The Competition (Amendment) Act 2022 (the Act) has come into force on 27 September 2023.
The Act implements the ECN+ Directive (Directive 2019/1) and makes a number of other substantial changes to Ireland’s competition laws. The Act applies to conduct since 4 February 2021, which is the date by which the ECN+ Directive should have been transposed into Irish law.
New Powers Relating to Merger Control
The Act introduces significant new powers for the Competition and Consumer Protection Commission (CCPC) in relation to merger control, including the ability to:
- Call in below threshold mergers for review
- Impose interim measures
- Initiate proceedings for gunjumping offences, and
- Unwind mergers or acquisitions
Power to Review Below Threshold Mergers
The Act gives the CCPC the power to require parties to notify a below threshold transaction which, in the opinion of the CCPC, may have an effect on competition in the Republic of Ireland. This is a broad power which the CCPC can exercise within 60 working days of the earlier of
- The announcement of a public bid,
- The date on which the CCPC becomes aware that the parties have entered into the relevant agreement, or
- The date on which the transaction is put into effect. Once notified, the CCPC can review the transaction in the same way as an above threshold transaction.
The current financial thresholds for notification of a merger or acquisition in Ireland are combined turnover in Ireland of the parties, i.e. the purchaser(s) and the target, of at least €60 million, and turnover in Ireland of each of two or more parties of at least €10 million.
Our Insights ‘Irish Merger Control Rules Undergo Significant Overhaul’ and ‘A New Era of Intervention by the CCPC in Below Threshold Mergers?’ explore the scope and potential implications of the CCPC’s new call-in power.
Power to impose interim measures
The CCPC is also, for the first time, given the power to impose interim measures where it considers it appropriate to do so due to the risk that the transaction may have an effect on competition in Ireland. Since Ireland’s merger control regime is suspensory, this power is primarily relevant to below-threshold transactions that the CCPC requires to be notified and may be exercised by the CCPC regardless of whether the parties actually notify the transaction.
Interim measures include, but are not limited to, obligations:
- To refrain from taking any steps to implement the transaction
- To take steps to mitigate any steps already taken
- Regarding the safeguarding of any assets or carrying on of activities
- Preventing the undertaking from engaging in certain conduct, including selling assets, integrating IT systems, participation in a tender process, discontinuing products or exchanging commercially sensitive information.
Gun-jumping
The Act introduces a new gun-jumping offence of implementing a notified transaction prior to clearance from the CCPC. The CCPC’s new powers to impose interim measures may also arise in the context of notified transactions implemented prior to clearance from the CCPC.
Previously, the only gun-jumping offence under Ireland’s competition laws was failing to notify a notifiable transaction.
Power to unwind transaction
The Act gives the CCPC the power to require a transaction, which was completed without approval and which it believes substantially lessens competition in Ireland, to be unwound or dissolved or to take such steps to restore the situation as far as practicable. Again, since Ireland’s merger control regime is suspensory, this power is likely to arise mainly in the context of below-threshold mergers that are completed before either being voluntarily notified by the parties or ‘called in’ for review by the CCPC.
Power to impose fines
The CCPC and the Commission for Communications Regulation (Comreg) will, for the first time, have the power to impose administrative financial sanctions of up to €10 million or 10% of total worldwide turnover on parties that have participated in a competition law infringement, subject to High Court approval. The Act also allows the CCPC and Comreg to impose periodic penalty payments for non-compliance with certain requirements under the Act, of up to 5% of the average daily total world-wide turnover in the preceding financial year per day during which failure to comply is ongoing.
The Act also increases the level of criminal fines which can be imposed on companies and individuals for cartel offences up to the greater of €50 million or 20% of turnover in the financial year preceding the conviction. The level of a fine must be effective, proportionate and dissuasive and will depend on the gravity and duration of the infringement.
Against this backdrop, it is anticipated that the CCPC will carry out dawn raids, which largely fell by the wayside during the Covid-19 pandemic. Information about our dedicated Dawn Raid Response Team is available here.
Administrative Leniency Policy
The new power to impose fines is accompanied by a new Administrative Leniency Policy (ALP), which allows the CCPC and Comreg to grant immunity from, or a reduction of, administrative sanctions where the parties disclose their participation in the infringement and cooperate with the CCPC. The ALP has also been extended to cover non-cartel conduct in the form of resale price maintenance.
The ALP will operate alongside the existing Cartel Immunity Programme (CIP), creating the possibility for parties to a cartel infringement to make parallel applications for immunity under both the ALP and the CIP.
We expect to see a significant uptick in leniency applications, including in relation to non-cartel conduct in 2023 and beyond. For further insights on leniency applications under Irish law, see the contribution that our Competition & Antitrust team made to the Q&A guide to cartel leniency law in Ireland accessible on Thomson Reuters Practical Law.
New investigative powers
The Act introduces a new investigative process for suspected breaches of competition law. It provides for the nomination of independent adjudication officers (AOs) by the CCPC and Comreg.
AOs have the same powers as a High Court judge hearing civil proceedings and can issue findings of a breach of competition law and impose fines and structural and behavioural remedies. As set out above, fines must be confirmed by the High Court.
The Act also allows the CCPC to monitor and record persons suspected of being involved in a hardcore cartel, including intercepting and recording electronic communications and video and audio surveillance of suspects.
New bid rigging offence
The Act introduces a new cartel offence of bid rigging. Bid rigging is a form of cartel behaviour where bidders or potential bidders in a procurement process collude without informing the procuring body. The Act identifies a number of bid-rigging practices, namely:
- an agreement not to submit or to withdraw a bid (sometimes referred to as bid suppression)
- an agreement to submit a bid on terms agreed with another bidder (eg an agreement to make
- an uncompetitive bid to ensure a certain bidder is selected)
- collusive tendering.
The practice to date has been to regard bidrigging as a form of price fixing or market sharing. The change is intended to make it clearer that such behaviour is unlawful as it distorts competition and signals a greater desire to uncover and investigate potential bid rigging offences.
Comment
The Act grants significant new powers to the CCPC and ComReg, similar to powers held by other competition authorities in the UK and Europe. The expectation is that these wide ranging new powers will lead to more active enforcement of the competition laws in Ireland. Time will tell if, and to what extent, the CCPC and ComReg will utilise their new powers.
While the new enforcement regime, and associated powers, may take some time to bed down, the new merger control powers are likely to be exercised sooner. Merging parties should carefully consider the competition risks of proposed transactions.
Please get in touch with a member of our Competition & Antitrust team for more information.
