Tuesday 25 October 2016

Raid on cement giants is no small matter for new body

Published 21/05/2015 | 02:30

Minister for Jobs, Enterprise and Innovation Richard Bruton with Isolde Goggin, chairwoman of the Competition and Consumer Protection Commission, at the new organisation’s launch late last year
Minister for Jobs, Enterprise and Innovation Richard Bruton with Isolde Goggin, chairwoman of the Competition and Consumer Protection Commission, at the new organisation’s launch late last year

The arrival of officials from the Competition and Consumer Protection Commission (CCPC) at the premises of an Irish Cement facility in Co Meath last week comes at a sensitive time for its parent group, CRH.

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Valued at €20bn, it is the most valuable Irish company. The eyes of the building materials world are on it as completes a potentially transformative €6bn acquisition.

CRH responded to publicity around the incident by saying it fully facilitated the inspection; it operates to the highest standards and has no issue in relation to competitive practices.

Irrespective of what the outcome of such a probe might be, the unannounced arrival of officials, accompanied by Gardai, a search and subsequent removal of documents, all bring pretty unwelcome publicity.

I remember several years ago attending a very heated lunch with former executives of CRH who were enraged at negative Irish newspaper coverage of local issues.

They argued that because of internet access, negative publicity about relatively small Irish matters affected the group's reputation and ability to buy businesses around the world.

CRH described last week's visit as an "inspection" and said "inspections regarding competition policies, procedures and practices are an accepted part of the business environment around the world".

The Commission conducted the search on foot of a District Court warrant, which is an investigative tool it doesn't use very often. It might be better characterised as a "raid".

Last year there were only three such warrants used. The year before that, there were only seven.

It involves a lot of resources and time. Raids in other investigations in the past have at times involved almost the entire staff of the former Competition Authority.

This probe is around the €50m bagged cement market and similar raids were conducted at other locations including cement retailers last week.

The CCPC said the investigation was at an early stage and the raids were part of a wider probe. However, as far back as 2013 the authority was investigating the cement sector but it isn't clear whether that was a separate probe.

Such a high profile investigation which includes Ireland's biggest company is a big deal for the relatively new CCPC. Merging the old Competition Authority with the National Consumer Agency was first decided in 2008. It didn't actually happen until October 2014.

The new body inherited 69 ongoing evaluations of complaints. There is consistently a very large gap between complaints of anti-competitive practices and actual criminal convictions.

In 2013 the authority received 195 new complaints, with 34 of them alleging criminal cartel behaviour. Of those, 26 were examined and closed that year which left eight under assessment. The same year there were 92 new complaints of anti-competitive agreements and abuses of dominance, with 64 of those examined and closed that year.

In the nine months between January and October of last year, there were 186 new complaints of which 19 related to allegations of criminal cartel behaviour.

The Irish competition authorities do not make findings against companies in relation to cartels. They investigate and if appropriate send a file to the Director of Public Prosecutions, who in turn makes a decision to prosecute or not. This approach is quite unusual among European competition bodies.

Over the years the authority has had a greater impact where it intervenes in a situation that it believes may be anti-competitive but does not constitute criminal behaviour. But there are also cases where it has jumped in, and had to beat a retreat or its inquiries have come to nothing.

In 2013 it investigated a complaint about fees charged by Irish Rail to ferry operators at Rosslare Europort. It didn't find evidence of discriminatory behaviour.

In 2013 it closed a long-running investigation into supply arrangements in the bulk LPG sector but did not issue a specific declaration.

It examined liquid-milk contracts reached between co-ops and farmers but decided they are acceptable as long as they are shown to aid efficiency.

It closed an investigation into the National Dairy Council's "Farmed in the Republic of Ireland" campaign, which promoted the point of origin of liquid milk products, concluding that it did not breach competition law.

And last year it investigated the purchase of Cemex-owned concrete businesses by Kilsaran and CRH subsidiary Roadstone. After months of investigation and meetings, the authority concluded that it was all above board and there was no breach of the Competition Act.

Recent successes have included an intervention with the Irish Medical Organisation which said that GPs would withdraw certain services to the state because of a proposed reduction in fees.

This resulted in a High Court action and a settlement agreement in which the IMO undertook not to organise or recommend collective boycotts or withdrawal of GP services.

Last year it successfully intervened against An Post proposals to introduce a zonal pricing scheme.

Criminal prosecutions have been rare. In 2013 it concluded two investigations into what it called "hardcore" breaches of competition law but there was insufficient evidence to warrant a file going to the DPP.

Last year it did send a file to the DPP for consideration in relation to the commercial flooring sector after it investigated allegations of a cartel and anti-competitive practices.

At times the authority has looked at very high profile organisations or examined very common grievances.

It went after the school uniform sector, investigating whether the availability of uniforms at just one retailer was anti-competitive.

This resulted in a change of stance by one uniform manufacturer in a particular case but all the authority could do was encourage schools, where possible, to allow a number of different retailers to supply their uniform.

Competition probes truly have been varied. Outcomes have been mixed. Against the backdrop of such a variety of targets for investigation, from school uniforms to a National Dairy Council ad campaign, raids on cement suppliers and retailers, are a very big deal for the new agency.

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