The Competition and Consumer Protection Act 2014

23-09-2014

Author: Pat O’Brien



The Competition and Consumer Protection Act 2014 (the “Act”) was signed into law by the President on 28 July 2014 and the entire Act (with the exception of the provisions in relation to media mergers for which no commencement order has yet been published) is scheduled to come into effect on 31 October 2014.

Establishment of the Competition and Consumer Protection Commission

The Act establishes a combined consumer and competition body known as the Competition and Consumer Protection Commission (the “CCPC”). The CCPC will replace the Competition Authority (the “CA”) and the National Consumer Agency (the “NCA”) as the body responsible for consumer protection and competition enforcement in Ireland.

The CCPC will have the same statutory functions as the existing bodies and will comprise of the current chairperson of the CA (as chairperson designate) and up to six members, including three members of the CA and the Chief Executive of the NCA.

Enhanced Enforcement of Competition Law

The Act increases the CCPC’s powers to investigate and enforce competition law breaches. It allows for the compelled disclosure of material which may be legally privileged. The compelling of the information must be done in such a way that the confidentiality of the information can be maintained. Following the compelled disclosure, application to the High Court must be made for determination of whether the information is legally privileged or not.

The offence under section 6 of the Competition Act 2002 of engaging in an agreement to fix prices, limit output or share markets (i.e. a serious cartel offence) is designated a “relevant offence” under the Criminal Justice Act 2011. This means that it is a criminal offence for any person to fail to disclose to Gardaí as soon as practicable information which he or she knows or believes might be of material assistance to the Gardaí in relation to the prevention of the commission or investigation of a serious cartel offence. This offence is punishable by fines of up to €5 million and / or imprisonment.

A person detained under the Criminal Justice Act 1984 can be released and have their detention suspended to allow further investigations to take place during the suspension period. The detention can be suspended twice over a maximum period of four months from the date the person was first detained.

Gardaí can question overnight a person detained under the Criminal Justice Act 1984 in connection with a serious cartel offence in certain circumstances, including where the Gardaí believe that there is a risk of the destruction of or interference with evidence.

The Act extends the provisions of the Communications (Retention of Data) Act 2011 to serious criminal cartel offences. The CCPC will be empowered to order the disclosure of internet and call data which is required to be retained by telcos and internet companies for up to two years. The companies will have to ensure that this data is available for the investigation, detection and prosecution of serious criminal offences.

New Merger Control Thresholds and Timelines

The Act changes the financial thresholds which trigger a requirement to make a merger filing. The requirement will now be triggered where, in the most recent financial year:

  • the aggregate turnover in the State (i.e. Republic of Ireland) of the undertakings involved (i.e. the purchaser and the target on a group basis but not the vendor) is not less than €50,000,000, and
  • the turnover in the State of each of 2 or more of the undertakings involved is not less than €3,000,000.

The requirement that each undertaking has a worldwide turnover of €40,000,000 has been removed. This change is designed to ensure that only those transactions with a real connection to Ireland will be required to be notified.

Transactions notified before the commencement of the new rules (i.e. 31 October 2014) will be reviewed under the existing rules. However, the CA has confirmed that an agreement that is not subject to mandatory notification prior to 31 October 2014, because it does not satisfy the current thresholds applicable until 31 October 2014, will become notifiable if it is not completed (i.e. put into effect) before 31 October 2014 where it satisfies the revised thresholds detailed above.

The Act also extends the time periods for the review of a notified merger. The CCPC will have up to 30 working days (increased from one calendar month) in Phase 1 and 120 working days (increased from four calendar months) in Phase 2 to review the notified merger. These periods will be extendable where a formal information request is made or where remedies are proposed. The introduction of a possible extension to the Phase 2 review in the Act is new.

These new time periods will have the potential to materially lengthen the review process. However, the effect may be mitigated somewhat by the Act allowing for a notification to be made prior to the signing of an agreement, where the undertakings involved can demonstrate a good faith intention to conclude an agreement. Under the existing rules, a notification can only be made once the transaction agreement has been signed and must then be made within one month of signing. Under these new provisions, there is no deadline for notification to the CCPC, although clearance must be obtained before the transaction is put into effect, i.e. completed.

Media Merger Regime

Under the new regime introduced by the Act, all media mergers must be notified not only to the CCPC but also separately to the Minister for Communications, Energy and Natural Resources. Under the current rules, a media merger is only required to be notified to the Competition Authority, with the possibility of the Minister becoming involved in the course of the review.

The Act also changes the test to be applied by the Minister in his or her review. The Minister will review the effect of the media merger on media plurality in Ireland, i.e. whether the merger will impair the diversity of content and the density of ownership of media in the State. The Act also amends the definition of a media merger to include online media businesses, which are not covered by existing media merger rules.

The Act provides that at least one of the merging media businesses must carry on ‘a media business in Ireland’, meaning that it must:

  • have a physical presence in Ireland and make sales to customers in Ireland; or
  • make sales to customers in Ireland of at least €2 million in the most recent financial year.

The Minister has up to 30 working days in Phase 1 to review the media merger. Where a Minister opens a Phase 2 review, this will involve a referral to the Broadcasting Authority of Ireland (the “BAI”) to conduct a more detailed review. The BAI will have 80 working days to report and the Minister 20 working days in which to make a decision. These periods are extendable where formal information requests are made. The reviews by the Minister and by the CCPC can run concurrently.

The provisions in the Act relating to grocery goods undertakings give the Minister power to make regulations in relation to relationships between relevant grocery goods undertakings (whose annual turnover exceeds €50 million) and other grocery goods undertakings. The power to make these regulations is designed to ensure fairness between suppliers and retailers in the grocery goods sector and to regulate certain unfair trading practices.

The regulations will focus primarily on the supply arrangements between larger and smaller grocery good undertakings, including: the form of contracts and contractual variation, termination and renewal; charges for listing grocery goods; conditions under which retailers may require suppliers to obtain any goods, services or property from a third party where the retailer obtains payment for it; retailers seeking payments from suppliers to obtain better shelf space or better shelf positioning; and payments sought in respect of wastage and marketing costs.

The Act allows for the regulations to require relevant grocery undertakings to implement new compliance procedures, including staff training, preparation of annual compliance reports and the maintenance of records.

The CCPC will have powers to investigate alleged breaches of the regulations, including the power to carry out inspections of grocery goods undertakings. Failure to comply with the regulations will constitute an offence which will be punishable by fines and imprisonment. Aggrieved parties will be able to seek damages from the grocery goods undertakings which have breached the regulations. There is also a name and shame provision in the Act which entitles the publication of a list of offenders. The CCPC will also be empowered to issue contravention notices directing a grocery good undertaking to remedy a contravention of the regulations.

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