €5 million or 10% of his or her annual individual turnover, whichever is greater. An individual can also be imprisoned for up to 10 years.
In accordance with amendments introduced by the Competition (Amendment) Act 2012 (2012 Act), an individual convicted of certain competition offences is not eligible for probation. In addition, a business or individual convicted of competition offences may potentially be ordered to pay the costs incurred by the CCPC in relation to the investigation, detection and prosecution of the offence.
In accordance with a further amendment made by the 2012 Act, a court has a discretionary power to disqualify a person from acting as a company director where the person has been found to have breached section 4 or 5 of the Competition Act or Article 101 or 102 of the TFEU. It should be noted that firms convicted of a criminal offence under competition law may also be excluded from participating in future public procurement competitions.
It is the responsibility of the directors and managers of a business to ensure that the business complies with competition law but it is not only directors and managers who can be prosecuted. Certain employees who involve themselves in serious anti-competitive activities might also face prosecution if they have played a role in such activity. It is also important to note that individual directors, managers and certain employees can be prosecuted for competition law offences even if the company for which they worked when committing the offence was not prosecuted.
An individual or business that assists a cartel can also be found guilty of a criminal offence. In Ireland, there have been convictions for aiding and abetting cartels where individuals did not work for the firms engaged in price-fixing but took on a co-ordinating or facilitating role in the cartel.
What are the legislative provisions relating to mergers and acquisitions?
The CCPC is the statutory body responsible for the enforcement of merger control law in Ireland. Part 3 and Part 3A of the Competition Act set out the legislative provisions relating to the review of mergers and acquisitions. Read more on our role in relation to mergers.