Getting the Deal Through: Cartel Regulation 2014 - Ireland
06 January 2014
The following article was written by Niall Collins, Head of EU & Antitrust, Mason Hayes & Curran and Maureen O'Neill, Partner, Mason Hayes & Curran for publication in the Getting the Deal Through - Cartel Regulation 2014. To view this article as it originally appeared, please download the pdf document to the right. © Copyright Getting the Deal Through 2013. All rights reserved.
Legislation and jurisdiction
1 Relevant legislation
What is the relevant legislation?
The Competition Act 2002 (as amended) (the Act) sets out the statutory basis for competition law in Ireland.
2 Relevant institutions
Which authority investigates cartel matters? Is there a separate prosecution authority? Are cartel matters adjudicated or determined by the enforcement agency, a separate tribunal or the courts?
The Competition Authority (the Authority) is an independent statutory body responsible for applying Irish and EU competition law in Ireland, as well as informing the government, public authorities, businesses and the wider public about competition issues. The Authority investigates alleged breaches of the Act, and can either itself bring a summary prosecution in the District Court or, for more serious cases, recommend prosecution to the director of public prosecutions (DPP). To date, all prosecutions of cartel cases have been brought by the DPP.
The Authority has also been assisted by two detective sergeants seconded from the Irish police force. Since 2007, in telecommunication matters, the Authority has shared enforcement responsibility with the Irish sectoral regulator (ComReg).
Have there been any recent changes, or proposals for change, to the regime?
In October 2011, section 10 of the Act came into force. The section allows for the provision of information to juries to assist them in considering complex financial and economic evidence during trials for breaches of competition law. Section 10 provides that in a trial on indictment, the trial judge may order that copies of any or all of the following documents shall be given to the jury in any form that the judge considers appropriate:
- any document admitted in evidence at the trial;
- the transcript of the opening speeches of counsel;
- any charts, diagrams, graphics, schedules or agreed summaries of evidence produced at the trial;
- the transcript of the whole or any part of the evidence given at the trial;
- the transcript of the closing speeches of counsel; and
- the transcript of the trial judge’s charge to the jury.
On 3 July 2012, the minister for jobs, enterprise and innovation (the minister) brought into effect the Competition (Amendment) Act 2012 (the Amendment Act). The Amendment Act is intended to strengthen the enforcement of competition law and help combat white-collar crime in Ireland. The main provisions of the Amendment Act include:
- an increase from five to 10 years of the maximum prison sen-tence for conviction of an offence relating to anti-competitive agreements, decisions and concerted practices;
- increases in fines that can be imposed for competition offences from €4 million to €5 million;
- a body convicted of competition offences may have to pay the costs of investigation and court proceedings for the first time;
- the courts can now disqualify a person from being a director of a company in summary criminal and in civil proceedings;
- a person convicted of certain competition offences will not be eligible for probation;
- commitments given to the Authority can be made rules of court; and
- it will be easier for private individuals affected by anti- competitive practices to prove an action for damages against a cartelist once public enforcement proceedings have successfully been taken (section 8 of the Amendment Act).
Although the Amendment Act is intended to strengthen the enforce-ment of Irish competition law and to tackle white-collar crime more effectively, it remains to be seen whether it will have any influence on the (heretofore) low levels of criminal sanctions imposed by the Irish courts in competition matters.
The amalgamation of the Authority with the National Consumer Agency (the Agency) is expected shortly with the unified regulators’ mandate to cover both competition and consumer law matters. The Consumer and Competition Bill is currently before the Irish legislature for debate. It is also expected that the Authority will publish its revised cartel immunity programme (CIP), which is currently being considered by the DPP. It is generally acknowledged that the CIP is working well, but that some tweaks may be required to provide enhanced clarity on how the CIP operates.
4 Substantive law
What is the substantive law on cartels in the jurisdiction?
Irish competition law is broadly derived from, and applied by anal-ogy with, the competition rules in the Treaty on the Functioning of the European Union (TFEU). Section 4(1) of the Act broadly reflects article 101(1) TFEU and prohibits and renders void ‘all agreements between undertakings, decisions by associations of undertakings and concerted practices which have as their object or effect the prevention, restriction or distortion of competition in trade in any goods or services in the state or in any part of the state’. The Act lists certain types of behaviour that are expressly prohibited and includes arrangements that:
- directly or indirectly fix purchase or selling prices or other trading conditions;
- limit or control production or markets;
- share markets or sources of supply;
- apply dissimilar conditions to equivalent transactions with other trading parties; or
- attach supplementary obligations to a commercial contract that have nothing to do with the subject of the contract (eg, tying).
Under section 6 of the Act, a breach of section 4 (or of article 101 TFEU) is a criminal offence. Furthermore, such a breach gives rise to a civil right of action. In the case of hard-core cartels, breach of section 6 can result in serious penalties, including imprisonment. ‘Hardcore cartel’ is defined in section 6(2) of the Act as an agreement or decision made by competing undertakings or a concerted practice, the purpose of which is to directly or indirectly fix prices with respect to the provision of goods or services, limit output or sales, or share markets or customers. The legislation defines ‘competing undertakings’ as undertakings providing, or capable of providing, goods or services to the same applicable market. Accordingly, section 6(2) is designed to catch horizontal anti-competitive arrangements.
5 Industry-specific provisions
Are there any industry-specific infringements? Are there any industryspecific defences or antitrust exemptions?
In the context of cartel-type activity, no industry-specific offences or defences exist.
It is a good defence to show, pursuant to section 4(5) or article 101(1) TFEU, that the alleged anti-competitive arrangement contributes to improving the production or distribution of goods, or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit.
Further, section 6(5) of the Act provides that, in the context of proceedings for a cartel offence under section 6(1), it shall be a good defence to prove that acts were done pursuant to a determination or direction by a statutory body. However, it is difficult to imagine circumstances whereby an Irish statutory body would condone cartel activity.
6 Application of the law
Does the law apply to individuals or corporations or both?
Section 4 applies to an ‘undertaking’, which is defined in the Act as an individual, a body corporate or an unincorporated body of persons engaged for gain in the production, supply or distribution of goods or the provision of a service.
Section 8(6) of the Act provides that where an undertaking commits an offence under section 6 and the conduct in question was authorised or consented to by a person being a director, manager or other similar officer of the undertaking, that person as well as the undertaking shall be guilty of an offence.
In the recent case of DPP v Hegarty, the defendant challenged proceedings taken against him on the basis that the prosecution had not first secured a conviction against his employers. The defendant argued that he could not be convicted unless his employer had first been convicted. In July 2011, the Irish Supreme Court ruled that an individual employee can be tried for a breach of Irish competition law even if his or her employer has not been convicted of an offence.
The Court noted that an‘undertaking’ for competition purposes can be a person, a body corporate or an unincorporated body. Further, ‘there is nothing surprising in the concept of both non-personal undertakings and their managers or officers and like persons being exposed to criminal prosecution arising out of the same abusive conduct. Such persons are separate and distinct legal personalities and therefore no question of double punishment arises’. The Supreme Court also noted that there is no reference to a‘conviction’ having been obtained in the relevant section of the Act, rather toan‘offence’ having been committed, and that there was no interpretative basis for importing into the section such a condition. The Oireachtas (the Irish parliament) could expressly have done so, but did not.
Does the regime extend to conduct that takes place outside the jurisdiction? If so, on what jurisdictional basis?
The Irish competition rules apply to any arrangements that prevent, restrict or distort competition in the state or in any part of the state. Accordingly, the test is effects-based. As such, conduct that takes place outside the state but gives rise to anti-competitive effects in the state will be caught by the legislation. For example, the Authority has investigated alleged extraterritorial cartels in the past in the form of associations registered under the US Webb-Pomerene Act (1918), but ultimately took no further action.
8 Steps in an investigation
What are the typical steps in an investigation?
Investigations can be initiated as a result of a complaint to the Authority, on the Authority’s own initiative or as a result of a leniency application under the CIP.
The gathering of evidence
Once the Authority has decided to initiate an investigation, it may gather evidence by issuing a written request for information, issuing a witness summons or conducting an on-site inspection (dawn raid) (see question 9 for further details). Where an investigation has been initiated as a result of a leniency application, the Authority will look to the applicant to provide as much information and assistance as possible to further its investigation.
While the Authority may take either civil or criminal action, cartel activity is typically treated as a criminal matter. Where the Authority considers the matter to be criminal in nature, it may opt for summary prosecution itself in the District Court. This will be before a judge sitting without a jury. In the case of more serious infringements, the Authority sends a file to the DPP, who will consider whether to prosecute on indictment (and before a jury in the High Court). Alternatively, the Authority may opt to take civil action.
There are no time frames provided for under statute in relation to the carrying out of investigations, and in practice investigations and legal proceedings can span several years.
9 Investigative powers of the authorities
What investigative powers do the authorities have?
The Authority’s investigative powers are primarily contained in sections 31 and 45 of the Act. It also has the power to use informal techniques, such as voluntary interviews, and request voluntary responses to information requests, although the use of such techniques is unlikely in the case of a criminal cartel investigation.
The Authority has the power to summon witnesses. It regularly uses the powers conferred upon it by section 31 of the Act to summon witnesses, examine witnesses under oath and require the production of any document within the control or possession of the witness. Witnesses summoned to appear before the Authority have the same rights and privileges as witnesses appearing before the High Court. They are also subject to the same penalties for failure to comply, and non-compliance may be subject to sanctions in the form of fines or imprisonment. In Ireland, the privilege against self-incrimination has constitutional status. If a witness is asked a question that could incriminate him or her, he or she should enquire whether he or she is being compelled to answer under the Act. If he or she answers under compulsion, the answers will not be admissible in proceedings against him or her.
The Authority may also conduct dawn raids. These powers permit officers to enter, by force if necessary, and search business premises and vehicles. The powers also extend to the private dwellings of directors, managers and members of staff. The Authority may authorise members of the Irish police force as officers for this purpose.
To enter premises, the authorised officers must be in possession of a warrant issued by a judge of the District Court in the area where the investigation is to take place. When conducting a dawn raid investigation, authorised officers may seize and retain (for a limited period) any books, documents or records relating to the business, and take any other steps necessary for preserving or preventing interference in these items. Officers may also gather information from directors and employees in relation to the carrying on of the business or gather any other information they may reasonably require. The obstruction of an authorised officer is a criminal offence.
10 Inter-agency cooperation
Is there cooperation with authorities in other j u risd ictions? If so, what is the legal basis for, and extent of, cooperation?
Under section 46 of the Act, the Authority may, with the consent of the minister, enter into arrangements with foreign competition authorities. The Authority can also arrange to provide information and assistance to a foreign competition authority. The Authority is a member of the European Competition Network (ECN), which aims to build an effective legal framework to police undertakings engaging in cross-border anti-competitive behaviour. With respect to enforcement of articles 101 and 102 TFEU, the ECN provides a framework for consultation, exchange of information and assistance between the European Commission (the Commission) and the national competition authorities (NCAs) as well as between individual NCAs, with the aim of consistent and uniform application of articles 101 and 102.
The Authority is also a member of the International Competition Network, which provides a forum for developing best practice in competition law and policy and addressing practical competition concerns. Domestic cooperation agreements also exist with sectorspecific regulators (eg, ComReg) as well as with the Agency (soon to be merged with the Authority).
11 Interplay between jurisdictions
How does the interplay between jurisdictions affect the investigation, prosecution and penalising of cartel activity in the jurisdiction?
The main interplay for the Authority is with the Commission. Cooperation among the network of competition authorities in the EU is governed principally by Regulation No. 1/2003 (the Modernisation Regulation) and the Commission Notice on cooperation within the Network of Competition Authorities.
Authorised officers from Ireland have accompanied officials from the Commission on dawn raids in relation to a number of alleged cartels operating in Ireland.
Since the Modernisation Regulation entered into force, the Authority is also charged with the enforcement of EU competition law. Under the regime, Irish authorised officers may be accompanied by officials from other NCAs and, under article 22 of the Modernisation Regulation, one NCA may ask another NCA for assistance in collecting information on its behalf.
With regard to punishment of cartel activity, it is theoretically possible for a cartel participant to be prosecuted twice, in the first instance for breach of domestic competition law and in the second instance for breach of EU competition law. It is highly likely, however, that either the relevant NCA or the Commission (depending on the particular case) would take the punishment imposed by the other body into consideration.
How is a cartel proceeding adjudicated?
The legislation provides that an individual indicted for an offence under section 4 of the Act will be tried before a jury in the Irish Central Criminal Court (the High Court exercising its criminal jurisdiction). Proceedings on indictment can only be initiated by the DPP.
Summary proceedings initiated by the Authority in the District Court are heard by a judge sitting without a jury.
13 Appeal process
What is the appeal process?
Under Irish law, most decisions of courts and bodies exercising quasi-judicial powers can be appealed to a higher court. Decisions of the District Court can be appealed to the Circuit Court. The appeal hearing takes the form of a de novo hearing.
A civil decision of the Circuit Court may be appealed to the High Court on a point of law. Similarly, a decision of the High Court may be appealed to the Supreme Court. The Supreme Court is the ultimate and final court of appeal.
In criminal trials, decisions of the District Court can be appealed to the Circuit Court. The appeal hearing will take the form of a de novo hearing. The only exception to this is where the appeal is in relation to the sentence only. In this situation, the Circuit Court need only re-hear as much of the case as is necessary. A criminal decision of the Circuit Court may be appealed to the Court of Criminal Appeal, as may a decision of the Central Criminal Court.
In certain circumstances, an appeal from the Central Criminal Court may be made directly to the Supreme Court. The DPP may also appeal to the Court of Criminal Appeal on grounds of undue leniency.
Decisions of administrative bodies, such as the Authority, may be judicially reviewed whereby a claimant will typically request an order quashing the decision of the administrative body on the basis that the decision was ultra vires the administrative body, or that the administrative body acted unreasonably in coming to its decision. The unreasonableness test used by the Irish courts has a particularly high threshold to overcome, as the courts tend to be reluctant to overturn decisions of expert bodies.
Appeals taken by the Competition Authority (or by the DPP on the advice of the Competition Authority) from civil and criminal actions may be made under the normal rules of civil and criminal procedure.
14 Burden of proof
Which party has the burden of proof? What is the level of proof required?
The onus of discharging the burden of proof in both criminal and civil cases is on the Authority or the DPP (depending upon who is prosecuting). In civil cases, the burden of proof is the ‘on the balance of probabilities’, while in criminal actions, the offence must be proved ‘beyond reasonable doubt’. Certain presumptions are contained in the Act to aid the Authority’s or the DPP’s prosecution of cartels. There are certain documentary presumptions as well as a presumption that the object of any hard-core arrangement is to restrict competition. In such instances, the burden of proof is reversed and the onus then lies on the defendant. There is also a rebuttable presumption that any director or any person employed by the undertaking who had decision-making authority consented to the breach of the competition rules unless proof to the contrary is established.
15 Criminal sanctions
What, if any, criminal sanctions are there for cartel activity? Are there maximum and minimum sanctions?
The Competition Authority may criminally prosecute cartel conduct (summary prosecution), or it may recommend prosecution to the DPP in the case of more serious cartel offences (prosecution by indictment).
On summary conviction
In the case of an undertaking that is not an individual, a fine not exceeding e3,000 may be imposed. In the case of an individual, a fine not exceeding e3,000 or a term of imprisonment not exceeding six months, or both, may be imposed.
On conviction on indictment
In the case of an undertaking that is not an individual, a fine not exceeding e5 million or 10 per cent of turnover (whichever is greater) may be imposed. In the case of an individual, a fine not exceeding e5 million or 10 per cent of the individual’s turnover (whichever is greater) or a term of imprisonment not exceeding 10 years, or both, may be imposed.
To date, a total of 33 criminal convictions have been secured in respect of cartel conduct. Criminal fines in excess of e600,000 and 10 custodial sentences have been imposed. However, the Irish courts have not yet required any individual to actually serve time in prison for cartel offences; all custodial sentences have, to date, been suspended.
In the most recent decision of DPP v Hegarty in May 2012, the Court imposed a custodial sentence of two years, the highest to date; however, this sentence was suspended. The Court noted that the only reason this sentence was suspended was because of the length of time that had elapsed since the offence was committed (10 years), and that it would be ‘somewhat invidious and certainly unfair’ if Mr Hegarty were required to serve the sentence now. The Court expressed its regret that the matter had not come before the courts for determination sooner.
In the earlier case of DPP v Manning, the Court imposed a 12-month prison sentence, which was suspended. In sentencing Mr Manning, the trial judge noted that Mr Manning would have served a prison sentence if not for the declining state of his health.
In DPP v Patrick Duffy and Duffy Motors (Newbridge) Limited, the trial judge stressed the Irish courts’ increasing intolerance of cartel infringements and stated that ‘Two years on, I say once more that if the first generation of carteliers have escaped prison, the second and present generation almost certainly will not’.
In 2009, Mr James Bursey was sentenced to six-month and nine-month suspended sentences. A total of €80,000 fines was also imposed, and Mr Bursey was sentenced to and served a 28-day prison term for non-payment of these fines.
The following criminal fines have been imposed by the Irish courts in recent years:
- in 2007, a fine of €30,000 was imposed in the case of DPP v Manning;
- in 2009, a fine of €80,000 was imposed on Mr James Bursey in the Citroen Dealers case;
- in 2009, a fine of €50,000 was imposed in the Duffy Motors case; and
- in 2012, a fine of €30,000 was imposed in the case of DPP v Hegarty.
16 Civil and administrative sanctions
What civil or administrative sanctions are there for cartel activity?
The Authority does not have the power to impose administrative fines or other sanctions. Fines can only be imposed by a court. Civil injunctions may be sought by the Authority. The Authority may also seek a declaratory order from a court declaring that the provisions of the Act have been breached by an undertaking.
17 Sentencing guidelines
Do sentencing principles or guidelines exist? Are they binding on the adjudicator?
In DPP v Patrick Duffy and Duffy Motors (Newbridge) Limited, the trial judge summarised the approach the Irish High Court will take with respect to cartel activity and sentencing practices in Ireland:
In Irish Law it has been established for many years that any sentence imposed must reflect the crime and the criminal. It must be rational in its connection to both. It must be proportionate. Therefore, factors such as the seriousness of the offence (culpability, harm, behaviour etc.), the circumstances in which it is committed and the prescribed punishment must be looked at. As of course must be any aggravating circumstance as well as any mitigating one. The latter would include, if the evidence so established, matters such as a guilty plea, co-operation, remorse, absence of previous convictions, good character, unlikely to re-offend etc. This list must be added to by any other individual factor which is legally capable as attracting credit. Having done this exercise the appropriate sentence to fit the crimes and the offender is arrived at.
As previously mentioned, it is also noteworthy that in the case of DPP v Manning, in sentencing Mr Manning, the Court considered as relevant his declining state of health.
Is debarment from government procurement procedures automatic or available as a discretionary sanction for cartel infringements?
No. As outlined in questions 15 and 16, the only sanctions imposed with respect to cartel infringements are the imposition of fines and custodial sentences.
However, under European public procurement legislation implemented in Ireland, contracting authorities are required to exclude from a tender process persons who have been convicted of an offence involving, inter alia, ‘participation in a prescribed criminal organisation’. It is untested whether this provision would apply in the context of a person or undertaking that has been convicted of a cartel offence.
19 Parallel proceedings
Where possible sanctions for cartel activity include criminal and civil or administrative sanctions, can they be pursued in respect of the same conduct? If not, how is the choice of which sanction to pursue made?
As outlined in questions 15 and 16, the Act provides for criminal sanctions only for breach of the competition rules.
Private rights of action
20 Private damage claims
Are private damage claims available? What level of damages and cost awards can be recovered?
The reliefs available to private litigants include injunctions, declarations and damages (including exemplary damages).
Section 14 of the Act provides, inter alia, that private actions for damages may be taken by any individual who is aggrieved as a result of any agreement, decision or concerted practice that is prohibited under the Act. The individual has a right of action against the undertaking party to the arrangement and against any director, manager or other officer of that undertaking. As noted in question 3, the Amendment Act provides that where cases have been successfully brought by the Authority, private parties suing for damages can rely on the fact that the parties have already been found by the courts to have infringed the Act and will not be required to separately prove that the infringement has occurred. This is designed to facilitate follow-on damages actions. To date, very few private actions have been taken in the Irish courts.
The legislation provides for single level damages only in Ireland. The Amendment Act provides for defendants to pay the cost of Authority investigations.
21 Class actions
Are class actions possible? What is the process for such cases?
There is no mechanism for a class action in Ireland. However, there remains limited scope within the rules of procedure of the Irish courts to join several causes in the same action. Order 15(9) of the Rules of the Superior Court states that: ‘Where there are numerous persons having the same interest in one case or matter, one or more of such persons may sue or be sued, or may be authorised by the Court to defend, in such cause or matter, on behalf or for the benefit of all persons so interested.’
Is there a leniency/immunity programme?
The Authority, in conjunction with the DPP, operates the CIP, which offers full immunity from prosecution to the first successful applicant. The programme is not a statutory regime, rather it is an administrative programme designed to assist the Authority in tackling cartel behaviour. Applications for immunity under the CIP are made to the Authority. The Authority may recommend to the DPP that an undertaking receives immunity, but only the DPP can grant immunity from prosecution. Under the CIP, there is no leniency available to any individual or undertaking other than full immunity for the first successful applicant.
23 Elements of the leniency/immunity programme
What are the basic elements of the leniency/immunity programme?
Immunity is available only to the first applicant to provide the Authority with evidence of cartel behaviour and the evidence provided must be sufficiently strong to merit the grant of immunity. Certain conditions must be satisfied before the CIP may be availed of. The applicant:
- must take certain steps, as agreed with the Authority, to terminate its participation in the anti-competitive activity;
- must not alert the other members involved in the anti- competitive activity that it has applied for immunity;
- must show that it has not, nor have any of its relevant past or present employees, coerced another party to participate in the anti-competitive activity, nor must it have acted as the instigator or have played the lead role in the illegal activity; and
- must provide complete and timely cooperation throughout the course of the Authority’s investigation and any subsequent prosecution. In particular, the applicant must reveal any offences in which it may have been involved, and provide full, frank and truthful disclosure and any and all supporting evidence and information.
The applicant may initially approach the Authority through its legal adviser on a hypothetical, no-names basis to protect its anonymity when attempting to determine if it would qualify for immunity. Accordingly, this allows an applicant to place a marker to protect its position (for a period determined by the designated officer) pending completion of the immunity application. This first contact is typically made by telephone with the Authority’s designated officer between the hours of 10am and 4pm Monday to Friday (except public or bank holidays). The Authority operates a telephone number, and the designated officer may be reached on +353 87 763 1378.
It remains to be seen whether the proposed removal of the prohibition on a cartel ringleader availing of immunity will materialise in the revised CIP, which is expected to be published shortly. It should be noted that a body corporate making an application for immunity must use a corporate act to do so.
24 First in
What is the importance of being ‘first in’ to cooperate?
The Authority will make a recommendation to the DPP to grant immunity only if the applicant is the first to come forward to confess involvement in cartel activity and to satisfy the conditions of the CIP (see question 23). Joint applications are not accepted.
25 Going in second
What is the significance of being the second cooperating party? Is there an ‘immunity plus’ or ‘amnesty plus’ option?
Neither immunity nor leniency are available to the second applicant coming forward, and there is no formal immunity plus or amnesty plus regime. However, if the first applicant fails to meet all the requirements of the CIP, a subsequent applicant who does meet the requirements may be granted immunity. Cooperation with the Authority may potentially be viewed as a mitigating factor by the court when imposing fines or sentencing, although this has not been addressed by the Irish courts to date.
26 Approaching the authorities
Are there deadlines for applying for immunity or leniency, or for perfecting a marker?
The first-in rule and the Authority’s marker system dictate that an applicant who is considering immunity should contact the Authority as soon as is practicable. As noted in question 23, the applicant’s legal adviser may contact the Authority on a no-names basis in the first instance. No deadlines exist in applying for leniency or immunity. An applicant will be allowed to initially apply for a marker with the Authority’s immunity officer, which protects the applicant’s place in the queue for immunity for a set period of time. During this time, the applicant must gather the necessary information and evidence needed to complete its application for immunity.
Where a marker is granted the immunity officer will then determine the period within which the applicant has to perfect the marker by submitting its application for immunity. Where a marker is perfected within the allocated set period, the information provided will be deemed to have been submitted on the date when the marker was granted. If a marker expires before it is perfected, the immunity officer will consider any other applications for a marker or for qualified immunity. A former holder of an expired marker may re-apply, but its original place in the queue is not protected. Joint applications for immunity by two or more conspirators will not be accepted.
Subject to the requirements set out at question 27, the Authority will recommend immunity to the DPP if the applicant is the first to come forward before the Authority has gathered sufficient evidence to warrant a referral of a completed investigation file to the DPP.
What is the nature and level of cooperation that is required or expected from an immunity applicant? Is there any difference in the requirements or expectations for subsequent cooperating parties?
In addition to the points set out at question 23, to benefit from the Irish leniency programme, the following conditions must also be satisfied by the applicant:
cooperate fully, on a continuing basis, expeditiously and at its own expense throughout the investigation and with any ensuing prosecutions; and
in the case of a corporate undertaking, the application for immunity must be a corporate act. While applications from individual directors or employees will be considered, they will not be regarded as having been made on behalf of the undertaking in the absence of a corporate act. Corporate undertakings must take all lawful measures to promote the continuing cooperation of their directors, officers and employees for the duration of the investigation and any ensuing prosecutions.
As noted at question 25, if the first applicant to request immunity fails to meet these requirements, a subsequent applicant that does meet these requirements can be considered for immunity.
There is no scope under the CIP for leniency to be granted to subsequent cooperating parties.
What confidentiality protection is afforded to the immunity applicant? Is the same level of confidentiality protection applicable to subsequent cooperating parties?
The Authority will not disclose information acquired by it in the course of its investigation, except in accordance with the normal practice and procedures pertaining to criminal investigations and prosecutions, in particular, if disclosure is:
- required by law;
- used to administer and enforce the Act;
- necessary to prevent the commission of a criminal offence;
- made public by the applicant; or
- made in the course of an investigation or subsequent proceeding.
An applicant cannot request that its identity, or any information disclosed, remains confidential during the investigation or subsequently in any proceedings that may be initiated by the Authority or the DPP.
Does the enforcement authority have the ability to enter into a plea bargain, settlement or other binding resolution with a party to resolve liability and penalty for alleged cartel activity?
Plea bargaining is not a feature of Irish criminal law.
The Authority, however, may reach a settlement with members of a cartel. In the event that legal proceedings have already been initiated, this may be done by a court-sanctioned settlement. Such was the case in the proceedings (civil proceedings in this case) involving the Licences Vintners Association and the Vintners Federation of Ireland. The other method of settlement is by way of negotiated agreement directly between the Authority and the alleged members of the cartel. Such a settlement was reached in the case of the Irish Hospital Consultants Association. Although there was no court action involved, the settlement agreements were legally enforceable and binding. In neither case did the settlement amount to an admission of liability.
30 Corporate defendant and employees
When immunity or leniency is granted to a corporate defendant, how will its current and former employees be treated?
Any person involved in cartel activity may offer to cooperate and seek immunity from the Authority. An undertaking may choose to seek immunity on behalf of its employees (present and past), including directors and officers. Employees not having the role of either director or officer of the undertaking may approach the Authority on their own behalf.
31 Dealing with the enforcement agency
What are the practical steps in dealing with the enforcement agency?
See question 23.
32 Ongoing policy assessments and reviews
Are there any ongoing or anticipated assessments or reviews of the immunity/leniency regime?
Every three years, the Authority publishes a strategy statement that sets out its strategic goals and objectives for the following three years. The most recent strategy statement (covering the period 2012– 2014) outlined the Authority’s intention to publish a revised CIP in conjunction with the DPP. As noted in question 3, the Authority’s revised CIP is currently being considered by the DPP and is expected to be published imminently.
Defending a case
May counsel represent employees under investigation and the corporation? Do individuals require independent legal advice or can counsel represent corporation employees? When should a present or past employee be advised to seek independent legal advice?
There is no specific legislation governing the representation of individuals or undertakings appearing before the Authority or before the Irish courts. However, during 2004, the Authority published a notice opining that where the same lawyer proposed to represent more than one person in a matter, and in circumstances where the Authority held the belief that it would adversely affect the investigative process, it could permit the lawyer to appear on behalf of one person only. The Law Society of Ireland challenged the Authority’s notice, which was subsequently quashed by the High Court on the basis that it was both unconstitutional and contravened article 6 of the European Convention on Human Rights. The High Court held, however, that in certain limited circumstances, an individual’s preferred legal representative could be denied by the Authority.
As an employee may be personally liable to criminal prosecution under the provisions of the Act, the interests of a company and of its employees may not be aligned. In such circumstances, it will typically be prudent for employees to seek alternative legal representation.
34 Multiple corporate defendants
May counsel represent multiple corporate defendants?
The same factors and considerations outlined in question 33 also apply in the case of corporate defendants.
35 Payment of legal costs
May a corporation pay the legal costs of and penalties imposed on its employees?
Yes. Corporations may pay both legal fees and any financial penalties imposed on employees.
36 International double jeopardy
Do the sanctions imposed on corporations or individuals take into account any penalties imposed in other jurisdictions?
There is no express provision requiring an Irish court to take this into account. It is likely that other jurisdictions would apply penalties proportionate to the effect on competition in their own jurisdiction. Therefore, it is unlikely that an Irish court would take such penalties into account.
The common law principle of double jeopardy in relation to the decisions of foreign courts is, however, recognised in Irish criminal proceedings. This is thought to apply to both convictions and acquittals. This principle may, therefore, be applied in relation to criminal sanctions for cartel activity.
37 Getting the fine down
What is the optimal way in which to get the fine down?
Availing of the CIP and observing continuing obligations under the immunity agreement is the optimal way of getting the fine down.
Update and trends
In past years, the Competition Authority has been hampered in its investigation and enforcement of cartels due to resourcing issues. However, significant additional resources were sanctioned recently, and we are seeing an increase in activity by the Authority in the area of cartel enforcement. For example, in the summer of 2013, the Authority carried out high-profile dawn raids of a number of flooring contractors suspected of having engaged in bid rigging.
The revised immunity programme is still awaited, and is expected to be published imminently.
The content of this article is provided for information purposes only and does not constitute legal or other advice. Mason Hayes & Curran (www.mhc.ie) is a leading business law firm with offices in Dublin, London and New York.
Reproduced with permission from Law Business Research Ltd. This article was first published in Getting the Deal Through – Cartel Regulation 2014, (published in November 2013; contributing editor: A Neil Campbell, McMillan LLP) For further information please visit www.GettingTheDealThrough.com