Irish competition law is set to be revolutionised by the Competition (Amendment) Bill 2022 (the “Bill”) published this week with enactment expected in the coming months. The key changes include (i) huge new criminal fines not exceeding the greater of €50 million or up to 20% of turnover for ‘cartel’ offences, (ii) new civil fines of €10 million or up to 10% of turnover (whichever is greater) or a range of other civil sanctions by a new independent panel of adjudicators within the Irish regulators, (iii) new interim order powers for the Irish regulators in competition enforcement and merger control cases, (iv) a new fully-fledged ‘whistle-blower’ or leniency regime with fine reductions for firms that co-operate with the regulators, and (v) new merger control powers for the regulator to compel notification and potentially unwind ‘below threshold’ mergers that are not subject to mandatory notification.
The Bill implements the provisions of Directive 2019/1 which seeks to harmonise the enforcement of EU competition law across the EU and bolster the enforcement powers of national competition authorities (the “ECN+ Directive”) and follows the public consultation on certain aspects of the Bill at the start of 2021 (see here). The Bill primarily enhances the powers and enforcement regime of the Competition and Consumer Protection Commission (the “CCPC”) (as well as those of the other Irish regulator with competition powers, the Commission for Communications Regulation).
While CCPC is set to gain radically increased powers under the Bill, this will only make a real impact on Irish businesses if the CCPC initiates and completes a much greater number of investigations in much shorter timeframes. In the past 5 years, only one criminal case with prosecutions (Commercial Flooring cartel) and three civil cases with legally binding behavioural commitments (Nursing Homes Ireland, Secondary Ticketing, Private Motor Insurance) have been taken to a conclusion and they took many years. By contrast, the CCPC is very active in merger control and therefore the CCPC’s increased powers in this area will perhaps have a much greater impact in the short term.
The Bill – 20 Things to Know
With the Bill running to some 120 pages, there is a lot to digest and some elements may change during the legislative enactment process, but here are our top 20 headline points in respect of the new provisions that will change the Irish competition enforcement regime and the Irish merger control regime:
1. New CCPC surveillance powers – Pursuant to the public consultation, the Bill provides for certain surveillances powers under the Criminal Justice (Surveillance) Act 2009 to be extended to the CCPC. These powers would enable the CCPC to undertake interception of recording of electronic communications and video and audio surveillance of suspects. The CCPC would need to apply to the High Court for authorisation to exercise such powers and in doing so demonstrate the necessity of same for the purposes of obtaining information as to whether a competition infringement has been committed.
2. New cartel offence of ‘bid-rigging’ – In Ireland, the practice to date has been to regard ‘bid-rigging’ as a form of price fixing or market sharing which are specifically prohibited under section 4 of the Competition Act 2002 (as amended) (the “Act”). However, this approach has led to some difficulties with Court cases, where bid-rigging as a specific concept was considered to be beyond the existing scope of anti-competitive practises outlined in the Act. The Bill therefore proposes to introduce a new explicit cartel offence of ‘bid-rigging’ through the amendment of section 4 of the Act, including a new definition of ‘bid-rigging’ which covers “participation or non-participation in a relevant bidding process without informing the person requesting the bids or tenders…”. Types of ‘bid-rigging’ include, in a relevant bidding process, (i) agreements not to submit nor to withdraw a bid or tender; (ii) agreements to submit a bid or tender on terms or subject to conditions; or (iii) collusive tendering.
3. New ‘mens rea’ requirement for cartel offences – As a technical matter, the criminal competition law offences under section 6 of the Act are currently governed by a ‘strict liability’ regime under which the mere commission of a competition law offence without any proof of intent or otherwise can give rise to liability. The Bill introduces a new ‘intention or recklessness’ requirement for criminal competition law offences under section 6 of the Act. The practical effect of this new mens rea requirement and whether it will make competition law infringements more difficult to prosecute under the criminal regime will wait to be seen. We would note the experience in the UK in prosecuting the cartel offence with the previous ‘dishonesty’ requirement where the UK competition authorities argued that the reason for the lack of prosecutions was that it was difficult to show that an individual had acted dishonestly (noting the ‘dishonesty’ requirement was ultimately removed following the amendments under the UK Enterprise and Regulatory Reform Act 2013).
4. Increased level of criminal fines – The Bill proposes an increase in the maximum level of criminal fines of an amount not exceeding the greater of €50 million or 20% of turnover of the undertaking or individual subject to a criminal prosecution. Noting that even criminal fines are generally capped at 10% of turnover in most other jurisdictions, this could catapult Ireland to the jurisdiction with the highest relative fines for criminal cartel conduct.
5. New enhanced civil enforcement process – The Bill sets out the proposed new multi-stage civil enforcement process following an investigation by the CCPC related to a competition law infringement, a breach of a procedural requirement or an action for non-compliance with commitments, a structural or behavioural remedy or a prohibition notice. Following its investigation and where it decides not to refer the matter to the DPP, the CCPC may either seek relief under section 14A or section 14B of the Act or proceed to issue a ‘statement of objections’ (“SO”). Where the CCPC issues an SO, the CCPC may decide to continue the investigation, close the investigation, agree legally binding commitments with the parties or refer the matter to a new independent panel of ‘adjudication officers’ (see below).
Where a referral is made, this may be for the purposes of seeking either an order on consent in respect of a settlement agreement (including a specific civil fine or other remedy) that the CCPC has entered into with the parties or a decision by the adjudication officer in relation to the existence of an infringement and the imposition of any civil fines or other remedy. Where the adjudication officer makes a negative finding, it shall inform the CCPC and the parties of any civil fines or other remedy it is proposing to impose, affording 15 working days for written submissions before reaching a final decision.
6. New independent adjudication panel – The Bill proposes the establishment of a panel of adjudication officers responsible for deciding on matters referred to it including the imposition of civil fines for competition law infringements. Adjudication officers will be nominated by the CCPC for appointment by the relevant Minister and shall be independent in the performance of their functions. Members of the CCPC or CCPC staff may serve as adjudication officers (with the exception of the Chairperson of the CCPC) and where they are appointed they shall not be required to perform any duty which would be inconsistent with their independence (including involvement in any competition law investigation). The relevant Minister is to make regulations for the appointment and functions of the role of adjudication officers.
7. Powers of new adjudication officers – Once a matter is referred to it, the Bill provides for a range of powers that an adjudication officer may take to reach a decision. These include (i) directing a CCPC officer or one or more of the parties subject to an investigation to answer questions, adduce evidence or clarify an issue of fact, (ii) conducting an oral hearing, and (iii) summoning a witness to appear to give evidence or attend an oral hearing (including on oath). Non-compliance with directions or a witness summons is an offence.
8. Introduction of civil fines for competition infringements – One of the novelties of the Bill is that it introduces a new civil ‘administrative financial sanction’ that may be imposed by adjudication officers with maximum fines of the greater of €10 million or up to 10% of turnover of the undertaking. This was a key provision mandated by the ECN+ Directive that is set to revolutionise the Irish competition enforcement regime bringing it in line with other EU regimes and the UK regime. Critically, the administrative financial sanction will need to be confirmed by the High Court (due to Irish constitutional law reasons and similar to the case of fines imposed by other Irish regulators including the Central Bank of Ireland and the Data Protection Commission). The High Court must, however, confirm the decision unless the High Court finds that the decision of an adjudication officer contains a manifest or fundamental error of law or that the fine or remedy imposed was manifestly disproportionate or in excess of the sanction or remedy required to be dissuasive or effective. The Bill sets out the principles for the calculation of civil fines which reflect those applied at EU level.
9. Other civil financial penalties – The Bill also introduces civil fines for a breach of a procedural requirement of €1 million or 1% of worldwide turnover and ‘periodic penalty payments’ of up to 5% of average daily total worldwide turnover for purported ongoing non-compliance with certain procedural requirements, a probation notice, commitments or structural or behavioural remedies – another and potentially powerful creature of the EU regime, as was infamously demonstrated in the EU case against Microsoft in 2000’s.
10. Prohibition notices – The Bill provides for a new power for the CCPC to issue prohibition notices where there is a risk of “serious and irreparable harm to competition” due to an ongoing infringement. This reflects the power of the European Commission to issue “interim measures” (noting the more recent increased use of the measure by the European Commission in Broadcom and Illumina/Grail) and was one of the new powers that the Government was required to introduce under the ECN+ Directive. The prohibition notice can require a firm both to ‘cease and desist’ or take positive steps to remedy a suspected infringement. Firms may make written submissions to the CCPC in relation to the contents of the order or ultimately appeal the order to the High Court. Breach of such an order is punishable by a fine of up to €10 million or 10% of turnover.
11. Commitments / settlement agreement – The Bill provides for the power of the CCPC to agree legally binding commitments with a company subject to an investigation that appropriately address the alleged conduct noting that it has been common practice for the CCPC to close an investigation subject to legally binding commitments (see, most recently, the CCPC’s private motor insurance investigation). In addition, the Bill 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 (as outlined above).
12. Introduction of a fully-fledged ‘whistle-blower’ programme – As mandated by the ECN+ Directive, the Bill introduces a fully-fledged ‘whistle-blower’ programme for the CCPC under the civil enforcement regime enabling greater incentives for whistle-blowers and enhanced detection of potential competition breaches. This supplements the current Cartel Immunity Programme in respect of the Irish criminal competition regime. The new ‘whistle-blower’ programme under the Bill relates to the imposition of civil fines in respect of cartel infringements and offers incentives to both so-called ‘immunity’ applicants (ie, ‘first in the door’) which may be granted full immunity from civil fines and subsequent ‘leniency’ applicants that provide evidence of ‘significant added value’ and may be granted a reduction of up to 50% of any civil fine (which reduces for each consecutive party that applies for leniency). The Bill also grants the CCPC the power to establish a leniency programme for competition law infringements other than cartels. The principles and process under the new leniency programme that are set out in the Bill mirror those under the EU leniency programme.
13. Appeals against decisions of an adjudication officer – The Bill sets out the procedural rules governing both substantive appeals (ie, ‘on the merits’) and applications for judicial review against decisions of an adjudication officer. Substantive appeals against civil infringement decisions are subject to a 28-day appeal deadline. Appeals by undertakings affected by, but not subject to, the decision are subject to a 14-day appeal deadline. Appeals by undertakings against a prohibition notice are subject to a 7-day appeal deadline. Undertakings may also seek judicial review against a competent authority (including a CCPC officer or an adjudication officer) in the performance of the functions under Parts 2C to 2G, subject to varying appeal deadlines depending on the type of decision concerned. Further appeals to the Court of Appeal are provided for, subject to certain specific conditions.
14. Transitional provisions – Where the investigation relates “wholly” to conduct that took place before 4 February 2021 (which is the deadline for transposition of the ECN+ Directive) or where the investigation has been opened and is pending prior to the enactment of the Bill, the conduct will be investigated pursuant to the CCPC’s powers under the current Irish enforcement regime. Where the investigation relates “in whole or in part” to conduct that took place before 4 February 2021, the conduct will be investigated pursuant to the CCPC’s powers under the new Irish enforcement regime as amended by the provisions of the Bill. Accordingly, it would seem that ongoing conduct – referred to as a ‘single continuous infringement’ under EU competition law – will be investigated under the new Irish enforcement regime as amended by the provisions of the Bill. However, where an investigation has been opened and is pending before the provisions of the Bill come into operation, the conduct will continue to be investigated under the current Irish enforcement regime.
15. Other elements of the new competition enforcement regime – Consistent with the principles of the ECN+ Directive, the Bill also provides that the CCPC may request a competition authority of another Member State to carry out an inspection, interview or other fact-finding measure on its behalf. The Bill also sets out a number of procedural provisions including provisions in relation to access to file and the establishment of confidentiality rings.
16. Power to compel notification of ‘below-threshold’ transactions – As expected from the public consultation, the Bill provides for a power of the CCPC to require notification of ‘below threshold’ transactions that are not subject to the mandatory notification requirement but which may impact competition in the State. The CCPC may do so within 60 working days of one of a number of specified events and shall specify a period within which the notification is to be made.
The date from which CCPC could seek to exercise this and its other new merger control powers set out below is unclear but the working assumption is that the CCPC will only be able to exercise these new powers from the date of enactment of the Bill and will be debarred from exercising these powers in relation to transactions (including ‘below threshold’ transactions) that have completed before the date of enactment of the Bill.
17. New ‘gun-jumping’ offences and CCPC power to bring summary prosecutions – The Bill provides for a new ‘gun-jumping’ offence of breach of the ‘stand-still’ obligation under section 19 of the Act (ie, where parties complete a transaction prior to CCPC clearance). This supplements the current Irish ‘gun-jumping’ offence of failure to notify prior to completion (which the Bill also now envisages to apply where parties fail to notify a ‘below-threshold’ transaction that the CCPC has required it to notify). The Bill also provides for a power of the CCPC itself to bring summary proceedings in respect of the ‘gun-jumping’ offence of failure to notify prior to completion. The Bill also clarifies that a transaction that is completed in the breach of the ‘stand-still’ obligation (ie, prior to CCPC clearance) is void until the CCPC approves the transaction or issues a determination to carry out an in-depth investigation.
18. Power to impose interim orders in respect of notified transactions – The Bill provides for a power of the CCPC to impose interim orders in respect of transactions that have been notified to it (including ‘below threshold’ transactions) where it considers it appropriate to do so due to the risk that the transaction may impact competition in the State. Such interim measures include measures to refrain from implementing or further implementing a transaction or measures to mitigate the effects of any steps already taken to implement the transaction (eg, obligations as to the carrying on of any activities or safeguarding of any assets). These appear to be similar in substance to ‘interim enforcement orders’ issued by the UK Competition and Markets Authority in respect of both completed and non-completed transactions.
19. Power to “unwind” completed transactions – The Bill provides for a power of the CCPC to unwind or dissolve completed transactions where the CCPC finds that the result of the transaction will be to substantially lessen competition in markets in the State. This is a potential new CCPC outcome that would appear to be most relevant in the case of ‘below thresholds’ transactions that are notified to the CCPC.
20. New rules in respect of ‘requirements for further information’ (“RFI”) – Where transaction parties subject to CCPC review respond to an RFI, the CCPC is under an obligation to either confirm compliance or request additional information within 10 working days of the submission of the response. The Bill also provides for a power of the CCPC to issue RFIs to ‘undertakings involved’ and third parties (eg, other market participants) that the CCPC considers may have relevant information.