The Competition (Amendment) Act 2022 (“the Act”) was signed by Present Michael D Higgins on 29 June 2022.
The legislation makes detailed procedural changes to competition law. In particular, it provides that breaches of competition law can be the subject of administrative fines, without the need for a criminal conviction.
This will greatly enhance the powers of Ireland’s two competition bodies, the Competition and Consumer Protection Commission (“CCPC”) and the Commission for Communications Regulation (“ComReg”).
The Act is detailed and complex. This note identifies seven key points.
Read Barry Doherty BL’s previous article – The Competition (Amendment) Bill 2022: Proposing a new sanctions-procedure for breaches of Competition Law
1. The new rules will apply soon
Over the years, there have been many proposals to change Ireland’s competition laws. Some Bills have been commenced but never became law. This time it’s different – the new Act went through the Oireachtas very quickly and is now law. The legislation was published 31 January 2022, and passed both houses of the Oireachtas on 22 June 2022.
The legislation was brought in, in part, to comply with Directive 2019/1 (“the Directive”). The Directive should have been implemented in Irish law by 4 February 2021.
In anticipation of its new powers, the CCPC has already consulted on how it might use those powers, which can be found here.
A CCPC press release of 4 July 2022 anticipates that the legislation will be commenced very soon, which can be read here.
As a result, businesses and their advisers will have to prepare for the new rules immediately.
At the time of writing, the new legislation was not publicly available (e.g. on the Oireachtas website or the Irish Statute Book online). The most recent published text of the legislation is the Bill as amended in the Dáil select committee on Enterprise, Trade and Employment on 6 April 2022, which can be read here. As there were no significant amendments after that point, it will be assumed that this text reflects the wording of the Act.
2. The new procedures are complex
As noted in the previous article on 9 February 2022, businesses and their advisers will have to get used to complex new procedures. Practitioners will have to become familiar with new concepts such as the “statement of objections” and “full investigation report” and advise whether clients are entitled to full or partial immunity from “administrative financial sanctions.”
Under the Act, the “competent authority,” which could be the CCPC or ComReg, can investigate a suspected breach of competition law, and bring the matter before an “adjudication officer” (“AO”). The AO is to act independently of the CA. The AO hears both sides, using procedures similar to those of a court. The AO can decide that the undertaking should pay a fine, or other sanctions. However, such sanctions must be confirmed by the High Court.
The sanctions can reach €10 million (or 10% of the undertaking’s worldwide to turnover in the previous year, whichever is higher). See the new section 15AC(1) of the Competition Act 2002, inserted by the Act.
The comment of 9 February 2022, summarised the procedures in the Competition (Amendment) Act 2022 (“the Bill”).
The Bill was changed significantly in Dáil Éireann, particularly in the Select Committee on Enterprise Trade and Employment. By way of overview, the following changes are particularly significant.
3. The rules of evidence are changing
Section 12 of the new Act repeals section 13 of the Competition Act 2002. This laid down special rules of evidence, to make certain documents admissible in proceedings (civil or criminal) under the Competition Act 2002. The Bill also covered similar topics, particularly in the proposed section 15AW dealing with the admissibility of evidence. In the Dáil, the Bill was amended to repeal section 13, thus reducing the risk of overlap and contradiction between the new section 15 AW and the existing section 13. However, under the Act (and specifically the new section 15AY inserted into the Competition Act 2002) proceedings under the Competition Act 2002, whether civil or criminal, will also be subject to Part 3 of the Civil Law and Criminal Law (Miscellaneous Provisions) Act 2020 – “the 2020 Act”. This also deals with the admissibility of evidence. See generally Nathan Reilly BL “The business of evidence” Bar Review November 2020 p. 144. That legislation in turn reflected, though not completely, the evidence rules in the Criminal Evidence Act 1992. At the same time, section 14 (8) of the 2020 Act provides that is not to alter or affect
“the admissibility of any document that would otherwise be admissible under any rule of law or enactment (including this Act) to prove the truth of any fact or facts asserted in it.”
Thus, there may still be scope for dispute over the admissibility of documents.
4. There are new rules on settlements
Section 12 of the new Act also repeals section 14B of the Competition Act 2002. This permitted the competent authority to obtain a court order, on consent, by which an undertaking agreed to do (or not to do) certain things, in exchange for which the competent authority would agree not to bring a civil action against that undertaking. Section 14B created a binding mechanism by which an undertaking would agree to cease breaches of competition law, without necessarily having to bring matters to a full trial. The thinking behind the section was that a breach of the agreement would put the offending party in contempt of court, which would give it a greater binding force than a simple agreement between the competent authority and the party concerned. The procedure under section 14B was comparable to commitments under Article 9 of Regulation 1/2003 (in EU competition law) or consent agreements in other jurisdictions e.g. under sections 105 and 106 of the Canadian Competition Act 1986. The CCPC used this power occasionally, for example to agree commitments in the furniture market: see here. However, in a recent report concerning private motor insurance, the CCPC explained that it decided against using section 14B and instead preferred to agree binding commitments with the interested parties. See paragraph 5.5 of the CCPC’s report of 8 February 2022 available here.
In the Dáil, it was explained that the new Act would also provide for binding commitments (see the new section 15AE) so the existing section 14B should be repealed to avoid confusion. The new section 15AE means that the competent authority can enter into binding agreements with undertakings. These would not require approval of the High Court (unlike former section 14B) though the terms of the agreement would have to be published. More generally, under the new Act there are provisions for the competent authority and a party under investigation to reach agreement, which can lead to a consent order: see sections 15L(5)(d), 15M and 15X(8) of the Act.
5. There are new rules on limitation periods
The Act contains is a new section 55A, which deals with limitation periods. In the Dáil, the relevant Minister explained that there was no explicit rule governing limitation periods for competition actions. (This is not quite accurate – section 11A of the Statute of Limitations 1957 lays down a six-year limit for damages actions brought under section 14(1) of the Competition Act 2002, and as discussed below this provision is explicitly mentioned in the amending legislation). The new section 55A applies to three types of actions:
(a) an action under section 14A of the Competition Act 2002 – this provides the competent authority with a right of action for breach of the competition rules (as opposed to section 14 which covers the right of action of aggrieved persons in general);
(b) issuing a prohibition notice under section 15H (this is a new procedure, created by the Act, by which the competent authority can order an undertaking to cease actions which might cause “serious and irreparable harm to competition” – it reflects the provisions on “interim measures” in Article 11 of the Directive).
(c) a referral under section 15M. Under this section, a competent authority can bring a case before an Adjudication Officer, to find an infringement of competition law. This is the chief innovation under the Act, and can ultimately lead to the High Court confirming a fine on the undertaking concerned.
Section 55A of the Act provides that the above three types of action can be brought notwithstanding the Statute of Limitations 1957 or the Statute of Statute of Limitations (Amendment) Act 1991. However, there is an exception for section 11A of the Statute of Limitations 1957 which (as mentioned above) governs damages actions under section 14 of the Competition Act 2002. This is somewhat curious, since damages actions under that provision seem to fall outside the three categories of action which are subject to the new limitations provision in the new section 55A. As a result, it is not obvious why the legislator considered it necessary to include an exception for section 11A of the Statute of Limitations 1957.
6. Adjudication Officers are subject to guidelines
The wording of section 15AF(1), as amended in the Dáil, provides that adjudication officers are to be subject to guidelines drawn up by the competent authority. In the Dáil debates, the relevant Minister explained that this would allow the competent authority to draw up guidelines on matters such as the principles to be taken into account in setting fines. Speaking in the Dáil on 6 April 2022, the Minister stated that this was justified by the fact that the adjudication officer is acting under the “delegated authority” of the competent authority. The Act contains provisions intended to ensure that adjudication officers are independent – see, in particular, the new section 15AP. Within this, section 15AP(1)(d)(ii)(I) provides that an adjudication officer is not to draw up or decide upon the guidelines. At the same time, those guidelines, where they apply, are binding on adjudication officers under section 15AF(2).
As mentioned above, the CCPC has been consulting on how it proposes to use its new powers. Reflecting Article 14 of the Directive, the CCPC proposes that administrative sanctions be imposed according to the gravity and duration of infringement. Its consultation document sets out a methodology very similar to that used by the European Commission in applying EU competition law, in its 2006 guidelines on finding. For example, there would be
- a fixed amount of the fine regardless of duration;
- a multiplier to reflect the gravity of the infringement;
- increases in the fine for matters such as recidivism, and
- a possible reduction e.g. in cases where the undertaking did not implement all of the anti-competitive agreement.
The EU courts have developed very detailed case-law on the calculation of fines, and it may be assumed that the Irish courts will take account of this.
7. The merger rules have been tightened up
This note focuses on the new provisions for administrative fines. However, it is worth noting that the Act tightens up some merger rules, particularly concerning the topic of “gun jumping” (where a merger is put into effect before clearance has been obtained). This is topical, in the light of the recent judgment of the EU General Court confirming a €28 million fine on Canon Inc for having jumped the gun on a merger. See the judgment of 18 May 2022 in Case T‑609/19 Canon Inc v Commission EU:T:2022:299.
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The views expressed above are the author’s own and do not reflect the views of The Bar of Ireland.