The
Competition Act, 2002
On
the 10th April 2002 the Competition Act, 2002 (the Act) became
law. On the 13th May 2002 the Minister for Enterprise Trade and
Employment signed the Commencement Order.
As and
from the 1st July 2002, Part 1, Part 2 (except for Sections 4(8),
5(3), 6(4)(c) and 10), Part 4, Part 5 (except for Section 48(b)),
Schedules 1 and 2 (except for paragraph 4 thereof) and Schedule
3 come into operation.
As and from the 1st January 2003, the remaining Sections of the
Act will come into full force and effect, except for two provisions,
namely Section 6(4)(c) and Section 10, the commencement of which
has been deferred for now, pending the formal adoption of a new
EU Regulation on the application of Articles 81 and 82 of the Treaty
and to allow for necessary administrative arrangements to be put
in place.
In
simple terms, the Act updates existing competition and mergers
legislation and when fully implemented, will repeal, amongst other
pieces of legislation, the following; the Mergers Takeovers and
Monopolies (Control) Act, 1978, the Competition Act, 1991 and
the Competition (Amendment) Act, 1996.
Competition
Rules and Enforcement
Section
4 provides that all agreements, decisions and concerted practices
"which have as their object or effect, the prevention, restriction
or distortion of competition in trade in any goods or services
in the State or in any part of the State, are prohibited and void"
unless it complies with certain conditions laid out in Section
4(5) or falls into a category of agreements, decisions or concerted
practices, the subject of a declaration for the time being in
force under Section 4(3).
Section
4(5) contains one of the saving provisions and governs agreements,
decisions or practices which would otherwise be unlawful, but
which "having regard to all relevant market conditions",
contribute to improving the production or distribution of goods
or to the provision of services or to the promoting of technical
or economic progress, while allowing consumers a fair share of
the resulting benefits.
Effectively,
the previous practice of issuing what were known as "Category
Licences" by the Competition Authority will be done away
with. This reform is analogous to the approach taken under EU
Competition Law by means of what are termed Block Exemptions.
However, the Competition Authority will still be able to issue
Category Licences in certain circumstances.
Section
5 of the Act prohibits the abuse of a dominant position.
Breaches
of Section 4 (anti-competitive agreements, decisions and concerted
practices) or Section 5 (abuse of dominant position) will constitute
an offence under the provisions of Sections 6 and 7 of the Act.
Section
8 sets out the penalties and proceedings for offences under Sections
6 and 7 and provides for fines in certain circumstances not exceeding
the greater of €4,000,000 or 10% of turnover in the financial
year ending in the 12 months prior to conviction, or in the case
of an individual, to a fine not exceeding €4,000,000 or 10%
of the turnover of the individual for the financial year ending
in the 12 months prior to conviction, or to imprisonment for a
term not exceeding 5 years, or both.
Section
14 provides that any party, who is harmed because of a breach
of Section 4 or Section 5 of the Act, has a right of action for
breach of the competition rules. Remedies include relief by way
of injunction or damages including exemplary damages.
Mergers
and Acquisitions
Section
16 deals with mergers or acquisitions and imports largely from
the EC Merger Regulations. The critical test is one of "control",
which is essentially the ability to exercise "decisive influence".
Section
18 provides a turnover threshold in the case of mergers or acquisitions
where at least two or more of the undertakings involved, has a
world-wide turnover of €40,000,000 or more, where two or
more of the undertakings carries on business on the island of
Ireland and where the turnover within the State of any one of
the undertakings concerned, is not less than €40,000,000
or where the provisions of Section 18(5) apply i.e., the exigencies
of the common good test.
Section
20 empowers the Competition Authority to "enter into discussions
with the undertakings involved in the merger or acquisition or
with any individual or other undertakings" in respect of
any notification received by it "with a view to identifying
measures which would ameliorate the effects of the merger or acquisition
on competition in markets for goods or services", so as to
"form a view as to what would substantially lessen competition
in markets for goods or services".
Sections
21 and 22 set out the procedures for investigating mergers and
the time frames for reaching decisions. Section 23 introduces
specific provisions with regard to media mergers. Section 24 sets
out the procedures for appeals to the High Court against determinations
of the Competition Authority.
The
Competition Authority
The
Act provides that the Competition Authority shall be a body corporate
with perpetual succession and sets out its functions, investigatory
powers and obligations.
Section
45 provides that the Competition Authority may appoint "authorised
officers" for the purpose of the Act. Authorised officers,
in the exercise of their duties, have the following powers:-
- The
right to enter and search premises or vehicles.
-
The right to enter and search any dwelling occupied by a director,
manager or any staff member of the undertaking concerned, where
reasonable grounds exist to believe that records relevant to
the investigation are being kept.
- To
seize and retain any books, documents and records relating to
the activities under investigation.
-
To require that any person employed by the undertaking under
investigation gives to the authorised officer his or name, home
address and occupation, and to provide to the authorised officer,
any books, documents or records relating to the activity being
investigated under their power or control.
-
To inspect, copy and take extracts from such books, documents
and records.
-
To require any person employed by the undertaking in question,
to give to the authorised officer, any information that they
may require.
-
To require any such person to give to the authorised officer,
any other information which the authorised officer may reasonably
require in connection with the entry and search of the premises
or vehicle in question.
It
is an offence to obstruct or impede the work of the authorised
officer.
Section
47 provides the authorisation for the Director of Corporate Enforcement,
the Garda Siochana or "such other person as may be prescribed"
by the Minister, to relate information to the Competition Authority
or the authorised officer in relation to the alleged commission
of an offence under the Act.
Section
50 of the Act provides substantial protection for persons reporting
alleged breaches of the Act to the Competition Authority. This
section will effectively grant immunity to persons who inform
the Competition Authority of suspected breaches and operates unless
it can be proved that the informant "has not acted reasonably
and in good faith" in forming the opinion and communicating
it to the Competition Authority.
Employers may not penalise employees who have made such information
available to the Competition Authority. However, it shall be an
offence under this section for any person to communicate information
which it knows to be false or misleading.
For further information or general enquiries contact:-
Kevin O'Brien
Email: kobrien@kilroys.ie
or
Anthony Layng
E-mail:
alayng@kilroys.ie
Telephone:
+353-1-439 5600
Fax: +353-1-439 5601 / 4395602
© Kilroys Solicitors 2002
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