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?

1
Competition Law AssociationWhat do I need to
know about Competition Law in Ireland and what
can we learn from 20 years of its operation?

• Dr Vincent Power, Partner
• AL Goodbody
• vpower_at_algoodbody.com
• 25 February 2010

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Outline of the Presentation

• Task is to brief you on competition law in
  Ireland
• An overview of competition law and practice
• Irish regime
• Anti-competitive practices
• Mergers and acquisitions
• Case law
• What have been the interesting cases and lessons
• from the two decades?

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Why Ireland?

• Ireland has been connected with some interesting
  competition cases
• United Brands
• Magill
• HB/Mars
• Holyhead I and II as well as Roscoff
• Charleroi
• Ryanair/Aer Lingus
• Irish Beef
• Some pending State Aid decisions in the financial
  services sector
• 33 convictions, first jury conviction in Europe
  for cartels, first jail sentences and some
  interesting civil cases

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Introduction

• Ireland, like England Wales, is a common law
  jurisdiction in the EU
• Traditional approach to competition law issues
  but changes in the late 1980s/early 1990s
• First Regime Competition Act 1991 and
  Competition (Amendment) Act 1996
• Second Regime Competition Act 2002 and
  Competition (Amendment) Act 2006
• Other legislation already in place and new
  legislation on the way
• Mixture of successes and failures
• Ireland is a little different!

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Introduction

• Competition Act 1991
• Establishment of the Competition Authority
• Privatisation of Enforcement Private Actions
• Competition 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 wrongs
• Merger control was still a Ministerial decision
  but mergers could be supervised under the Mergers
  Acts and the Competition Act
• Notification regime for arrangements

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Introduction

• Competition (Amendment) Act 1996
• Public Enforcement of Competition Law
• Criminalisation of Breaches
• Competition Authority still not given the power
  to dawn raid and impose fines
• Prosecutions had to be taken in court
• Evidential and enforcement difficulties

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Introduction

• Competition Act 2002
• The 1991-1996 Acts were not working
• Abolition of notifications washing clean linen
  in public
• Criminalisation of breaches of EU competition law
  
• Before 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 place
• Competition (Amendment) Act 2006
• Grocery sector

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Irish Regime

• Competition Authority
• Focused entirely on competition law
• Does not have the power to impose fines so
  extra rigour required for court cases to succeed
  (not just review of decisions)
• Anti-competitive arrangements
• Abuse of dominance
• Concentration control
• Studies and advocacy
• Courts
• Extremely important
• Economists
• Juries
• No CAT

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Irish Regime

• Anti-Competitive Arrangements
• Civil breaches
• Criminal breaches
• A breach of Art.101 TFEU is a criminal offence
  under Irish law
• Imprisonment for up to five years and/or fines of
  4m/10 of worldwide turnover
• Focus on cartels
• Abuse of Dominance
• Civil and criminal breach
• A breach of Art.102 TFEU is a criminal offence
  under Irish law
• Difference in penalties

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Concentration Control

• Concentration Control
• Competition Authority is centre-stage with
  Ministerial involvement limited to media mergers
  and emergency financial mergers
• Substantial lessening of competition test
• Notification and publication regime
• Some interesting cases

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Concentration Control

• Concentration
• two or more previously independent undertakings
  merge or
• one 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)

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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 and
• Each 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) and
• The 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)

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Concentration Control

• Carries on Business is a critical concept
• Non-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 or
• Without 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

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Concentration Control

• Media Mergers
• Since 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
  elsewhere
• A 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 platform
• Thresholds do not apply media mergers are
  automatically notifiable
• Cumbersome procedure in theory but works in
  practice
• However, what if a Group (which happens to
  include a media business) buys something which is
  clearly not media-related?

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Concentration Control

• Financial Mergers
• The pre-existing regime and the Credit
  Institutions (Financial Support) Act 2008 regime
  both operate
• Section 7 of the 2008 Act has a special regime
• Maintenance of the stability of the financial
  system v. competition law?
• 2008 Act transactions are notifiable to the
  Minister rather than the Competition Authority
• Clearance 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

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Concentration Control

• Notification Process under the Competition Act
• Notification 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 month
• Failure to notify has consequences

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Concentration Control

• 8,000 filing fee
• Calendar days not working day timetable
• First Phase procedure typically, one month but
  can be 45 days with proposals from the parties
• Second Phase procedure can be longer up to
  four months normally with conditions imposable by
  the Authority
• Vast majority of cases are first phase decisions
• Opening a second phase is not necessarily a
  problem

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Concentration Control

• Clearance is a precondition to closing
  concentrations
• Clearance without approval in Ireland
• Aviva/CGU/Gresham
• Radio 2000/Newstalk 106
• Topaz/Statoil
• Third party involvement

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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/CC
• Heineken/Beamish Crawford
• Johnston Press/Clonnad

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Criminal Enforcement

• Criminal Enforcement
• To date, 33 convictions
• How? Leniency and transparency of some trade
  association activities
• Are juries willing to convict?
• What are the guidelines on sentencing?
• What are the lessons?
• Little guys
• Procedures
• Leniency
• Cartels

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Some Interesting Cases

• For example
• West of Ireland Home Heating Cases
• Competition Authority v Duffy
• Law Society v Competition Authority
• Mayo Waste
• Panda
• Irish Beef
• Competition Authority v LVA and VFI

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Some Interesting Cases

• Law Society v Competition Authority
• Legal representation of suspects in cartel
  investigation
• Competition Authority stated that it could veto
  the choice of lawyer where several suspects chose
  the same lawyer
• Law Society was concerned from a general policy
  perspective
• Forced to institute proceedings in the High Court
• High Court annulled the Competition Authoritys
  notice

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Some Interesting Cases

• Irish Beef
• Rationalisation
• Government involvement and McKinsey Report
• Stayers and Goers with compensation
• Competition Authority
• High Court not concerned under Article 101(1)
• Supreme Court appeal by the Authority
• Article 267 reference to the CJEU
• Supreme Court decision and reference back to the
  High Court
• High Court to consider application of Article
  101(3)
• European Commission intervention

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Some Interesting Cases

• Mayo Waste
• Controversial case
• Jury
• Decision-making by the jury
• Theory of harm issue
• Farmers blockade of Drogheda port case
• Concerns by the Competition Authority

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Some Interesting Cases

• Competition Authority v LVA and VFI
• Recession and declining on-trade drink sales
• Two vintners associations announce a price
  freeze
• Competition Authority reacts with concern
• Associations refuse to withdraw it
• But associations had some years earlier given
  undertakings not to do anything with pricing
• Competition Authority invoked those undertakings
  and sued the associations
• Court found the associations were in breach of
  those commitments

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Some Interesting Cases

• Panda
• Application of Competition Acts to the Local
  Authorities
• Decision by the High Court
• Competition Authority v Avonmore Waterford
  Group/Athboy Co-operative
• Ballina Mineral Water v Heineken
• Irish Dental Association
• Civil damages actions
• Donovan v ESB
• Follow-on actions

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Differences

• Key Differences in the Irish System
• Different law and legal regime
• Strong written Constitutional protection of human
  rights
• Competition Authority deals only with competition
  (not consumer matters) but this is scheduled to
  change
• Historically, strong international team in the
  Authority but constant change
• Competition Authority does not have power to
  impose fines the court is where the real
  enforcement lays
• A strong but intermittent US dimension to Irish
  competition law
• High market shares are not an issue
• Hold separate/fix-first arrangements are unusual

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Lessons

• Do not rely on the private enforcement of
  competition law
• Streamline merger control
• Abolition of notifications but community still
  needs guidance
• Merger of the Competition Authority and Consumer
  Body?
• Competition enforcement by lower courts is not
  easy
• Competition enforcement by some juries may not be
  easy
• High market shares not necessarily a problem in
  concentration control

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Lessons

• Be careful of open-ended and wide studies
• Valuable international experience and expertise
• But chopping and changing of personnel
• Trade associations
• Authority is subject to the vagaries of political
  respect
• Cartel enforcement has been against the little
  guys
• BIDS and the State element
• Public understanding and acceptance or is
  competition something you can have in a boom
  but not in a bust?

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Competition Law AssociationWhat do I need to
know about Competition Law in Ireland and what
can we learn from 20 years of its operation?

• Dr Vincent Power, Partner
• AL Goodbody
• vpower_at_algoodbody.com
• 25 February 2010