knowledge | 11 December 2018 |
Coming Soon: “Civil Fines” for Irish Competition Law Offences
Civil fines of potentially millions of euros for Irish businesses that violate competition law are on the way, following adoption on 4 December of the so-called ECN+ Directive.
This is a break-through for Ireland’s competition law enforcement agency, the Competition and Consumer Protection Commission, which has long campaigned for European-style administrative fines here.
The Competition Act 2002, Ireland’s principal competition law statute, criminalises all infringements of the competition rules. However, the sole civil action available to the CCPC is a “right of action … for relief by way of injunction or declaration” (Competition Act, s. 14(2)).
Precisely how a system of administrative fines will work in the Irish context is not clear. One option is that, like the European Commission or the UK Competition & Markets Authority, the CCPC will determine a violation and fine the perpetrator(s). But a more likely outcome may be that the CCPC must prove its case in court before Ireland’s Competition Court, albeit to a civil standard of proof, with the court then deciding the fine.
From a public submission on an earlier draft of the ECN+ Directive, the CCPC favours the latter system, i.e., a system of civil fines imposed by a court in civil enforcement proceedings brought by the CCPC as plaintiff. The Government, which has two years to implement the ECN+ Directive, has yet to state its intentions on this front.
Competition law violations have been criminal offences for over 20 years in Ireland. But only a handful of prosecutions have ever been brought and fewer still have succeeded.
On criminal conviction, the statute book currently provides for fines of up to €5 million or 10% of annual turnover, whichever is bigger and jail time for business executives directly implicated of up to 10 years. But the largest fine ever imposed, after a guilty plea in a criminal prosecution, is €80,000 and, while custodial sentences have been handed down, all have been suspended - no one has ever gone to prison.
For many years, therefore, senior CCPC officials have argued Ireland’s lack of civil fines is a serious gap in enforcement. Indeed, as far back as 2011, CCPC officials publicly recognised that ‘[t]his situation means that there is, in reality, little or no incentive for undertakings to comply with the prohibitions in the Act relating to non-hardcore conduct.”
This view was effectively recognised by the European Commission in a 10-year review of Regulation 1/2003 published in 2014 (and which ultimately led to the ECN+ Directive), in which the European Commission noted, “ … in one Member State, it is currently not possible to impose deterrent civil/administrative fines on undertakings.”
It seems likely that civil fines under implementing legislation for the ECN+ Directive will apply to EU competition law violations only. If this is the case, civil fines would be possible solely for competition law wrongdoing with the potential to “affect trade between Member States.” This would preclude Irish competition law violations where no impact on trade between Member States is discernible.
This briefing is for general guidance only and should not be regarded as a substitute for professional advice. Such advice should always be taken before acting on any of the matters discussed.