The Competition (Amendment) Act 2022 (Act) was signed into law on 29 June 2022. The Act gives the two Irish competition authorities, the Competition and Consumer Protection Commission (CCPC) and the Commission for Communications Regulation (ComReg), significant additional enforcement powers. In this regard, the Act implements Directive EU 2019/1 (ECN+ Directive). The Act also gives the CCPC additional powers relating to mergers and acquisitions. It is anticipated that the Act will commence on 1 August 2022.
In the first of three articles on the Act, we have summarised the key new powers relating to enforcement of anti-competitive behaviour.
Power to Impose Administrative Fines
For the first time, the CCPC will have the power to impose administrative fines. Until now, Irish legislation only allowed a fine to be imposed by the courts for a criminal breach of competition law (unlike most other EU Member States).
The Act allows the CCPC (and ComReg) to impose the following fines:
civil fines for a breach of competition law up to a maximum of €10 million or 10% of world-wide turnover in the preceding financial year, whichever is the greater;
civil fines for breach of a procedural requirement up to a maximum of €1 million or 1% of world-wide turnover in the preceding financial year;
periodic penalty payments for non-compliance with up to 5% of average daily total world-wide turnover in the preceding financial year per day during which failure to comply is ongoing.
These powers remain subject to court oversight. The Act provides that the level of a fine must be effective, proportionate and dissuasive and will depend on the gravity and duration of the infringement.
Increased Criminal Fines
The Act also increases the level of criminal fines which can be imposed on companies and individuals for cartel offences up to the greater of €50 million or 20% of turnover in the financial year preceding the conviction. At the same time, the Act introduces a new requirement by providing that an undertaking only commits a criminal offence if it intentionally or recklessly acts to prevent, restrict or distort competition or makes omissions which have that effect. This additional requirement is likely to make criminal prosecutions more difficult to prove and may lead to more civil enforcement of competition law going forward.
New Investigative Process
Both the CCPC and ComReg can investigate suspected breaches of competition law. The Act introduces a new investigative process and we have set out some of the main features in this article.
The Act amends the Criminal Justice (Surveillance) Act 2009 to allow the CCPC to monitor and record persons suspected of being involved in a hardcore cartel. This will allow the CCPC to apply to the High Court for an authorisation to intercept and record electronic communications and video and audio surveillance of suspects.
New Bid Rigging Offence
The Act introduces a new cartel offence of bid rigging. Bid rigging is a form of cartel behaviour where bidders or potential bidders in a procurement process collude without informing the procuring body. The Act identifies a number of bid-rigging practices, namely:
an agreement not to submit or to withdraw a bid (sometimes referred to as bid suppression);
an agreement to submit a bid on terms agreed with another bidder (eg an agreement to make an uncompetitive bid to ensure a certain bidder is selected);
The practice to date has been to regard bid-rigging as a form of price fixing or market sharing. The change is intended to make it clearer that such concerted behaviour during the tender process is unlawful as it distorts competition.
The Act requires the CCPC (and ComReg) to introduce a new leniency programme to enable it to grant leniency to undertakings in exchange for disclosing their participation in a cartel and cooperating with an investigation. The leniency programme will run alongside the existing immunity programme which is available in respect of criminal sanctions.
The CCPC has consulted on the new leniency programme and it is proposed that the CCPC may:
grant immunity from fines to the first participant in a cartel to come forward with evidence of an infringement, where the CCPC did not already have sufficient evidence of an infringement and provided certain conditions are met;
give a reduction of up 50% in fines to second and subsequent applicants to come forward with evidence who, in the CCPC's view, add significant added value relative to evidence already received and provided certain other conditions are met.
The conditions which an applicant must meet include:
ending its involvement in the cartel;
cooperating fully, including providing the CCPC promptly with all relevant information, promptly replying to any requests and making directors and staff available for interviews; and
not destroying, falsifying or concealing relevant information.
An undertaking which took steps to coerce another undertaking to join a cartel or remain in it is not eligible for immunity (but is eligible for a reduction).
The Act also allows the CCPC to extend the leniency programme to infringements other than cartels and the CCPC has indicated that it may do so for resale price maintenance (ie where a supplier fixes, or sets a minimum, resale price to be charged by the reseller).
The Act applies to conduct since 4 February 2021, which is the date by which the ECN+ Directive should have been transposed into Irish law. Where an investigation relates wholly to conduct that took place before 4 February 2021 or where an investigation has been opened and is pending prior to commencement of the Act, the CCPC's previous powers will apply.
The Act places powerful new sanctions at the disposal of the CCPC and ComReg which are similar to powers held by other competition authorities in the UK and Europe. This increase in enforcement powers for breaches of competition law in Ireland has been long awaited and is to be welcomed. The theory is that changes in behaviour will only occur when effective deterrents, including the power to impose fines, exist.
The Act amounts to a sea change in Irish competition law and the scale and strength of the new powers, both in terms of merger control and competition enforcement, should not be underestimated. It is expected to lead to a much more active enforcement regime, though it may take time for some of the new enforcement powers to 'bite'. This is because the changes introduced by the Act only apply to conduct after 4 February 2021. In addition, due to the complexity of the Act, there are likely to be challenges to the exercise of these new powers.