Ireland inches closer to administrative fines regime

Written by Charley Connor and first published in the Global Competition Review on 10 August 2020.

Ireland’s government has said it will empower the country’s antitrust enforcer to fine companies for anticompetitive conduct, although it still faces significant opposition and constitutional challenges.

Leo Varadkar, Ireland’s deputy prime minister and minister for enterprise, trade and employment, said yesterday that he planned to give the Competition and Consumer Protection Commission (CCPC) “more teeth” to “break up cartels where they exist” and protect consumers and producers. 

“Imposing administrative fines in Ireland is always more complicated than in other EU countries due to our constitution and legal system,” Varadkar said in a statement. “We’ll be considering what the best level of fines to impose is in the new government.”

Under Ireland’s constitution, fines are generally reserved for criminal conduct. In civil cases, the competition enforcer can only ask courts for a cease-and-desist order and a declaration of illegality ruling that a particular agreement or conduct is unlawful. 

Amendments made to Ireland’s competition law in 2012 allow courts to fine companies and individuals up to €5 million for anticompetitive conduct and to sentence individuals for up to 10 years in prison. The enforcer bagged its first bid-rigging convictions in 2017 and secured two guilty pleas in its first gun-jumping prosecution last year.

Varadkar said yesterday that he is consulting with Ireland’s attorney general, Paul Gallagher, to determine what level of fines the CCPC should be able to impose for anticompetitive conduct.

A spokesperson for the competition authority said that introducing an “administrative enforcement regime” would have a greater deterrent effect and increase the incentives for companies to cooperate with the CCPC’s investigations.

The spokesperson said the enforcer “continues to work” with the Department of Business to transpose the ECN+ Directive into national law by 4 February 2021.

The ECN+ Directive requires that all national authorities in the EU are able to impose fines for anticompetitive behaviour as part of a push to ensure that each agency has “adequate tools to impose proportionate and deterrent sanctions for breaches of EU antitrust rules”. 

More broadly, the directive attempts to harmonise national competition regimes across the EU by giving enforcers comparable tools to those of the European Commission’s Directorate-General for Competition. 

Vincent Power, a partner at A&L Goodbody in Dublin, said the authority has repeatedly – and unsuccessfully – asked for the ability to fine companies for anticompetitive conduct.

The ECN+ Directive represents the CCPC's “best hope” of obtaining this power, but it does require a “great deal of debate, discussion and design” if the government is to adopt a civil fining system that is both robust and practical, he said.

"There are two sides to the argument and both sides need to be put on the table now," Power said. Those in favour of amending the law claim that the CCPC could move quicker and “in a more targeted manner” if it had such powers, he said. Administrative fines also act as a deterrent and avoid using resources for a criminal trial, he added.

Others argue that the current penalties are “more than adequate” and instead blame the quality of the enforcer’s cases as a barrier to prosecution, Power said. They also claim that administrative fines would add “another layer of bureaucracy for no good reason” and pose “constitutional difficulties”, he added.

“There are merits to both sides of the argument,” Power said. “It is time to have a level-headed sensible discussion on the issue in the 179 days left."

Alan Kelly, the leader of Ireland’s opposition Labour party, told the Business Post yesterday that his country’s government might miss the February deadline to comply with the ECN+ Directive. “The government and the department [of business] have had 20 months since the directive was adopted yet nothing apart from some meetings has happened,” he said.

Beyond the fines

Kelly also reportedly criticised the Irish competition authority for its apparently ineffective investigations. In May 2019, the European Commission launched its own investigation into alleged anticompetitive conduct in the Irish motor insurance market after the CCPC’s similar probe “yielded no results”, he said.

The Irish enforcer began investigating the motor insurance sector in 2016, after complainants alleged that senior industry players engaged in “unspoken coordination” by making pricing statements that led to sharp price increases to motor insurance premiums. 

The EU enforcer’s probe, however, appears to focus on whether the conditions for accessing an industry association’s data-sharing portal may restrict competition in the motor insurance market.

The EU watchdog has also previously criticised the CCPC’s inability to impose fines. In a 2017 report, it noted that Ireland reported only one penalty decision between 2004 and 2013 – “meaning that there is virtually no enforcement of the EU competition rules”

The authority is also facing criticism from market players. Last August, it rejected a request from the Irish Farmers Association to look into alleged collusion in the beef-processing sector, sparking a protest outside its headquarters in Dublin.

The farmers’ association commissioned economist Jim Power to conduct an independent investigation into the allegations of collusion. In March, Power recommended that the CCPC launch a full investigation into the processing industry “to address the deep disquiet of farmers about collusive behaviour”.

But in June, the authority again rejected the idea of a probe. “Following an extensive review and assessment of all the information gathered on foot of the complaints received, the CCPC has formed the view that there is insufficient evidence of a breach of competition law to warrant taking any further action at this time,” it said.

For more information on this topic please contact Dr Vincent Power, Partner or any member of A&L Goodbody's EU, Competition & Procurement team.

Date published: 11 August 2020