On 27 September 2023, the Competition (Amendment) Act 2022 (the "2022 Act") will enter into force following the recent publication of the much-anticipated commencement order regarding the 2022 Act. The 2022 Act revolutionises the Irish competition enforcement regime through the implementation of the ECN+ Directive, with the introduction of new and enhanced enforcement powers for the Irish competition authorities, the Competition and Consumer Protection Commission ("CCPC") and (regarding the electronic communications and postal sectors) the Commission for Communications Regulation ("ComReg").
The key changes to the Irish competition enforcement regime under the 2022 Act include a new multi-stage adjudication process including the establishment of a panel of 'adjudication officers', the introduction of new administrative or civil fines of up to 10% of worldwide turnover and the establishment of a fully-fledged 'whistle blower' programme – as well as a whole host of other changes that essentially overhaul the Irish competition regime.
We reported in full regarding the changes under the previous Bill (see "Irish Competition Law Update: 20 Things You Need to Know About Irish Competition Law Changes") and, since the changes between the Bill and the 2022 Act are relatively minimal, that commentary still holds.
In this Insight, we re-examine five key reforms under the 2022 Act that revolutionise the overall Irish competition enforcement regime and how this fundamentally impacts competition compliance in Ireland and the risk assessment for companies that uncover or are otherwise faced with potential competition issues.
See our separate Insight regarding the CCPC's new merger control powers under the 2022 Act.
Five key reforms to the Irish competition enforcement regime under the 2022 Act
1. New investigative powers
The Irish competition authorities will retain the full suite of investigative powers under the 2022 Act, including the power to carry out on-site inspections, the power to request large volumes of information and data and the power to summon witnesses to come before them.
The 2022 Act also grants new powers of surveillance, through extension of the Criminal Justice (Surveillance) Act 2009, enabling it to intercept communications and monitor the movements of persons suspected of infringement or non-compliance with competition law. The authorities must apply to the High Court for permission to exercise these powers by demonstrating reasonable grounds for their belief that the surveillance measures sought are necessary for the enforcement of competition law.
Significantly, through the multi-stage adjudication process, the adjudication officers will also have broad investigative powers in respect of matters that come before them which will mean that parties will be subject to greater exposure throughout the investigation process.
2. New fully-fledged whistle-blower process
The 2022 Act introduces a new administrative leniency programme enabling greater incentives for whistle-blowers and enhanced detection of potential competition breaches.
Supplementary to the current Cartel Immunity Programme in respect of the criminal cartel offence (which solely gives full immunity from criminal fines to parties that are 'first in the door'), the new leniency programme relates to the administrative or civil fines in respect of alleged conduct issues and offers broader incentives in terms of both full immunity from civil fines to parties that are 'first in the door' as well as reductions of up to 50% of any civil fine for any subsequent parties that provide evidence of ‘significant added value’ (and which reduces for each consecutive party that comes forward).
The new administrative leniency programme set out under the CCPC's Administrative Leniency Policy published in August 2022 is modelled on the EU programme. The CCPC has also issued further guidance in relation to the interaction between the Cartel Immunity Programme and the Administrative Leniency Policy which was also published in August 2022.
3. New multi-stage adjudication process
The 2022 Act introduces a new multi-stage adjudication process which, at a high-level, envisages an initial investigation by the CCPC case team that will make preliminary recommendations at the end of their investigation and a subsequent examination by a new panel of adjudication officers that will make a final decision in relation to the alleged conduct issues. Adjudication officers will have broad powers of investigation and review in relation to the matter and the preliminary recommendations by the CCPC case team, similar to those of a High Court judge in civil proceedings. The decision of the adjudication officers will be subject to confirmation by the High Court and can also be subject to a substantive appeal before the High Court (either 'on the merits' or by way of judicial review).
While the new multi-stage adjudication process will be complex and potentially lengthy, it has sufficient flexibility to enable investigations to be expedited and outcomes to be agreed in light of the alleged conduct issues under review (e.g., the possibility of commitments or a settlement agreement is envisaged, as explained further below).
4. New civil fines for a wide range of anti-competitive conduct
Perhaps the biggest novelty of the 2022 Act and what has attracted the most attention is the introduction of new civil fines of up to a maximum of €10 million or 10% of a party's worldwide turnover.
There are a number of elements of the new civil fines that mark a significant step-change relative to the position to date. First, in contrast to criminal fines imposed by the Director of Public Prosecutions, new civil fines can be imposed directly by the CCPC (although they are subject to confirmation by the High Court, as explained above). Secondly, the quantum of new civil fines is potentially much higher as the calculation of fines will be based on 10% of worldwide turnover on a consolidated group basis. Thirdly, in practical terms, new civil fines may be imposed for a much wider range of potential conduct issues as the finding of infringement will be based on the civil 'balance of probabilities' standard and there is no mens rea requirement. Accordingly, under the new regime, civil fines may be imposed not only for traditional 'cartel-type' conduct (e.g., price-fixing), but also all types of anti-competitive information exchanges, vertical issues such as resale price maintenance and 'newer' forms of conduct issues arising from horizontal competitor collaboration (e.g., in the context of environmental or sustainability initiatives) or labour market issues – all of which have been more difficult to sanction under the existing Irish regime.
Notably, the 2022 Act also introduces new procedural fines and new 'periodic penalty payment' fines for ongoing infringements and increases the maximum level of criminal fines of an amount not exceeding the greater of €50 million or 20% of Irish turnover of the undertaking or individual subject to a criminal prosecution. Since criminal fines are also generally capped at 10% of turnover in most other jurisdictions, this catapults Ireland to the jurisdiction with the highest relative fines for criminal cartel conduct (albeit such criminal fines will continue to be calculated by reference to domestic Irish turnover).
5. Other new outcomes for anti-competitive conduct
The 2022 Act provides for a range of other new civil outcomes in respect of conduct under investigation.
The 2022 Act provides for the (retained) power of the CCPC to agree legally binding commitments with a party under investigation and that appropriately addresses the alleged conduct, noting this has been the CCPC's most common enforcement outcome to date (see, most recently, the CCPC’s private motor insurance investigation). The 2022 Act also provides for the possibility of the CCPC agreeing a settlement with an undertaking including a specific administrative financial sanction or structural or behavioural remedy and making a referral to an adjudication officer for an order on consent.
On an interim basis, the CCPC also now has the power to issue a prohibition notice where there is a risk of “serious and irreparable harm to competition” due to an ongoing infringement (comparable to 'interim measures' at EU level which were most recently issued in Broadcom and Illumina/Grail)
Overall, the 2022 Act provides for a much broader range of enforcement outcomes which gives significant flexibility under the new regime relative to the alleged conduct issues under investigation.
The commencement of the 2022 Act marks an important milestone and heralds a new dawn for the competition enforcement landscape in Ireland. The Irish competition authorities, namely the CCPC and ComReg, are now equipped with a much greater enforcement arsenal than has been the case to date and can be expected to step up their investigation of potential conduct issues in the short-term.
While it will naturally take some time for the full force of the regime to 'bite', the commencement of the regime fundamentally changes competition compliance in Ireland and the overall risk assessment for companies that uncover or are otherwise faced with potential competition issues in the course of ongoing business activities. It is therefore critical that parties are aware of the implications of the reforms under the 2022 Act so as to to 'get ahead' of the new regime to the best extent possible.
Matheson's Competition and Regulation group advise on all aspects of Irish and EU competition law and merger control and are on hand to offer expertise and guidance as needed. We will continue to monitor and report on developments under the new Irish competition enforcement regime relevant to our clients.