The Competition and Consumer Protection Commission (CCPC) are about to get more enforcement powers, including additional powers to issue fines and tackle anti-competitive practices.
The forthcoming Competition (Amendment) Bill 2021 (Bill) will implement Directive EU 2019/1 (ECN+ Directive) which must be transposed into national law by 4 February 2021.
What is the ECN+ Directive?
The central aim of the ECN+ Directive is to ensure that competition authorities have independence, sufficient resources and appropriate power of enforcement, including the ability to issue fines, for breaches of Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU). Article 101 TFEU prohibits undertakings from engaging in anti-competitive agreements and practices while Article 102 TFEU prohibits abuse of a dominant position. The Directive also requires leniency programmes in all Member States (which Ireland does not currently have).
What impact will the Bill have on enforcement of competition law?
Current legislation in Ireland only allows a fine to be imposed by the courts for a criminal breach of competition law (unlike most other EU Member States). This means that the CCPC's powers in relation to non-criminal breaches are severely limited and do not pose a significant deterrent. If an investigation does not reach a criminal standard, the CCPC can only seek commitments from a business that they will cease the practice and obtain an injunction against them doing the same action again. The Directive requires Member States to ensure that fines can be imposed for non-criminal breaches of EU competition law.
Are any other amendments of Irish competition law proposed?
The Bill also includes amendments to the Competition Act 2002, as amended, which are outside the scope of the ECN+ Directive. The purpose of these amendments is to further bolster the CCPC’s powers in the enforcement of EU and Irish competition law and the statutory merger review regime. The Department of Enterprise, Trade and Employment is currently running a consultation on these additional legislative amendments. The deadline for responding to the consultation is 5pm, Friday 29 January 2021.
The proposed amendments include:
1. Introduction of a specific offence of ‘bid-rigging’ - Bid-rigging is a form of cartel behaviour in which the firms that bid in a procurement process agree amongst themselves which firm submits the most advantageous tender. As a result, the winning tender price is often higher than would otherwise have been the case. There are a number of types of bid-rigging:
- bid rotation (where bidders take turns at being the winning bidder);
- bid suppression (where some bidders sit out of a bidding process so another party can win a bid); and
- complementary bidding (where uncompetitive bids are made to ensure that 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 proposed change is intended to make it clearer that such concerted behaviour during the tender process is unlawful as it distorts competition
2. Giving the CCPC the power to bring summary prosecutions in respect of ‘gun jumping’ offences - Under Irish law, proposed mergers or acquisitions which reach certain financial thresholds must be notified to the CCPC before they are put into effect. Failure to notify any such merger or acquisition or putting it into effect before clearance by the CCPC is referred to as “gun-jumping" and is a criminal offence. Currently only the Director of Public Prosecutions has the power to bring summary prosecutions and the proposal is intended to ease the burden on the DPP.
3. Introducing new surveillance powers for the CCPC - It is intended for the Bill to introduce new powers for the CCPC, when investigating serious criminal breaches of competition law and under specific conditions, to (i) carry out video and audio surveillance and (ii) to require interception and recording of electronic communications. Cartels have become more sophisticated and cartelists often communicate electronically or by mobile phone. The CCPC does not currently have access to the content of those communications or the power to covertly tape of private meetings. There are similar powers to allow interception of direct communications between cartel conspirators in other jurisdictions, including UK, US, Canada, Australia, Austria and Israel.
4. Other amendments relating to the operation of merger control - These proposed changes include:
- clarification that the CCPC has the power to accept and review voluntary notifications of completed mergers;
- power of the CCPC to make interim orders which prevent any action (eg integrating merging businesses) that may prejudice or impede its review of voluntary notifications;
- power to require that such a merger must be unwound where it is found to lead to a substantial lessening of competition;
- power to seek or receive information from third parties in a merger review (currently, the CCPC can only require information from "undertakings concerned" with no clarity on who this covers);
- clarification of the provisions surrounding requests for information, including time periods for responses and when the merger review clock restarts
The 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 financial penalties, exist.
Concerns are likely to be voiced in relation to the proposed additional powers related to video and audio surveillance and the interception and recording of electronic communications. Appropriate safeguards must be put in place to ensure that these powers do not infringe on persons' human rights.