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Sunday, 14th April 2024
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New Competition Act will change the business landscape Back  
The Competition Act 2002 was signed into law by the President on April 10, 2002 although its provisions will not take effect immediately. The Act replaces all existing competition and mergers legislation in Ireland and it brings about a number of changes which mirror actual or proposed changes to EC competition law says Helen Kelly and Karen Gibbons.
While the substantive law on anti-competitive agreements and abuse of dominant position in Ireland remains the same, procedural aspects will change on the introduction of the Act. It will no longer be possible to notify an agreement to the Competition Authority (the ‘Authority’) for approval; rather, businesses will be responsible for ensuring that their own agreements comply with competition law, although the Authority will give some guidance in the form of notices and declarations. This is in line with the so-called ‘modernisation’ of EC competition law proposed by the European Commission, which also aims to abolish the system of notification of anti-competitive agreements. Criminal sanctions are retained in the Act, with a re-balancing of imprisonment penalties to reflect the gravity of different types of anti-competitive behaviour. The maximum term of imprisonment has been increased from two to five years for so-called ‘hardcore’ competition offences, i.e. price fixing, market sharing and bid-rigging. There will no longer be an imprisonment term for other anti-competitive offences, such as abuse of a dominant position or more minor anti-competitive agreements. Fines of up to the higher of E4 million or 10 per cent of annual turnover will remain. The Act makes a number of technical changes to the criminal procedures for proving a competition offence and a number of presumptions are contained which will make the prosecutor’s job somewhat easier. Certain technical defences are also contained in the Act.
A new merger control regime is also established by the Act. The merger notification regime will be largely depoliticised. Mergers will be notified to the Authority, rather than the Minister for Enterprise, Trade and Employment (the ‘Minister’), as is currently the case. The Minister only retains a role in relation to the application of ‘public interest’ criteria to media mergers. Increased financial thresholds are contained in the Act so that a substantially reduced number of mergers will fall within the scope of Irish merger control rules. Mergers will be notifiable where each of two or more of the undertakings involved in the acquisition carry on business in any part of the island of Ireland; any one of the undertakings involved has turnover in the State of not less than E40 million; and the worldwide turnover of at least two of the undertakings involved is more than E40 million. Mergers may not be put into effect until the Authority has made a determination.
The Act provides for a two-phase examination process for mergers. The first phase allows the Authority to make a determination within one month of notification to allow the merger to proceed. This will be the case for mergers, which do not give rise to significant competition concerns. Where there are such concerns, the Authority may proceed to a second phase investigation. In such cases, the Authority will have four months within which to investigate the merger and decide whether it should be cleared or blocked. The Authority will also have the power to receive and negotiate undertakings or commitments from the parties in order to reduce the impact on competition of an otherwise difficult merger. In such cases, additional time will be allowed for the parties to negotiate the undertakings with the Authority, both in phase one and phase two. The Authority will apply no public interest or common good criteria. Provision is made for increased transparency of the mergers process, with the Authority publishing notice of receipt of notifications and inviting submission by third parties. The Authority will publish a decision setting out its ruling and the reasons for its decision.
The Act is moving to the US style substantive test for the assessment of mergers, i.e. whether or not the merger would result in a ‘substantial lessening of competition’ in markets for the goods or services in question in Ireland and may decide to implement a similar test. The UK is also proposing to implement a similar test.
Media mergers will be treated differently to all other mergers as the Minister will make the final decision on the merger following delivery to him/her of the Authority’s report and can overrule the Authority on public interest grounds. A media merger is one, which involves undertakings which are involved in publishing newspapers, periodicals or magazines, sound and/or audio visual broadcasting (except over the internet) or provision of a broadcast service platform, such as a cable company. Public interest criteria will be applied in respect of these mergers. These criteria include the strength and competitiveness of media business indigenous to the State, concentration of ownership of titles, diversity of views in Irish society, the maintenance of cultural diversity and the position in the media generally of any of the undertakings involved.
A special appeals process is also proposed in the Act whereby the parties to a merger may appeal a decision of the Authority to the High Court on an accelerated basis. A further appeal on a point of law may be made to the Supreme Court.
The Act contains miscellaneous provisions relating to the Competition Authority and its members. It also makes specific provision for the possibility for future amendment of the 1987 Groceries Order - the Minister will be entitled to amend or revoke it, with the consent of the Houses of the Oireachtas.
The T?naiste is expected to sign the commencement order relating to most parts of the Act in the coming weeks. It is expected however that the sections on mergers will be delayed until the Authority has had an opportunity to prepare itself for the increased workload. The Authority is likely to draw up guidance notes and require additional resources and staff to handle the mergers workload. The new mergers regime is unlikely to apply until the second half of 2002.

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