Launch of new Cartel Immunity Programme

January 22, 2015

 

The Competition and Consumer Protection Commission (the Commission), in conjunction with the office of the Director of Public Prosecutions (DPP) has today released details of an improved Cartel Immunity Programme. The operation of illegal cartels in the State represents serious white collar crime and the Commission’s revised Programme is an important tool in uncovering this criminal behaviour.

A cartel is a secret agreement between companies to fix prices, limit output or not compete for certain market segments or customers. Cartels in effect shield the parties involved from the competitive forces which would normally occur in the market. This type of activity has a very detrimental effect on consumers and the wider economy as prices may be higher and the number of options available to consumers may be lessened. Competitive markets are essential in maintaining an efficient, well-functioning economy. Active competition drives innovation, promotes business to offer higher quality and keeps prices down.

Speaking about the Cartel Immunity programme Ms Isolde Goggin, Chair of the Competition and Consumer Protection Commission said, ‘Cartels result in increased prices, lower quality products and narrower choice for consumers. They represent the most serious form of anti-competitive behaviour. The detection, investigation and prosecution of cartels is one of the highest priorities for the Commission.’

Cartels by their nature operate in secret and are very difficult to uncover. The Cartel Immunity Programme provides a unique mechanism to help uncover cartels and provide witnesses for the criminal prosecution of cartel members. The Programme means that a member of a cartel may avoid prosecution if they come forward and reveal their involvement in illegal cartel activity before the Commission has completed any investigation and referred the matter to the DPP. Under the Programme the Commission acts as an intermediary between applicants and the DPP in seeking immunity from prosecution in return for providing evidence in a criminal trial.

The new Cartel Immunity Programme revises and enhances the provisions available to the Commission to uncover this criminal activity.  The new Programme removes a previous bar on an instigator company qualifying for immunity.  However, given the nature of the offense it maintains a ban on immunity for a company that coerced others to join or remain in the cartel.

With the new programme there will also be enhanced legal certainty for those applying for immunity from prosecution. In addition, the revised Programme is better aligned with the EU Model Programme.

Ms Goggin said, ‘Cartels are by their nature secretive and therefore difficult to detect. The Cartel Immunity Programme is a vital tool in uncovering cartels that are operating in the State. The new Cartel Immunity Programme is designed to produce more effective investigations and successful outcomes. The Commission is committed to taking on illegal cartels and uncovering this anti-competitive and highly damaging activity.’

 

Notes to the Editor 
Additional information on the Programme is available here.

 

Competition and Consumer Protection Commission
The Competition and Consumer Protection Commission was formed on 31 October 2014 following the amalgamation of the Competition Authority and the National Consumer Agency. On that day the Competition and Consumer Protection Act 2014 came in to force. The Commission has a new dual mandate to enforce competition and consumer protection law and we will build on the work of the legacy organisations to: protect and strengthen competition, empower consumers to make informed decisions and protect them from harmful business practices.

What are cartels?

Cartels are secret conspiracies between companies that should be competing with each other, to fix prices, limit output or sales, share markets or customers.
There are different types of cartels:
Price fixing: Competitors illegally agree the price for, or discounts on, goods or services.
Market sharing: Competitors illegally agree on which locations each of them can or cannot operate in, or customers to whom they can or cannot sell. They also divide locations and/or consumers up among competitors.
Limiting production: Competitors illegally agree to control the amount of goods or services provided, in order to ensure that prices remain high.
Bid-rigging/collusive tendering: Collusive tendering involves competitors illegally agreeing on who will win a tender. Bid-rigging or collusive tendering may take the form of any or all of the specifically prohibited activities, by fixing prices or sharing markets.

Enforcement actions

A cartel offence is a serious white collar crime and persons convicted on indictment face up to ten years imprisonment and potentially fines of up to €5 million.  Companies can also face fines of up to €5 million or 10% of annual turnover (whichever is greater). There is an automatic disqualification of directors on conviction on indictment which precludes them from acting as director of a company again for up to 5 years.  Trials on indictment are held in the Central Criminal Court.

Since the enactment of the 2002 Competition Act there has been 33 convictions on indictment.   17 of those convictions were against individuals with 2 of these following jury trials.  These have resulted in fines of €629,000 being imposed (with €316,000 of this being imposed on individuals).  In terms of prison sentences 9 persons have been given custodial sentences totalling 11 years.  These custodial sentences have ranged from 3 months to 2 years.  In all cases the custodial sentences were suspended.  There have been 2 further jury trials involving the cartel offence where all of the defendants were acquitted.

Cartel Immunity Programme

Under the Programme the Commission acts as an intermediary between applicants and the DPP in the exercise of her general discretion to grant immunity from prosecution in return for providing evidence in a criminal trial.  The cartel offence stands out from most other offences in that consumers do not know that they have been a victim (i.e. the crime normally goes undetected).  The Programme gives incentives to one participant in the cartel to come forward.

Applications for immunity must be made to the designated officer in the Competition and Consumer Protection Commission. Contact with the designated officer must by telephone. The designated officer can be contacted on 087 763 1378 between the hours of 10am and 5pm Monday to Friday, except public or bank holidays.

For further information contact:

Petrina Grehan, 01 7038616 / 086 1251386

 

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