Ireland: Competition and Consumer Protection Commission
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In 2016, the Competition and Consumer Protection Commission (CCPC) made important strides in achieving its strategic objectives. Since our establishment in October 2014, we have invested considerable time in developing the structures required to create a dynamic and effective enforcement organisation with a 360-degree market perspective. This investment has started to pay off. We also undertook a significant recruitment programme across all functions. And in 2016, key large-scale investigations were opened into anticompetitive practices and behaviours across a range of sectors.
An ongoing priority for the CCPC is the detection of bid-rigging particularly in public procurement. The rate of overcharge related to detected cartels worldwide is estimated to be between 20-30%, meaning that if only 5% of procurement processes were subject to bid-rigging, the extra cost to the lrish state would be in the region of €100 million per year.
To both detect and deter bid-rigging, the CCPC is currently exploring the introduction of a screening programme for procurement processes, which systematically searches for indications that bid-rigging may have occurred.
During 2016, the CCPC opened an investigation into alleged bid-rigging in the procurement of publicly funded transport services. As part of this investigation, the CCPC applied to the relevant local District Courts for search warrants to gather evidence at identified locations. In July 2016, the warrants were executed and 20 searches were undertaken in Tipperary, Waterford, Limerick and Kilkenny. Authorised officers from the CCPC and several members of the Gardaí, including a detective sergeant from the Garda National Economic Crime Bureau, carried out the searches.
Following an investigation by the CCPC into allegations of anticompetitive activity in the industrial flooring sector in 2015, the director of public prosecutions decided that an individual and undertaking should be charged with entering into a bid-rigging agreement with a trial originally due to be heard in April 2017. However, in 2017 the individual and undertaking charged entered guilty pleas relating to charges that they had engaged in anticompetitive conduct. At the time of writing, a sentencing hearing regarding this case was due to conclude in May 2017.
Enforcing competition law
The CCPC investigates potential abuse of dominance, restrictive vertical and non-hard-core horizontal agreements cases.
In summary in 2016:
- We issued 12 witness summons and 11 formal requirements for information in the course of investigating potential breaches of competition law.
- We opened 24 new files and closed 13 relating to potential criminal breaches of competition law.
- Three competition related investigations were opened into the following areas: potential price signalling in the private car insurance market; the conduct of the Irish Property Owners Association; and potential bid-rigging in publicly funded transport services.
- Three competition related investigations were closed, two of which were closed with commitments from the parties involved.
- We reviewed 80 competition-related complaints.
One area of major concern for the CCPC in civil competition enforcement is information sharing. It is a fundamental principle of competition law that competitors make decisions and act independently of each other in the market and the CCPC was proactive within the Irish market in this context over the past year. In August 2016, the CCPC closed an investigation into potential anticompetitive information sharing between private motor insurers via a software product provided by an intermediary software services provider, Relay Software Limited (Relay). Following engagement with the CCPC, Relay and Allianz Plc, AXA Insurance Limited, Zurich Insurance Plc, RSA Insurance Ireland Limited and Sertus Underwriting Limited entered into Agreements and Undertakings with the CCPC.
In September 2016, the CCPC also opened an investigation into motor insurance companies allegedly openly signalling upcoming increases in motor insurance premiums in the state. This investigation is ongoing.
In 2016, the CCPC concluded an investigation into the display of minimum recommended rates for tour guide services on the Approved Tour Guides of Ireland (ATGI) website. The investigation found that the publication of a list of recommended minimum rates on the ATGI website meant that consumers - in this case tourists and tour operators - did not benefit from normal price competition between tour guides. The CCPC directed ATGI to remove the list from its website and to inform its members that tour guides must decide individually what price they charge for their services.
In late 2016 the CCPC also opened and concluded and investigation into the Irish Property Owners' Association (IPOA). In December 2016, the IPOA released a press statement in response to Government legislation introducing rent controls in the private residential rental sector. In this statement, the IPOA stated that following a meeting of its members, property owners were considering a range of potential measures, including the introduction of a number of new charges to tenants and the withdrawal from state-sponsored rental schemes.
Competition law expressly forbids a trade association from coordinating the business conduct of its members, including the terms and conditions under which they are prepared to supply a product or service. The investigation was closed in January 2017 with the IPOA signing a binding agreement and undertaking with the CCPC. By signing this undertaking the IPOA made a number of binding commitments, which included a commitment to retract the December press statement; to inform its members that that the setting of rents and charges in the private rental sector are matters for individual landlords and their tenants; and to introduce a competition law compliance programme for its members.
The CCPC received 67 merger notifications and issued 70 determinations on transactions it assessed in 2016. Highlights include an in-depth two-phase investigation into PandaGreen's acquisition of Greenstar, and the first private hospital merger notified to the CCPC (or its legacy organisation, the Competition Authority), whereby Bon Secours Health System Limited was proposing to acquire Barringtons private hospital in Limerick. The CCPC's clearance for PandaGreen/Greenstar required structural divestments, while the clearance of the Bons Secours/Barringtons Hospital transaction entailed a binding commitment from the parties that Barringtons would make pricing decisions independent of Bon Secours.
Advising government and influencing policy
The CCPC, through its advocacy function, advised the government, its agencies, and public bodies on how proposed legislation or regulations could affect markets in terms of competition and/or consumer welfare. In particular, the CCPC had significant engagement with the Commission for Energy Regulation (CER) in relation to the all-island single electricity market (iSEM) and the proposed measures to promote liquidity in the iSEM forward market.
In 2016, the Legal Services Regulatory Authority Ireland was established. The creation of this organisation was the culmination of a 10-year advocacy effort by the CCPC and its predecessor, the Competition Authority, to achieve independent regulation of the legal profession in the interests of consumers.
As part of the Programme for a Partnership Government, in 2016 the CCPC was asked to conduct a study examining the market structure, legislation and regulation of the mortgage market in Ireland. The result will outline options on how Ireland can develop, in the long-term, a better-functioning, more sustainable mortgage market. With a recovery in the Irish economy and a steady rise in house prices the CCPC will propose a series of options for Government to put in place so that Ireland has a mortgage market, which is competitive, open to entry and serves the needs of consumers. At the time of writing the CCPC's final paper was due to be published in June 2017.
Grocery Goods Regulations
On 30 April 2016, the CCPC commenced its official role as enforcer of the Grocery Goods Regulations (Regulations). The minister for jobs, enterprise and innovation introduced these regulations to facilitate greater certainty and transparency in the dealings between suppliers and grocery businesses. The Regulations apply to retailers and wholesalers of food and drink operating in Ireland, who have, or are part of, a wider group that has a worldwide turnover in excess of €50 million. They put in place certain obligations relating to contracts with suppliers. The CCPC is responsible for monitoring compliance, investigating complaints and, where appropriate, taking enforcement action. As part of our enforcement role in this area, the CCPC must review annual reports detailing each affected grocery business's compliance with the Regulations. The first annual compliance reports were due for submission by 31 March 2017.
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 are misleading or unfair, or that harm consumers, are dealt with using a range of enforcement powers, ranging from civil remedies to criminal prosecution. In 2016, the CCPC took 40 enforcement actions against 33 traders found to be in breach of consumer protection legislation. A total of 27 fixed payment notices were paid by 24 Irish traders for breaches of price display legislation, while 11 compliance notices were issued to traders directing them to address various breaches of consumer protection legislation.
Investigating the sale of clocked or crashed cars is a key consumer enforcement priority for the organisation. In July 2016, a Dublin-based car trader was convicted with providing false information in relation to a vehicle's previous history - an offence under the Consumer Protection Act 2007. This followed an investigation undertaken by the CCPC. The trader was ordered to compensate the consumer the sum of €5,000. In February of this year, a CCPC investigation conducted during 2016 led to the conviction of a Dublin car trader for providing false information to a consumer in relation to a vehicle's previous history. This trader was given a three-month custodial sentence.
In 2016, the CCPC investigated 556 product safety cases. The CCPC's close cooperation with Revenue and Customs resulted in the examination of 41 consignments. Following thorough investigations, the CCPC concluded that 26 of these consignments should be prevented from entering the market as they did not comply with product safety legislation and posed a risk to consumers. As a result of the CCPC's investigation, approximately 41,618 products were destroyed or re-exported to the country of origin.
A busy start to 2017
Ireland's markets and our work are about to change significantly as Britain prepares to exit the European Union. As an organisation, we need to be ready to anticipate and react to the changing circumstances.
While working towards our long-term mission, ‘to make markets work better for consumers and businesses', each year we revisit our priorities to make sure our actions work towards this mission.
In 2017, we continue to prioritise cartel detection, particularly bid rigging in procurement. In May 2017, in the Central Criminal Court, an undertaking and individual pleaded guilty to breaches of competition law in the industrial flooring sector. In addition, our ongoing investigation into potential bid-rigging in the procurement of publicly funded transport services continues. We work hard to publicise successful cases in this area as they act as an important deterrent to would-be offenders.
In 2017, with the Office of Government Procurement, the state's leading procurement body, we will be exploring systematic screening tools for procurement processes. This will assist in the detection and deterrence of bid rigging on public tenders.
Another key priority for 2017 is to take enforcement action against firms engaging in information sharing and anticompetitive agreements. In January of this year, the CCPC commenced a formal investigation into suspected breaches of competition law in relation to the provision of tickets and the operation of ticketing services for live events. This investigation is ongoing and focuses primarily on potentially anticompetitive conduct by operators including; those involved in providing tickets and ticketing services, promoters and venues.
The CCPC also has an ongoing investigation into potential anticompetitive practices in the supply of bagged cement in Ireland. A search conducted at the premises of Irish Cement (a subsidiary of CRH) in May 2015 was subject to High Court action to prevent the CCPC from examining certain e-mails that were seized. At the end of January 2017, the Supreme Court heard our appeal against the High Court decision in the CRH case and at the time of writing, we are awaiting the decision.
Earlier this year the CCPC also concluded the investigation into potential anticompetitive conduct by the IPOA, as detailed above.
This busy trend of activity will continue into the second half of 2017 as we work to develop a pipeline of enforcement activity across our competition and consumer protection divisions.
The creation of the CCPC presented a unique opportunity to form a new, independent and authoritative organisation with the knowledge and expertise to achieve the best outcomes for consumers, businesses and the economy as a whole. As an organisation, we are committed to making a significant impact where it is needed most. With so many staff new to the organisation or new in their roles, training is a considerable focus for us. This is also important in supporting existing staff who are operating in new structures and roles. Our organisational structure is built to fulfil our statutory functions as effectively and efficiently as possible and so continuing to grow and develop our staff is essential. A core priority of the CCPC is to maintain and improve individuals' skills and performance, and in doing so enhance the overall performance of the organisation. In 2016, we created a distinct role within the organisation to address our legal training and development needs.
Given Ireland's history and geographic location, Brexit obviously raises serious issues regarding the free movement of people, the possible reinstitution of a hard border, and the circumstances of the large number of citizens of one country living in the other. The CCPC will have to be a strong advocate on behalf of consumers, as well as a respected enforcer against abuses. Indications are that 2017 will be a challenging year, but irrespective of what difficulties lie ahead the CCPC will continue to work hard to ensure that markets in Ireland are open and competitive, and that consumers are protected and able to assert their rights when they need to.