Irish competition law: changes will strengthen enforcement

The 2022 Competition (Amendment) Act (‘the Act’), which implements the EU’s ECN+ Directive (31-page / 531KB PDF) into national law, was enacted on 29 June 2022. It will come into force in a staggered fashion over the coming weeks, with many provisions expected to take effect in August 2022.

The Act represents a sea change in Irish competition law. The amendments will go further towards aligning Ireland with European and international best practice for effective antitrust and merger control enforcement. It will now be important to ensure that the enhanced powers come with equally robust procedural safeguards and guidance to ensure legal certainty and that parties' rights of defence are protected.

Background

The new law will give the Competition and Consumer Protection Commission (CCPC) and the Commission for Communications Regulation (ComReg), which has concurrent competition law enforcement powers, enhanced enforcement powers to address anti-competitive conduct. It will also introduce enhanced merger control powers, going beyond the minimum EU requirements of the ECN+ Directive.

Under the existing competition enforcement regime in Ireland, the CCPC and ComReg are unable to fine companies directly for competition law infringements without seeking a criminal conviction by a court. For civil competition law infringements, they can only seek commitments from businesses to cease or refrain from future anti-competitive practices and can only enforce compliance with such measures through court proceedings. Penalties for implementing notifiable mergers without prior clearance – known as 'gun jumping' – can only be sought by the Director of Public Prosecutions (DPP) on an application to the court, not by the CCPC itself.

This sets a high bar for effective enforcement of the Irish competition law rules. It is also out of step with the enforcement powers of the UK's Competition and Markets Authority (CMA), the European Commission, and many EU national competition authorities, which can directly levy administrative fines for breaches of antitrust rules.

As a consequence, there have been relatively few antitrust enforcement cases under the existing regime in Ireland. For example, in terms of criminal enforcement, to date the CCPC has secured criminal convictions in only one bid-rigging cartel (in that case a former director’s fine was increased on appeal); and, just last month, 14 people were reportedly charged over their alleged involvement in a school transport bid-rigging cartel. Three other cartels where criminal convictions were secured involved price-fixing. In terms of civil antitrust enforcement, the CCPC’s latest investigations in the private motor insurance, household furniture products, and bagged cement sectors were either settled with legally binding commitments or discontinued, without the imposition of civil penalties.

The ECN+ Directive aims to ensure that all national competition authorities in the EU have sufficient independence, powers and resources to effectively enforce competition law, including the ability to find that an infringement has occurred, strong evidence-gathering powers and an effective leniency programme. The deadline for EU member states to bring into force domestic laws implementing the ECN+ Directive expired on 4 February 2021. In addition to making the necessary changes to implement the ECN+ Directive into Irish law, and following a public consultation, the Irish government decided to propose to introduce additional powers under the Act that go beyond the directive's scope.

New antitrust enforcement powers

The Act, once in force, will introduce significant changes to Ireland’s competition law enforcement rules.

Stronger dawn raid powers

The CCPC's dawn raid powers will be strengthened, and it will also be allowed to impose interim measures during investigations. The CCPC will also have powers, with court authorisation, to undertake video and audio surveillance and intercept and record electronic communications in cartel investigations.

Civil enforcement

The CCPC will be able to investigate suspected breaches of competition law and, following a referral to an adjudication officer, impose administrative fines where it finds an infringement without the need to obtain a criminal conviction in court. Significantly, the burden of proof on the CCPC will be much lower – on a balance of probabilities rather than beyond a reasonable doubt. However, fines can only be imposed if the business breached competition law “intentionally, negligently or recklessly”.

The maximum civil fine that can be imposed will be €10 million or 10% of the relevant undertaking’s global turnover, whichever is the greater. The fines will be imposed by an independent adjudication officer following a referral by the CCPC or ComReg, and – for constitutional reasons - must be confirmed by the High Court before taking effect. The adjudication officer may also impose remedies or periodic penalty payments, as appropriate.  By creating the new adjudication officer function, the Act allows competition fines to be imposed without the need for a criminal conviction whilst respecting constitutional rights.

The CCPC will have new powers to issue prohibition notices if there is risk of “serious and irreparable harm to competition” – akin to antitrust interim measures that the European Commission may impose.  The CCPC will also be able to enter into legally binding commitments or settlement agreements with businesses to resolve competition law infringements.

Criminal enforcement

The criminal competition law regime will be maintained alongside the revised civil regime. However, criminal antitrust infringements will no longer be strict liability offences – it will be necessary to demonstrate intentional or reckless conduct by the infringing party, potentially making criminal prosecution more difficult in the future.

Maximum criminal penalties for breaching Irish or EU competition law, upon conviction on indictment, will increase to €50m (up from €5m) or 20% (up from 10%) of the relevant undertaking’s turnover, whichever is higher. The ECN+ Directive requires EU member state national competition authorities to set maximum penalty levels for breaches of article 101 or 102 TFEU at a level not less than 10% of the company’s total worldwide turnover, but member states can impose higher maximum penalties.

A revised civil or ‘administrative’ immunity and leniency programme will be put in place. This will operate alongside the CCPC’s cartel immunity policy for criminal competition enforcement.

New types of prohibited conduct

‘Bid rigging’ will specifically be prohibited as one of several types of cartel conduct – along with price fixing, market sharing, and import/export bans – enabling the CCPC to pursue such infringements more easily. To date, the CCPC has had to characterise bid-rigging as another type of cartel conduct that is expressly prohibited by Irish competition law, such as price fixing or market-sharing.

Appeals

Sanctions imposed by an adjudication officer will be appealable to the Irish courts, in a similar way as infringement decisions and antitrust fines may be appealed in other jurisdictions such as the UK and EU.

Individual penalties

Under the previous regime, individuals convicted on indictment of a criminal infringement of Irish competition law are automatically disqualified from acting as company directors. Individuals convicted on indictment of criminal infringement may also be imprisoned for up to 10 years. This position will not change; however individuals will now face the risk of increased maximum fines under the Act.

The chair of the CCPC welcomed the proposed changes, noting that the Act “marks the beginning of a new era in competition law enforcement” and that the CCPC is ready to use its new powers “as soon as the Act comes into force”. He said that CCPC is also “introducing a leniency programme to encourage whistleblowing on secret cartels”.

Ireland’s minister of state with responsibility for company regulation said that the new powers introduced by the Act "will act as a big disincentive for those taking part in anti-competitive practices, which drive up costs, freeze out start-ups and smaller businesses and lead to bad quality products and poor services”. The Act "also enables greater cooperation between competition authorities across the EU, allowing us to challenge these practices on a cross-border basis", he said.

Merger control regime changes

Various changes to the merger control regime are also proposed.

‘Gun jumping’ proceedings

The CCPC will itself be able to pursue summary proceedings before the courts for “gun jumping” fines rather than relying on the DPP to bring such proceedings. A gun-jumping offence arises from the implementation without prior CCPC approval of a transaction that either:

• is subject to mandatory notification under Irish merger control rules; or
• is not notifiable but has been called-in by the CCPC under its new powers, as set out below.

Mandatory vs voluntary notification

The mandatory notification obligation remains for mergers that trigger the relevant mandatory thresholds: where the transaction parties’ combined turnover in Ireland is at least €60m and where each parties’ Irish turnover is at least €10m. Additionally, all mergers in the media sector are notifiable.

While merger parties already had the ability to notify on a voluntary basis transactions that fell below the mandatory notification thresholds, the Act now formally gives the CCPC the power to call in and review non-notifiable mergers if the CCPC believes the transaction may have an “effect on competition in markets for goods or services in Ireland”. This is a low threshold for CCPC intervention and could create some legal uncertainty for merging parties in the future.

New remedies

The CCPC will now have the power to unwind or dissolve completed transactions that would result in a substantial lessening of competition in Ireland. This mirrors the CMA’s long-established powers under the UK merger control regime.

It will also be able to impose a range of interim measures to prevent action that could prejudice or hinder its review of notified mergers, including mergers below the mandatory notification thresholds. Interim measures may include preventing parties from taking steps towards implementing, or further implementing, the deal pending the conclusion of CCPC’s merger review.

Information-gathering powers

The CCPC will be able to seek or receive information from third parties not directly involved in the merger proceedings. The Act also imposes time limits within which the CCPC must confirm that its request for information has been complied with or request additional information.

Next steps

The CCPC has developed a series of draft policies on the proposed operation of its new powers and responsibilities when the Act comes into force. Public consultation on most of these policies has already concluded. The policies will set out CCPC’s future approach to leniency, enforcement, penalties, and access to file, and how the new civil and existing criminal antitrust regimes will operate together.

Businesses must be mindful of these substantial changes and the increased enforcement risk, both in terms of antitrust investigations and merger control. Companies concerned about potential competition law infringements will need to become familiar with the CCPC’s new civil leniency regime, including accompanying guidance.