Competition Enforcement in Ireland Following the Competition (Amendment) Act 2022: Of Many Forms and Mixed Effectiveness
Introduction
Historically, Irish competition law has enjoyed both limited forms and effectiveness of enforcement.[1] The historic regime was certainly underutilised. It was even judicially described as ‘toothless and ineffective’.[2] However, the imminent implementation of the Competition (Amendment) Act 2022 (‘2022 Act’) promises change.[3] In fact, according to some, the Act provides ‘a once in a generation opportunity to reform Irish competition law’ for the better. [4]
This article will first examine the various forms of competition law enforcement in Ireland, with particular emphasis on recent legislative developments. Secondly, albeit too early to analyse with certainty, the perceived effectiveness of these measures will be explored. It will be concluded that, even at this premature stage, it is clear the 2022 Act’s changes should ameliorate several longstanding shortcomings of the Irish antitrust enforcement system.
Forms of Enforcement
In understanding the forms of competition enforcement, one must remember Ireland has ‘two systems of competition law in concurrent operation’; EU law and national law.[5] Without question, the EU law framework, as enforced by the European Commission and private litigants, tends to dominate the competition conversation in the European context. However, since the 2003 Regulation which significantly decentralised competition enforcement,[6] 85% of EU competition cases have been managed by National Competition Authorities (‘NCAs’) rather than the European Commission. This highlights the importance of NCAs in modern enforcement.[7] In the Irish context, the Competition and Consumer Protection Commission (‘CCPC’) is the primary NCA,[8] with lesser roles held by the courts, DPP and ComReg.[9]
The forms of enforcement enjoyed by the CCPC have traditionally contrasted with those available to the European Commission or ‘many European countries’.[10] However, the recent ECN+ Directive introduced ‘a standard toolbox of powers and instruments’ for NCAs to enforce competition law.[11] Ireland’s 2022 Act transposes the ECN+ Directive and in many respects even goes beyond its requirements. For instance, the 2022 Act grants increased powers of surveillance which allow for conducting video and audio surveillance as well as to require interception and recording of electronic communications.[12] Similarly, the 2022 Act also grants new powers regarding merger regulation and prohibition notices to enforcement bodies despite the ECN+ Directive not mandating same.[13]
Traditionally, civil enforcement in Ireland was confined to injunctive relief,[14] settlements and commitments.[15] Neither the courts nor the CCPC could impose fines for non-criminal breaches. This contrasted markedly with other EU jurisdictions and the European Commission aptly deemed this system ‘unsuited to detection and deterrence’ of anti-competitive behaviour.[16] Crucially, the 2022 Act facilitates administrative enforcement of competition law by empowering the CCPC to make findings of competition law breaches and impose administrative fines of €10 million or 10% of the undertaking’s worldwide turnover, whichever is greater.[17] The calculation of fines must also consider legislatively prescribed factors[18] and the CCPC Guidelines.[19] In addition to this EU competition harmonisation factor, it is also notable that the 2022 Act is ‘part of a wave of legislation providing for administrative fines’, with other examples including the Online Safety and Media Regulation Act 2022 and Communications Regulation Bill 2022.[20]
The European Commission emphasises the importance of such fines in serving two key objectives: punishment and deterrence.[21] Jointly, these objectives help prevent such anticompetitive conduct from occurring by reducing the financial incentives for breaching competition rules. While optimal enforcement requires a careful balancing of fines and individual sanctions, the mere introduction of such fines is itself a promising starting point.[22]
Notably, fines must be imposed by independent adjudication officers.[23] The fines are then confirmed by the High Court.[24] This onerous separation of powers is constitutionally required in the Irish context, particularly following the Supreme Court decision pertaining to the administration of justice by quasi-judicial bodies in Zalewski.[25] However, despite this oddity imposed by Irish constitutional law, it should not be overly concerning because a similar functional separation has been voluntarily adopted by the French ADLC body, which is ‘said to be one of the best performing NCAs in the world’.[26]
Regarding criminal enforcement, sections 4 and 5 of the 2002 Act have always constituted criminal offences. However, the penalties upon indictment have now increased to include maximum fines of €50 million or 20% of the undertaking’s annual turnover. Given that most European jurisdictions are capped at 10% fines for such offences, ‘this could catapult Ireland to the jurisdiction with the highest relative fines’.[27] The criminal enforcement regime has also been morphed by the new ‘bid rigging’ offence, which prohibits ‘participation or non-participation in a relevant bidding process without informing the person requesting the bids or tenders’.[28] While such practices often previously fell under the broad wording of section 4 of the 2002 Act, it was felt an express and clearly defined prohibition would remove some difficulties which had been observed in prior prosecutions.[29] Other criminal enforcement changes include a limitation of certain prosecutions.[30] In addition, there is modified mens rea requirement for cartel offences.[31]
When considering the various forms of competition enforcement in Ireland, it is important to also consider the role of private enforcement. This involves ‘aggrieved parties’ pursuing remedies such as damages in respect of abusive conduct by dominant undertakings which has impacted them.[32] It is beyond the scope of this discussion to consider the limits of public enforcement but, suffice it to say, the importance of the role played by private parties in ensuring fair market competition is well-documented and should not be underestimated.[33] One primary reason for this is the reality that NCAs have limited resources and simply cannot act as the sole enforcer of competition rules. While the CCPC’s budget is significantly above the European NCA average,[34] it should be borne in mind that the CCPC fulfils a ‘dual mandate’ of, not only enforcing competition, but also consumer protection more generally.[35] Given that the ECN+ explicitly requires that NCAs are sufficiently financially resourced, perhaps the CCPC will warrant greater funding going forward.[36]
Effectiveness of Enforcement
Some concerns that perhaps these vast legislative changes may have an underwhelming impact have already begun to garner media attention.[37] The extent to which the new powers will actually be enforced by the CCPC and others has even attracted political comment.[38] Perhaps most notably, the Department of Enterprise, Trade and Employment recently oversaw a Public Consultation inviting submissions regarding the perceived effectiveness of several elements of the 2022 legislation from various stakeholders.[39] Responses were received from the CCPC, the Law Society of Ireland and several large commercial law firms among others.[40] While the broad sentiments towards the legislation were positive, there were nonetheless mixed responses to each of the specific elements upon which comments were sought. For instance, while some felt the new express prohibition of ‘bid-rigging’ was helpful, others opined its overly narrow definition and lack of alignment with other EU jurisdictions could prove problematic.[41] By contrast, changes to powers to prosecute ‘gun jumping’ offences by merger parties were widely welcomed and broadly supported.[42] These new powers allow for summary prosecution where parties proceed without the requisite merger approval from the European Commission.
However, perhaps the strongest responses received from stakeholders were those pertaining to the new surveillance powers discussed previously. Most submissions regarding the surveillance issue stressed the need for independence and safeguards in exercising these powers given the weighty human rights considerations involved.[43] Some concerns with these powers included the level of judicial involvement in the process, ensuring fair trial rights and greater clarity on how non-relevant information gathered would be excluded or how legally privileged material would be handled. This broad sample of views expressed by those involved in the Public Consultation are intended to illustrate the divisiveness of the 2022 Act’s measures. Some are almost unanimously welcomed, while others raise varying levels of concern. Ultimately, it appears that certain aspects of the reform may not yet be settled and only in time will their forms or effectiveness become clear.
Regarding the extent to which these increased powers will be implemented and enforced by Irish NCAs, the CCPC’s recently released Annual Report sheds light on the Commission’s investigative activities.[44] Overall, the total number of inspections by the Commission increased dramatically in 2022. For instance, there were 605 unannounced online and in-person business-compliance inspections took place in 2022, contrasting markedly with the 115 such inspections in 2021.[45] While the undeniable impact of the Covid-19 public health restrictions should be borne in mind when making such temporal comparisons, the signs are encouraging. Further indicia of ambitious enforcement include the CCPC’s first ever merger prohibition and a pioneering in-depth review of social media influencer marketing.[46] Another encouraging feature of the CCPC’s efforts was that, even in the face of challenging circumstances and limited resources, the Commission aimed to prioritise ‘areas where we could make the greatest difference’.[47] Furthermore, the Annual Report designating one of their four core Strategic Goals as being ‘to continue to invest in our people, governance and infrastructure’ is another welcome objective which will hopefully lead to greater invocation of competition enforcement tools going forward.[48]
Conclusion
The 2022 Act has expanded the range of forms that Irish competition enforcement can now adopt. A once almost forgotten regime existing only in the shadow of the European Commission may now emerge as a large player in the NCA realm. The potential impact of the CCPC’s enforcement should not be underestimated, particularly given the current attractiveness of Ireland as a jurisdiction of choice for large US monopolists.[49] This combined with Ireland’s increasing role as something of a regulatory hub could make Ireland’s domestic competition law enforcement an important piece of the EU antitrust puzzle.[50]
Regarding the post-reform effectiveness of Irish competition law, it is too early to draw definitive conclusions. These reforms will presumably make Irish competition enforcement more effective. In attempting to synthesise the sentiments of various practitioners, it appears ‘competition law is set to be revolutionised’[51] by this ‘overhaul’[52] of ‘significant changes’.[53] These ‘wide-ranging new powers’,[54] which have been introduced under the Act, have been described as representing a ‘sea change in Irish competition law’.[55] This combined with positive signs from the CCPC’s Annual Report could certainly lead to further progress in terms of national antitrust enforcement.
Even if these powers are not to be exercised forcefully in practice, the mere creation of these new powers will likely ‘act as a big disincentive’ for potential infringers.[56] Equally, the reputational and credibility boosts to the CCPC as an enforcement body alone should also increase deterrence.[57] While the true impact of the 2022 Act remains to be seen, the legislation is an ostensibly positive development. On the most basic level, the Act provides a ‘long-sought after breakthrough’ on many key traditional enforcement issues,[58] yet also seemingly ‘fills a significant gap in the existing enforcement regime’.[59] Some fine-tuning is probably warranted. However, this should not detract from the overall thrust of the legislation which has been well received. Only in time will the true impact of the 2022 Act be revealed. For now, Irish competition enforcement remains of many forms and mixed effectiveness.
[1] Alan McCarthy and Vincent Power, Irish Competition Law: The Competition Act 2002 (Dublin, Butterworth 2003) 23. Michael Frese, Sanctions in EU Competition Law: Principles and Practice (Oxford, Hart Publishing 2014) 6.
[2] Macken v O’Reilly [1979] ILRM 79.
[3] Competition (Amendment) Act 2022 (‘2022 Act’).
[4] Ceara Tonna-Barthet, ‘The Impact of Fining Powers on the Effective Enforcement of Irish Competition Law and The Need to Facilitate Collective Redress’ (2022) 25(1) Trinity College Law Review 97; Isolde Goggin, ‘Joint Committee on Enterprise, Trade & Employment: CCPC opening statement’ (CCPC.ie, 23 February 2021)
<www.ccpc.ie/business/joint-committee-on-enterprise- trade-employment-ccpc-opening-statement/> accessed 20 August 2023.
[5] Sinead Eaton and Pat O’Brien, Competition Law in Ireland (Alphen aan den Rijn: Kluwer Law International 2017) [34].
[6] See Regulation (EC) 1/2003 of the Council of 16 December 2002 on the implementation of the rules on competition laid down in arts 81 and 82 of the Treaty.
[7] European Commission, ‘European Competition Network: Statistics; (europa.eu)
<https://competition-policy.ec.europa.eu/european-competition-network/statistics_en> accessed 20 August 2023.
[8] Department of Enterprise and Employment, Competition Law (enterprise.gov.ie)
<https://enterprise.gov.ie/en/what-we-do/consumer-competition/competition-law/#:~:text=The%20Competition%20and%20Consumer%20Protection,Irish%20and%20European%20competition%20law> accessed 20 August 2023.
[9] 1/2003 Regulation, Articles 5 and 35.
[10] Patrick Massey and Daragh Daly, Competition & Regulation in Ireland: The Law and Economics (2003) (Dublin: Oak Press 2003) 104.
[11] Directive (EU) 2019/1 of the European Parliament and of the Council of 11 December 2018 to empower the competition authorities of the Member States to be more effective enforcers and to ensure the proper functioning of the internal market. Siún O’Keeffe, ‘Transposing ECN+: for some a formality, for others fundamental change’ (2021) 23(1) Irish Journal of European Law 249.
[12] Competition (Amendment) Act 2022, section 35. Criminal Justice (Surveillance) Act 2009 (as amended).
[13] Competition (Amendment) Act 2022, sections 14 and 15. See Pinsent Masons, ‘Irish Competition Law: changes will strengthen enforcement’ (pinsentmasons.com, 13 July 2022)
<https://www.pinsentmasons.com/out-law/analysis/irish-competition-law-changes-strengthen-enforcement> accessed 20 August 2023.
[14] Competition Law Act 2002, section 14A.
[15] Competition (Amendment) Act 2022, sections 14K(4)(d) and 15L(5)(d). Sinead Eaton and Anna-Louise Hinds, ‘Commitment Issues: New Developments in EU and Irish Competition Law’ (2014) 35(1) European Competition Law Review 33.
[16] Commission Staff Working Document on Ten Years of Antitrust Enforcement under Regulation 1/2003, SWD (2014), 230 final; O’Keeffe (n 11).
[17] Competition Law (Amendment) Act 2022, section 15AC.
[18] Competition Law (Amendment) Act 2022, section 15AB.
[19] CCPC, Guidelines on the determination of administrative financial sanctions and periodic penalty payments (ccpc.ie, Consultation Draft, April 2022)
<https://www.ccpc.ie/business/wp-content/uploads/sites/3/2022/04/2022.04.04-Determination-of-admin-financial-sanctions-and-periodic-penalty-payments-for-consultation.pdf> accessed 20 August 2023.
[20] Barry Doherty, ‘Dialling up Administrative Fines under the Communications Regulation Bill’ (Irish Legal News, 4 November 2022)
<https://www.irishlegal.com/articles/barry-doherty-bl-dialling-up-administrative-fines-under-the-communications-regulation-bill-2022> accessed 20 August 2023. Online Safety and Media Regulation Act 2022; Communications Regulation Bill 2022.
[21] European Commission, ‘Fines for breaking EU Competition Law’ (competition-policy.ec.europa.eu)
<https://competition-policy.ec.europa.eu/system/files/2021-01/factsheet_fines_en.pdf> accessed 14 November 2023.
[22] See OECD, ‘Global Forum on Competition: Sanctions in Antitrust Cases – Summaries of Contributions’ DAF/COMP/GF/WD(2016)81 (Paris, 28 November 2016).
[23] Competition (Amendment) Act 2022, section 15P(1)(a).
[24] Competition (Amendment) Act 2022, section 15AZ.
[25] Irish Constitution, Articles 34.1 and 37. Massey and Daly (n 9) 104. Zalewski v Adjudication Officer [2021] IESC 24.
[26] Anna Piszcz and Catherine Grynfogel, ‘Overview of Compliance with the Requirements of Directive (EU) 2019/1 with Regard to the Independence and Resources of National Competition Authorities: The Examples of France and Poland’ (2022) 53(7) IIC International Review of Intellectual Property and Competition Law 1071, 1077.
[27] Matheson, ‘Irish Competition Law Update: 20 Things You Need to Know About Irish Competition Law Changes’ (matheson.com, 3 February 2022)
<https://www.matheson.com/insights/detail/irish-competition-law-update-20-things-you-need-to-know-about-irish-competition-law-changes> accessed 20 August 2023.
[28] Competition Law Act 2002, section 4(11).
[29] Matheson (n 25).
[30] Competition (Amendment) Act 2022, section 7(1).
[31] Competition (Amendment) Act 2022, section 6(1).
[32] Competition Law Act 2002, section 14(1).
[33] David McFadden, The Private Enforcement of Competition Law in Ireland (Hart Publishing: Oxford and Portland, Oregon 2013) 8-12; Directive 2014/104/EU of the European Parliament and of the Council of 26 November 2014 on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the European Union.
[34] See OECD, Annual Report on Competition Policy Developments in Ireland: 2021 (oecd.org, 23 May 2022)
<https://one.oecd.org/document/DAF/COMP/AR(2022)15/en/pdf> accessed 20 August 2023.
OECD, Competition Trends 2023 (oecd.org, February 23 2023)
<https://www.oecd-ilibrary.org/finance-and-investment/oecd-competition-trends-2023_bcd8f8f8-en> accessed 20 August 2023.
[35] CCPC, ‘About Us’ (ccpc.ie). <https://www.ccpc.ie/business/about/about-us/> accessed 20 August 2023.
[36] ECN+ Directive, Article 5.
[37] Sean Murray, ‘Crackdown on white-collar crime not begun after 12 months’ Irish Examiner (Cork, 30 June 2023) <https://www.irishexaminer.com/news/arid-41173849.html>.
[38] Murray (n 35). Department of Enterprise, Trade and Employment, ‘Press Release: Minister Troy Welcomes the Enactment of the Competition (Amendment) Bill 2022’ (gov.ie, 1 July 2022)
<https://www.gov.ie/en/press-release/ecbea-minister-troy-welcomes-the-enactment-of-the-competition-amendment-bill-2022/> accessed 20 August 2023.
[39] Department of Enterprise, Trade and Employment, ‘Report on the Public Consultation on Aspects of the Competition (Amendment) Bill (9 January 2023) (‘Public Consultation Report’)
<https://enterprise.gov.ie/en/publications/publication-files/report-on-public-consultation-on-aspects-of-the-competition-amendment-bill.pdf> accessed 17 August 2023.
[40] See Law Society of Ireland, ‘Law Society Submission: Public Consultation on Aspects of the Competition (Amendment) Bill 2021’ (January 2021)
<https://www.lawsociety.ie/globalassets/documents/submissions/2021-competition-ammendment-bill.pdf> accessed 20 August 2023.
CCPC, ‘Competition Law Developments in 2022’ (ccpc.ie)
<https://www.ccpc.ie/business/research/consultations/competition-law-developments-in-2022/> accessed 20 August 2023.
Kate McKenna, Calum Warren and Laura McDonnell, ‘Matheson Responds to Public Consultation on Competition (Amendment) Bill 2022’ (matheson.com, 10 June 2022)
<https://www.matheson.com/insights/detail/matheson-responds-to-public-consultation-on-competition-(amendment)-bill-2022> accessed 20 August 2023.
A&L Goodbody, ‘Public Consultation on Aspects of the Competition (Amendment) Bill 2021’ (algoodbody.com) <https://www.algoodbody.com/files/uploads/news_insights_pub/ECN+_Consultation.pdf> accessed 20 August 2023.
[41] Public Consultation Report (n 37) 4.
[42] Public Consultation Report (n 37) 4-5.
[43] Public Consultation Report (n 37) 5.
[44] Competition and Consumer Protection Commission, ‘Annual Report 2022’ (CCPC.ie, 18 August 2023) <https://www.ccpc.ie/business/wp-content/uploads/sites/3/2023/08/2023.06.29_CCPC_Annual-Report-2022.pdf> accessed 22 August 2023.
[45] Law Society Gazette Desk, ‘CCPC stepped up inspections last year’ (lawsociety.ie, 18 August 2023)
<https://www.lawsociety.ie/gazette/top-stories/2023/august/ccpc-stepped-up-inspections-last-year> accessed 22 August 2023.
[46] Annual Report 2022 (n 42) 4.
[47] Competition and Consumer Protection Commission, ‘CCPC publishes 2022 Annual Report’ (CCPC.ie, 18 August 2023) <https://www.ccpc.ie/business/ccpc-publishes-2022-annual-report/> accessed 22 August 2023.
[48] Annual Report 2022 (n 42) 41.
[49] Central Statistics Office, ‘Multinationals: An Irish Perspective’, ISSN 2009-6985 (CSO.ie, 2 November 2022) ISSN 2009-6985. Patrick Gunnigle and David McGuire, ‘Why Ireland? A Qualitative Review of the Factors Influencing the Location of US Multinationals in Ireland with Particular Reference to the Impact of Labour Issues’ (2001) 32(1) The Economic and Social Review 43.
[50] Law Society Gazette, ‘Ireland “Solidifies Position” as Tech Regulatory Hub’ (Law Society, 9 February 2023)
<https://www.lawsociety.ie/gazette/top-stories/2023/february/ireland-solidifies-position-as-tech-regulatory-hub> accessed 20 August 2023.
[51] Matheson (n 23).
[52] McCann Fitzgerald, ‘Get Ready for ECN+ Antitrust Overhaul in Ireland – Topic 1: A New Risk of Competition Law Fines?’ (mccannfitzgerald.com, 30 March 2021)
https://www.mccannfitzgerald.com/knowledge/antitrust-competition/get-ready-for-ecn-antitrust-overhaul-in-ireland-risk-of-competition-law-fines [accessed 25 March 2023].
[53] Arthur Cox, ‘The Competition (Amendment) Act 2022 – An Overview of Recent Reforms to Competition Enforcement in Ireland’ (arthurcox.com, 10 August 2022)
https://www.arthurcox.com/knowledge/the-competition-amendment-act-2022-competition-law-in-ireland/ accessed 20 August 2023.
[54] A&L Goodbody, ‘Competition (Amendment) Act 2022’ (algoodbody.com)
https://www.algoodbody.com/services/eu-competition-procurement/competition-amendment-act-2022/our-thinking-competition-amendment-act-2022/P12 accessed 20 August 2023.
[55] Pinsent Masons (n 12).
[56] Department of Enterprise, Trade and Employment (n 36).
[57] Corinna Potocnik-Manzouri, ‘The ECN+ Directive: Example of Decentralised Cooperation to Enforce Competition Law’ (2021) 6(2) European Papers 987.
[58] O’Keeffe (n 11).
[59] Laura McGovern and Jessica Egan, ‘Competition Law Enforcement: A New Era’ (2023) 117(1) Gazette of the Law Society of Ireland 56, 58.