Tuesday 24 October 2017

New competition law is a stepping stone on long road to recovery

Jobs, Enterprise and Innovation Minister Richard Bruton is introducing new legislation to enforce competition law within Ireland
Jobs, Enterprise and Innovation Minister Richard Bruton is introducing new legislation to enforce competition law within Ireland

Finbarr O'Leary

ENTERPRISE Minister Richard Bruton published the Competition (Amendment) Bill 2011 two months ago. This bill, which seeks to enforce competition law within Ireland whilst also effectively combating white-collar crime, can be viewed as a small stepping stone on a long road to economic recovery.

Typically, competition offences are categorised into two separate divisions, "hardcore" offences, which include price fixing, cartels, and agreements designated to limit sales, and "non-hardcore" offences such as the abuse of a dominant position on the economic market.

Under European Union rules we are obliged to comply with Articles 101 and 102 of the Treaty on the Functioning of the European Union.

To date, Irish competition legislation is governed by the Competition Act 2002 which encompasses this obligation and provides sanctions and penalties that are to be implemented against breaches of competition law.

The most crucial amendment that will hugely impact the commercial sector relates to the alteration of section 160 of the Companies Act 1990.

This modification indicates that certain breaches of competition law will be added to a list of circumstances in which the courts are entitled to make a disqualification order against a person.

A disqualification order will exclude that person from seeking certain appointments within a company, including directorship.

The bill also proposes to instigate the following changes:

•Raising the fine attached to the conviction of hardcore offences from €4m to €5m.

•Increasing the term of imprisonment from five to 10 years on conviction on indictment of hardcore offences.

•A convicted party will be held accountable to pay all costs and expenses, as measured by the court, to the appropriate authority in relation to detecting, investigating and prosecuting the breach of competition law.

•Increasing the maximum daily fine applicable to a continuing contravention from €300 to €500 in respect of a summary conviction on indictment from €40,000 to €50,000.

•In situations where the court has determined that an entity actively engaged in prohibited anti-competitive behaviour, the findings shall be deemed "res judicata".

Should subsequent proceedings be initiated it will not become necessary for the opposing party to prove that this conduct was prohibited.

The proposed changes will have a fundamental impact on the economy, particularly in relation to the commercial sector.

If it is enacted, the new laws will provide a more effective deterrent and punishment for individuals or organisations who engage in price fixing, cartels, abuse of a dominant position and other anti-competitive practices.

Severe sanctions will encourage a decrease in the levels of white-collar crime undertaken by commercial entities and which currently flood our legal system.

In addition, with the current economic climate in a state of crisis, the bill represents equality through its ability to evoke an even and fair market in which all companies and businesses will be afforded the same commercial opportunity.

This, in turn, will enable start-up companies to avail of the open market in the same way as existing businesses, without having the added strain of competing against prohibited competitive conduct. We are all far too aware of the challenges that new businesses encounter in order to survive these harsh financial times, however, the enactment of this bill shall hopefully provide some release.

Furthermore, we may witness an increase in private enforcement of competition law actions due to the proposed provision on follow-up cases.

Once a court has determined that an undertaking has engaged in prohibited practices under current legislation the findings will be deemed res judicata.

This will pose hazardous to all commercial entities. Taking into account the significance of this provision, it is vital that companies familiarise themselves with the current national and European Union law which will allow companies to alter their current trading standards in order to comply with the law and avoid a series of subsequent private enforcement proceedings.

The publication of this bill reinforces the unstable economic climate that we are presently experiencing.

The time has come for all commercial entities to strike down price fixing, stamp out cartels and signify the end of anti-competitive behaviour if we are to succeed in staying afloat.

As a member state of the European Union, we have a duty to uphold the promises that we pledged, and as a nation illustrate our commitment and trustworthiness to other member states.

The publication of this bill effectively portrays this image by meeting the obligation under the EU/IMF programme of financial support for Ireland to bring forward legislation to strengthen competition law.

As a nation we must create a united front and effectively exert the committed business acumen that we have strived so hard to achieve.

Without a doubt, the road to recovery will be long, but this bill may assist in eventually providing "a light at the end of the tunnel".

Finbarr O'Leary is a managing partner at Michael Powell Solicitors

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