Ireland: Competition and Consumer Protection Commission
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2015 represented the first full year of operation for the Competition and Consumer Protection Commission (CCPC). The amalgamation, in October 2014, of the Competition Authority and the National Consumer Agency heralded a new era for consumer and competition policy in Ireland. The new organisation was structured to effectively harness the extensive professional and technical expertise and experience that existed across both legacy organisations.
The work of the CCPC in 2015 was guided by prioritisation principles to ensure that the activity of the organisation had the greatest possible impact for consumers and businesses alike.
Despite resource constraints and the effort devoted to the ongoing construction of a new organisation, the CCPC achieved significant outputs, in terms of both quantity and quality, in 2015.
In 2015, the CCPC was given new responsibilities in the grocery sector. New regulations were published, which govern aspects of contractual relationships between wholesalers/retailers and suppliers. During 2015, the CCPC began resourcing this new function, in preparation for the commencement of its role on 1 February 2016.
In 2015, the CCPC also assumed responsibility for assessing applications from bodies who wish to become alternative dispute resolution (ADR) entities. The CCPC evaluates whether the applicant qualifies as an ADR entity within the scope of the Regulations and complies with the quality requirements. The CCPC also assumed responsibility for enforcement functions relating to online dispute resolution.
The Competition and Consumer Protection Act 2014 (the 2014 Act) introduced a number of important amendments to the merger review regime set out in the Competition Act 2002.
In the first instance, the 2014 Act changed the financial thresholds for mandatory notification of mergers. Mergers must now be notified to the CCPC if, in the most recent financial year, the aggregate turnover in the state of the undertakings involved is not less than €50 million and the turnover in the state of each of two or more of the undertakings involved is not less than €3 million. However, it is important to note that these financial thresholds do not apply to ‘media mergers’ – such mergers are subject to mandatory notification to the CCPC, irrespective of the turnovers of the undertakings involved.
Secondly, undertakings are no longer under an obligation to notify a merger within any specific time period. The relevant merger, however, cannot be put into effect before the CCPC issues a clearance decision. In addition, firms do not need to wait until an agreement has actually been concluded before notifying the CCPC. They are able to notify from as early as they can demonstrate a ‘good faith intention’ to conclude an agreement. These changes make the Irish merger review process more efficient and user-friendly for notifying parties, and bring it in line with the EU regime.
In what was a busy year for merger and acquisitions in the state, the CCPC published fully reasoned decisions for the 78 mergers notified to it in 2015. The CCPC’s merger work included six extended reviews and three Phase II investigations into Valeo/Wardell (carried over from 2014), Topaz/Esso and Baxter/Fannin.
The Phase II investigation into Valeo/Wardell was notified in 2014 and concluded in 2015. Both Valeo and Wardell are involved in the sale and distribution of food products to the retail sector in the State. The CCPC’s Phase II investigation examined the competitive effects of the merger on 20 separate food products. The CCPC concluded that in the market for one product type, brown sauce, the proposed merger would result in a reduction from three to two competitors and was likely to lead to a substantial lessening of competition in that market. As a result, the CCPC cleared the transaction in February 2015, however, on condition of binding divestiture proposals made by Valeo to divest the YR brand of brown sauce.
The Phase II investigation into Topaz/Esso, which began in April 2015, was pursuant to a referral decision by the European Commission under article 4(4) of the EU Merger Regulation. Both Topaz and Esso Ireland are Irish oil companies, active in the retail and non-retail sales of petroleum products in the state. The CCPC’s investigation involved in-depth economic and econometric analyses of the affected market segments, consideration of detailed submissions from the parties involved, as well as consultations with suppliers, customers and competitors of the merging parties. The CCPC identified competition concerns arising from the proposed transaction concerning; (i) fuel terminalling at Dublin Port – where the transaction would reduce the number of terminal operators from four to three; and (ii) a number of identified petrol forecourts where the transaction would substantially lessen competition in local areas. As a result, the CCPC cleared the proposed transaction on condition of binding divestiture proposals submitted by Topaz to divest certain businesses to be acquired from Esso, including its share and interest in a sea-fed terminal located in Dublin.
The Baxter Healthcare/Fannin Compounding transaction was the final Phase II investigation concluded by the CCPC in 2015 and related to Baxter’s acquisition of assets belonging to Fannin in the manufacture and supply of compounded medicines in Ireland. In the course of its review, the CCPC identified concerns regarding the likely competitive impact of the proposed acquisition. These related principally to the potential significant reduction in competition for the commercial supply of compounded chemotherapy medicines to hospitals in the state following the acquisition. However, the parties submitted evidence to the CCPC that Fannin Compounding is a ‘failing division’ of Fannin Limited and that the assets involved would exit the market if the transaction was prohibited. Following an in-depth review of the ‘failing division’ argument, the CCPC formed the view that the competitive structure of the relevant market would deteriorate to at least the same extent in the absence of the proposed acquisition and concluded that the proposed acquisition would not, of itself, substantially lessen competition in any market for goods or services in the state.
Enforcing competition law
In 2015, the CCPC announced a new Cartel Immunity Programme, which revised and enhanced the provisions available to the CCPC to uncover this form of criminal activity. The new programme removes the previous bar on an instigator company qualifying for immunity, but maintains the ban on immunity for a company that coerced others to join or remain in the cartel. It also enhances legal certainty for those applying for immunity, and is more closely aligned with the EU Model Leniency Programme.
In 2015, following a CCPC investigation of anticompetitive activity in the industrial flooring sector and the subsequent referral of a file to the Director of Public Prosecutions, an individual and undertaking were charged with entering into a bid-rigging agreement.
The CCPC also investigates suspected anticompetitive conduct, which does not fall within the definition of a ‘cartel’. In 2015, the CCPC continued to investigate allegations of anticompetitive behaviour in the bagged cement industry. This led to five inspections by almost 40 CCPC staff, searching the premises of undertakings involved in the bagged cement sector.
In October 2015, the CCPC secured binding commitments from Europe’s largest booking agent, Booking.com in relation to their ‘Best Price Guarantee’ promise. The commitments mean that accommodation providers in Ireland can now offer cheaper rates through different online agents and to consumers who contact them directly – for example by email, over the phone, face-to-face or via the ‘members only’ section of their websites. It will enable increased competition among businesses operating in this sector.
Funeral-related services are, by their nature, purchases that consumers have to make in the most difficult and stressful circumstances. Following an investigation into anticompetitive practices by Glasnevin Trust, a provider of funeral services in the greater Dublin area, the CCPC sought a number of remedial measures from the company. These measures, aimed at mitigating the alleged anticompetitive practices, relate to the provision of burial plots, headstones and headstone foundations and the company also agreed to increase transparency regarding prices to consumers and funeral directors, who play a significant role in this market.
In May, the CCPC expressed concerns to the National Association of General Practitioners that its conduct, in relation to the provision of free GP care to children under six years of age, amounted to a campaign designed to encourage members to engage in a collective boycott, which is contrary to EU and Irish competition law. This followed action previously taken against the Irish Medical Organisation (IMO), which resulted in undertakings to cease the activity being provided to the High Court by the IMO.
The CCPC is responsible for enforcing a wide range of consumer protection legislation, which governs transactions between businesses and consumers across the economy. Business practices that mislead, are unfair or harm consumers are dealt with using a range of enforcement powers, ranging from civil remedies to criminal prosecutions.
In 2015, the CCPC took enforcement actions against 62 traders found to be in breach of consumer protection legislation, including a number of the major telecom providers in Ireland.
Preventing the sale of crashed or clocked cars is a key priority for the CCPC and in 2015, the CCPC secured compensation orders for consumers who had been provided with misleading information in relation to dangerous vehicles.
In 2015, the CCPC investigated five complaints of unsafe products per week and dealt with an average of 40 RAPEX notifications every week. RAPEX is the European Commission’s internet-based rapid alert system for the notification of hazardous non-food consumer items. The CCPC works with the Irish customs authority to stop unsafe products from making their way into the Irish market. In December 2015, the CCPC was involved in a significant operation preventing the supply and sale of unsafe hoverboards in Ireland.
The CCPC, through its advocacy function, advises government, its agencies and public bodies on how proposed legislation or regulations could affect markets in terms of competition and consumer welfare.
One of the areas in which the CCPC has long advocated reform is in respect of legal services. Since the publication of a 2006 Report on the Legal Profession, we have consistently sought the establishment of an independent regulator for the sector, along with other reforms aimed at increasing competition and bringing down legal costs for consumers, businesses and the state.
In 2015, after many years of gestation, a new Legal Services Regulation Act was finally signed into law. The Act establishes an independent Legal Services Regulatory Authority and provides for the CCPC to make a nomination to the board of the Authority. Further advocacy work by the CCPC is anticipated in 2016 to ensure that the benefits of the new Act are fully realised.
What the future holds
The absence of civil fines for competition law infringements is an ongoing significant gap in the Irish enforcement regime, which the CCPC has sought to address for many years. More recently, the Irish Law Reform Commission has identified this as an issue, which needs to be considered. The European Commission is also consulting stakeholders on how to empower national competition authorities to be more effective enforcers. The CCPC is participating fully in both these processes.
As an organisation, the CCPC is committed to directing its efforts in areas where it can have the greatest impact. A substantial recruitment campaign has begun to bolster resources in the organisation and strengthen our team of committed and expert professionals. As an organisation, we are very confident that the structures we have built, combined with our strategic focus, and strengthened resources, will help us achieve our mission of making the markets work better for consumers, businesses and the wider economy.