Joanne Finn

The Competition (Amendment) Act 2022 was signed into law on 29 June 2022, with the majority of its provisions commencing on 27 September 2023.

The Act implements the ECN+ Directive and introduces fundamental changes to the Irish competition law landscape, notably ensuring that the Irish competition regulator, the Competition and Consumer Protection Commission (CCPC), has sufficient powers to carry out its functions in an effective manner.

The Act goes beyond the requirements of the Directive in certain respects with an increase to the CCPC’s merger control powers, stronger enforcement mechanisms, streamlined investigation procedures and changes to penalties for breaches.

Merger control

The Act is characterised by a significant increase in the CCPC’s powers in the realm of merger control, with a more extensive and varied toolkit at its disposal.

The most significant change brought about by the Act is the CCPC’s new power to “call-in” below-threshold transactions. This power may be used where the CCPC considers an unnotified transaction may “have an effect on competition in markets for goods or services in the State”.

When making use of this power, the CCPC must notify the parties in writing within 60 working days after the earliest of the following dates: a) a party’s intention to make a public bid, b) when the CCPC becomes aware of the parties entering into a binding agreement, or c) the transaction being put into effect.

The length of the period during which the CCPC can exercise this power is undoubtedly long and will result in uncertainty, especially considering the merging parties will not have any guarantee against further interference during this period.

Another important change is the CCPC’s new power to impose interim measures in respect of certain mergers and acquisitions. The interim measures envisaged may require parties to refrain from further implementing the transaction, to halt the disclosure of sensitive information, or to mitigate measures that have already been carried out. Criminal prosecution or sizeable fines can be imposed on undertakings that fail to comply with such interim measures.

Updates to the offence of “gun-jumping” have elevated the offence to a criminal one, where guilty parties can face a fine of up to €250,000, as well as an additional daily fine up to a maximum of €25,000. The extent of the CCPC’s power is evidenced by their new power to undo or dissolve already completed transactions where it determines it would result in a substantial lessening of competition in the State.

The CCPC may also bring summary proceedings in the District Court for failure to notify a transaction or failure to respond to a request for information (RFI), once more bypassing previous reliance on the Director of Public Prosecutions to bring such proceedings. The power to issue compulsory RFIs to third parties to a notified transaction is also noteworthy, as this extension indicates the direction of travel in respect of CCPC powers.

Penalties

The Act now empowers the CCPC to issue civil administrative fines for breaches of competition law, a change that is amongst the Act’s most significant.

Allowing the imposition of fines of up to €10 million or 10 per cent of an undertaking’s worldwide turnover provides the CCPC with much needed flexibility and autonomy in enforcing competition law, particularly in relation to behaviours that may not attract criminal sanctions, yet still constitute infringements of competition law.

It also removes the previous reliance of the competent authority on the DPP to bring criminal proceedings, sidestepping the backlog that has built up in that office and allowing for dynamic and robust competition enforcement. However, this autonomy is not unlimited, as any civil fine imposed requires prior High Court approval, a crucial safeguard in light of the constitutional fallout to the Zalewski judgment.

On a separate yet related note, the Act considerably increases the fines that may be imposed by the courts in criminal proceedings on the back of competition law infringements.

From a previous maximum fine of €5 million or 10 per cent of annual turnover, the Act now sets out a maximum fine of €50 million or 20 per cent of an undertaking’s turnover in the preceding financial year. The magnitude of this increase is more than a mere reflection of inflationary trends over a 20-year period, but instead signals a willingness by the legislature to crack down on serious competition law infringements.

Investigation

The Act introduces a number of reforms giving additional investigative mechanisms to the competent authority.

New surveillance options are available to the CCPC, subject to judicial authorisation, that will allow it to monitor and record suspected participants in hardcore cartels. The previous statutory time limit of six years for initiating legal proceedings has been removed, which will greatly aid the CCPC in investigating and prosecuting competition law infringements, especially ones that cover a broad time frame.

Directly reflecting the provisions of ECN+, the Act also introduces a graduated leniency programme, allowing the CCPC to grant immunity from, as well as a reduction of, any administrative financial sanctions to an undertaking that provides evidence of an infringement.

If an undertaking fails to qualify for full immunity, leniency is available to reduce a financial sanction. A number of conditions must be fulfilled to qualify for leniency, including that the evidence offered provides “significant added value” to the evidence already in the authority’s possession. This programme should give the competent authority additional leverage in the investigation process.

The CCPC has published various new guidance documents on its website, including on the interaction between the cartel immunity programme (CIP) and the administrative leniency policy (ALP) to provide undertakings with guidance on how the CCPC will deal with situations when applications are made to it under both the CIP and the ALP.

Enforcement procedures

In addition to the enhanced penalties for infringement, the Act details new procedures for enforcement.

Following an investigation and prior to a fine being imposed, the CCPC may issue a Statement of Objections (SO) to outline its initial views of the alleged breach and provide an opportunity to the undertaking to submit a written response. The CCPC may choose to continue or close the investigation on the foot of the SO, but the process also provides the opportunity to agree legally binding commitments with the undertaking(s) in question, or to refer the matter to an adjudication officer (AO).

The position of an AO is another innovation of the Act. The primary purpose of this role is to seek to come to a conclusion, on the balance of probabilities, whether or not there has been a breach of competition law. In coming to this conclusion, AOs can arrange for further submissions or hearings and are empowered with the same privileges, powers and rights of a High Court judge in civil proceedings. This new process is inherently adversarial and is likely to lead to more extensive use of legal resources.

Among the most important powers available to an AO is the imposition of periodic penalty payments. During investigations, an AO may order these payments to compel an undertaking to comply with an authorised search, to provide complete and correct information or to attend an interview or hearing. These payments shall not exceed five per cent of the average daily worldwide total turnover of the relevant undertaking in the preceding financial year. These payments that can be levied during the course of an investigation speaks to the comprehensive manner in which enforcement has been enhanced.

Conclusion

Assessing the changes brought about by the Act in light of the increased scrutiny of transactions by the CCPC in recent months, as evidenced by the blocking of Uniphar’s acquisition of NaviCorp last year, it can be argued that a new era of competition law enforcement is upon us.

The commencement of these provisions and the exercise of these powers could result in a flurry of competition law activity over the coming months and years. Considering the changes outlined above, increased vigilance by market actors is wise, as well as an abundance of caution when deciding whether to notify a transaction to the CCPC.

• Joanne Finn is a partner and Elaine Davis is a senior associate at DAC Beachcroft Dublin.