Pdc 3 Chap 9 Test Creation Set

Front 1

Discuss the main facets of Irish and EU competition law.

Back 1

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Front 2

Evaluate the two basic prohibitions imposed under EU and Irish competition law on the activities of a business.

Back 2

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Front 3

Distinguish when a business may be deemed to have engaged in anti-competitive arrangements.

Back 3

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Front 4

Analyse the differences between "hardcore" and "non-hardcore" offences.

Back 4

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Front 5

Evaluate when a business may be found to have abused a dominant position in the marketplace.

Back 5

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Front 6

Discuss the principal penalties provided for under EU and Irish law for a breach of competition law.

Back 6

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Front 7

Describe the system for the control of mergers under Irish law.

Back 7

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Front 8

Explain the role of the Irish Competition Authority in enforcement of competition law.

Back 8

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Front 9

What is competition? What is Competition Law? Both Irish and EU competition law are bodies of rules that do what three things?

Back 9

Competition is the intangible force of rivalry that exists in a market. Competition law is designed to promote and protect this competition by use of the law. Both EU and Irish competition law are bodies of rules which: • prohibit anti-competitive arrangements between economic operators) with some exceptions); • prohibit the abuse of dominance by undertakings having a dominant position; and • control many merger and acquisition agreements.

Front 10

Where is EU competition law embodied? When does EU competition law apply?

Back 10

EU Competition law is primarily embodied in Articles 101 and 102 of the Treaty on the Functioning of the European Union (the 'TFEU') as well as in secondary legislation and the case law of the General Court (previously known as the Court of First Instance or "CFI") and the Court of Justice. EU competition law applies whenever there is an effect on trade between EU Member States.

Front 11

Where is Irish Competition Law found in Irish legislation? Why are Sections 4&5 of which Irish legislation relevant to what articles of the Treaty on the Functioning of the European Union?

Back 11

Irish competition law is contained in the Competition Act 2002 as amended (the "Competition Act") and case law which has developed in this area. Sections 4 and 5 of the Competition Act contain provisions similar to those of Articles 101 and 102 of the TFEU. Irish competition law applies whenever there is an effect on trade in Ireland.

Front 12

Describe proposed (circa 2012) legislation to amend competition law in Ireland

Back 12

New legislation is expected in the coming year to amend the Competition Act and to amalgamate the Irish Competition Authority (the "Competition Authority") with the National Consumer Agency ("NCA"). It is expected that this legislation, provisionally entitled the Consumer and Competition Bill, will be introduced in late 2012.

Front 13

What is special about how Irish competition law develops, in connection with EU competition law and it is important to remember when looking at Irish competition law?

Back 13

As Irish competition law is developed by analogy with the EU competition rules, case law which has developed under Article 101 can assist in interpreting the various provisions under Section 4.

Front 14

What is Article 101 of the TFEU and Section 4 of the Competition Act aimed at?

Back 14

Article 101 of the TFEU and Section 4 of the Competition Act are aimed at controlling anticompetitive agreements and arrangements between businesses.

Front 15

Describe the two stage approach provided under Article 101 and Section 4 (in the context of competition law). What is the two stage approach premised on?

Back 15

Article 101 and Section 4 provide for a two stage approach whereby the restrictive aspects of agreements or arrangements are first considered and an analysis is subsequently made on whether the arrangement generates efficiencies that might counteract those restrictive effects (i.e. is considered to be pro-competitive or neutral on balance). The two stage approach is premised on the fact that restrictions of competition are prima facie prohibited, unless "exempted" from that prohibition by means of their pro-competitive effects.

Front 16

What are block exemption regulations and what is the Irish term?

Back 16

The European Commission ("Commission") and the Competition Authority have adopted block exemption regulations (or in the Irish context, declarations) in respect of certain types of agreements which can be generally regarded as pro-competitive and therefore legal, provided all the relevant conditions of the respective block exemption or declaration are respected.

Front 17

What do Article 102 of the TFEU and Section 5 of the Competition Act do (in the competition context)? Is there an exemption provision for breaches of the article/section?

Back 17

Article 102 of the TFEU and Section 5 of the Competition Act prohibit the abuse of a dominant position. There is no exemption provision for a breach of Article 102/Section 5.

Front 18

The assessment of whether an undertaking is in a dominant position involves what?

Back 18

The assessment of whether an undertaking is in a dominant position involves an analysis of the degree of market power it holds.

Front 19

According to the case-law, holding a dominant position confers what?

Back 19

According to the case-law, holding a dominant position confers a special responsibility on the undertaking concerned to ensure that it does not abuse this market power

Front 20

In the view of the European Commission, a good proxy for the absence of substantial market power is what? What specific Commission guidance specifically states what in this respect?

Back 20

The Commission considers that low market shares are generally a good proxy for the absence of substantial market power. The Commission's guidance (Communication from the Commission - Guidance on the Commission's enforcement priorities in applying Article 82 of the EC Treaty to abusive exclusionary conduct by dominant undertakings (2009/C45/02), at paragraph 14) states that, as a general rule, dominance is not likely if the undertaking's market share is below 40 per cent in the relevant market.

Front 21

What is very important to remember when examining something that MAY constitute either an illegal anti-competitive agreement, or an abuse of a dominant position? Is there any guidance or legislation that defines the key concept here?

Back 21

It is very important for the appreciation of what constitutes either an illegal anti-competitive agreement, or an abuse of a dominant position, to understand the market context in which the alleged breach takes place. In this sense competition law is very dependent on context. An action or agreement that may be entirely appropriate for one undertaking in one situation may not be for another in another situation. An appreciation of the relevant parties' market power is vital. This is done through the notion of "relevant market", which broadly speaking is the means of determining the aforementioned market power (Commission Notice on the definition of relevant market for the purposes of Community Competition Law OJ [1997] C372/5).

Front 22

How is relevant market defined in the context of competition law?

Back 22

Relevant market is defined both by reference to 1. the nature of the product/service (a relevant product market comprises all those products and/or services which are regarded as interchangeable or substitutable by the consumer, by reason of the products' characteristics, their prices and their intended use), and 2. the geographical area (the relevant geographic market comprises the area in which the undertakings concerned are involved in the supply and demand of products or services, in which the conditions of competition are sufficiently homogeneous) concerned.

Front 23

How is relevant market, in the context of competition law, a tool?

Back 23

It is a tool used to identify and define the boundaries of competition and identify in a systematic way the competitive constraints faced by firms.

Front 24

How is the relevant market tool used?

Back 24

This is done by identifying the actual competitors of the undertaking which are capable of constraining its behaviour and preventing it from behaving independently of effective competitive pressure.

Front 25

Broadly speaking, what is the main source of competitive constraint?

Back 25

Broadly speaking the main source of competitive constraint is "substitutability", or rather the ability of other goods or services, possibly in neighbouring territories to compete effectively with the goods or services at issue

Front 26

Looking at competition law, the European Commission has previously segmented the banking sector into what five segments? Are there plans for further sub-division?

Back 26

In previous decisions, the Commission has segmented the banking sector into the following areas: (1) retail banking, (2) corporate banking, (3) money markets, (4) investment banking, and (5) other financial services. The Commission has suggested that these markets may be further subdivided into narrower markets or segments, e.g. by the specific product or service provided.

Front 27

Looking at competition law and retail / SME corporate banking, what is the generally accepted geographical scope of these organisations? What about the geographical scope of Investment banking, corporate banking for large corporate clients and financial services markets?

Back 27

The geographic scope of retail and SME corporate banking markets is in most cases considered to be national in scope. Investment banking, corporate banking for large corporate clients and financial services markets are generally considered to be international in scope.

Front 28

In addition to market share of the undertaking in question, what else is an important factor in competition analysis? Give an example and quote an authority

Back 28

In addition to market share of the undertaking in question, the number of other undertakings in the market and their respective shares (i.e. "market concentration") is another important factor in competition analysis. For example, in its report on competition in the (non-investment) banking sector in Ireland (conducted in 2005) the Competition Authority noted that the personal current account market in Ireland was highly concentrated, with two firms sharing well over 70 per cent of the market between them. This is a preliminary indicator of a lack of competition in the market (Competition Authority Document: Competition in the (non-investment) banking sector in Ireland, September 2005).

Front 29

What did Joaquín Almunia say about competition in Ireland? Who is he?

Back 29

Joaquín Almunia (Vice President of the Commission responsible for Competition Policy) in a speech to the Federation of International Banks in Ireland on 17 June 2011 stated that: "As a result of the Irish authorities' strategy to build the new banking system on two pillar banks, the Bank of Ireland and Allied Irish Bank will work in a de facto duopoly in the Irish market. As European Commissioner for Competition, let me say that this prospect will require close surveillance, because duopoly may hamper competition in Ireland's banking market." and which can be distinguished from neighbouring areas because the conditions of competition are appreciably different in those areas.

Front 30

What do Article 101(1) and Section 4(1) prohibit? Explain in detail

Back 30

Article 101(1) and Section 4(1) both prohibit 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 and in particular those which: • directly or indirectly fix purchase or selling prices or any other trading conditions; • limit or control production, markets, technical development, or investment; • share markets or sources of supply; • apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; or • make the conclusion of contracts subject to the acceptance by other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject matter of such contracts.

Front 31

In the context of competition law, when does Article 101 apply and when does Section 4 apply? What is the legal status of any agreements or decisions that are prohibited by Article 101(1) and Section 4(1)?

Back 31

Article 101 applies where the agreement or practice affects trade between EU Member States, while Section 4 applies where there is an effect on trade in the State (of Ireland) or any part of it. Any agreements or decisions prohibited pursuant to Article 101(1) and Section 4(1) are automatically void and unenforceable.

Front 32

In the context of competition law, what do Article 101(3) and Section 4(5) provide for?

Back 32

Article 101(3) and Section 4(5) provide exemption from the usual prohibitions in Article 101(1) and Section 4(1) respectively in the case of: • any agreement or category of agreements between undertakings; • any decision or category of decisions by associations of undertakings; • any concerted practice or category of concerted practices; which 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, and which does not: o impose on the undertakings concerned, restrictions which are not indispensable to the attainment of these objectives; o afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products or services in question.

Front 33

In the context of competition law, if the Competition Authority and the Commission declare in writing that in its opinion a specified category of agreements, decisions or concerted practices complies with the conditions referred to in Article 101(3) or Section 4(5) respectively, what does this mean and what is its effect? Can the Competition Authority/Commission withdraw such? Give an example

Back 33

Both the Competition Authority and the Commission may declare in writing that in its opinion a specified category of agreements, decisions or concerted practices complies with the conditions referred to in Article 101(3) or Section 4(5) respectively. Such declarations are known as "block exemptions" or "declarations" in EU and Irish law respectively. These instruments list the conditions under which certain types of agreement may be automatically deemed exempted from the prohibition on restrictive agreements without the need for further individual analysis. Both the Commission and the Competition Authority retain the right to withdraw the benefit of the relevant block exemption or declaration in individual cases (e.g. where despite compliance with the conditions in the relevant exemption/declaration, it is considered that the arrangement will, nevertheless, have an effect on competition).

Front 34

Describe the historical position up to 2003 where an agreement or arrangement fell within the prohibition in Article 101(1) or Section 4(1) (but outside the scope of a block exemption or declaration) but otherwise gave rise to efficiency gains within the meaning of Article 101(3) or Section 4(5) - what would happen here?

Back 34

Undertakings were previously permitted to notify arrangements to the Commission or the Competition Authority where the agreement or arrangement fell within the prohibition in Article 101(1) or Section 4(1) (but outside the scope of a block exemption or declaration) but otherwise gave rise to efficiency gains within the meaning of Article 101(3) or Section 4(5). Only the Commission or the Competition Authority could authorise or exempt such arrangements under Article 101(3) or Section 4(5) (so called 'individual exemption').

Front 35

Up to 2003, there was a process for the below scenario. What changed in 2003 and replaced the old process?

Back 35

Where an agreement or arrangement fell within the prohibition in Article 101(1) or Section 4(1) (but outside the scope of a block exemption or declaration) but otherwise gave rise to efficiency gains within the meaning of Article 101(3) or Section 4(5) By virtue of Council Regulation (EC) No. 1/2003 (the "Modernisation Regulation"), which became binding on EU Member States on May 1 2004, and Part 2 of the Competition Act, this system was abolished in favour of a system of self-assessment. It is now the responsibility of undertakings which are party to any arrangement (in conjunction with their legal advisers), to establish whether the agreement or practice comes within the prohibition in Article 101(1)/Section 4(1) and whether it benefits from the efficiency exemption in Article 101(3)/Section 4(5). Since the introduction of the Modernisation Regulation, the Competition Authority is also obliged to apply Article 101/102 of the TFEU where there may be an effect on trade between Member States.

Front 36

In terms of competition law, to be in scope for Article 101 / Section 4 Agreement, must the agreement be of a formal nature?

Back 36

An agreement need not be of a formal nature. It does not need to be in writing, legally binding or contained in a single document. Examples of agreements within the scope of Article 101/Section 4 include contracts, decisions of meetings of trade associations, group or collective boycotts of particular suppliers/customers/products and standard terms and conditions. The essential feature of the concept is that an "agreement" relates to conduct by a number of undertakings distinguishable from the unilateral behaviour of an undertaking.

Front 37

In practice when looking at entities engaged in economic activities, are these regarded as 'undertakings'? Is an individual an undertaking (quote legal reference)? Are employees?

Back 37

In practice, most entities engaged in economic activities may be considered to be an undertaking. This includes companies, joint ventures, partnerships, and sole traders. An individual may also be considered to be an undertaking. The Competition Authority held in George and Michael Paul/Riobard Lyne (Decision No. 360 dated 12 October 1994) that three individuals were undertakings by virtue of the fact that they were guest house owners. An individual (self-employed) professional, tradesperson or entrepreneur would also be considered an undertaking. Employees are not undertakings.

Front 38

How does Section 3(1) of the Competition Act define undertakings? How does the same define 'gain'?

Back 38

Section 3(1) of the Competition Act defines undertakings as entities, which are "engaged for gain" in the production, supply or distribution of goods or the provision of a service. The term "gain" implies that the entity is charging in connection with its activities.

Front 39

What is the significance of The Competition Authority v. Officers of the Irish League of Credit Unions ([2004] IRLHC 330 in the context of defining undertakings?

Back 39

The High Court's decision in The Competition Authority v. Officers of the Irish League of Credit Unions ([2004] IRLHC 330. The High Court decision was appealed to the Supreme Court, where the Court confirmed that the Irish League of Credit Unions ("ILCU") was both an undertaking and an association of undertakings. It operated commercially and for gain in the financial market in Ireland.

Front 40

How is undertaking defined in the TFEU? What is the significance of Distribution of Package Tours during the 1990 World Cup case (Commission Decision 92/591 OJ [1992] L326/31)?

Back 40

The TFEU does not contain a definition of the term "undertaking". However, the Commission and the Court of Justice have defined it broadly. The Commission indicated in the Distribution of Package Tours during the 1990 World Cup case (Commission Decision 92/591 OJ [1992] L326/31) that an undertaking does not have to be particularly large or engaged in any particular activity: "the term "undertaking" must be viewed in the broadest sense covering any entity engaged in economic or commercial activities such as production, distribution or the supply of services and ranging from small shops run by one individual to large industrial companies."

Front 41

What are associations?

Back 41

Associations are generally trade or professional associations but may include agricultural cooperatives, non-profit making associations and associations of associations.

Front 42

What is the test of whether a decision amounts to a decision by an association of undertakings?

Back 42

The test of whether a decision amounts to a decision by an association of undertakings is whether the decision can be regarded as the expression of the will of the association to coordinate the behaviour of the members. Constitutions, bye-laws, articles of association, rules, recommendations, codes of conduct or other basic documents of a trade association may amount to a decision by an association of undertakings.

Front 43

What has the Competition Authority does to assist trade associations and their members regarding competition law compliance?

Back 43

The Competition Authority has published a guide to provide practical information to trade associations and their members regarding competition law compliance (Notice on Activities of Trade Associations and Compliance with Competition Law, Competition Authority Notice No N/09/002, dated November 2009) (refer to www.tca.ie).

Front 44

What are the three arrangements within the scope of Article 101 / Section 4- which is the most controversial and complex?

Back 44

Concerted practices are the most controversial and complex of the three arrangements within the scope of Article 101/Section 4.

Front 45

Describe the concept of concerted practice

Back 45

The concept of a concerted practice was included so as to encapsulate any informal arrangement or cooperation not already covered by the other two arrangements (i.e. agreements and decisions). Concerted practices usually involve a form of co-operation or collusion between undertakings which helps remove uncertainty and unpredictability from the market.

Front 46

How did The European Court of Justice define a concerted practice? Quote the reference

Back 46

The European Court of Justice has defined a concerted practice as: "a form of coordination between undertakings which, without having reached the stage where an agreement properly so-called has been concluded, knowingly substitutes practical cooperation between them for the risks of competition." (C-48/69 ICI v. Commission [1972] ECR 619)

Front 47

In the context of identifying concerted practice (in competition law), what is critical about the object or effect of the arrangement? What is NOT a defence to an accusation of such?

Back 47

Object or Effect The arrangement need only have the object or effect of preventing, restricting, or distorting competition in order to infringe Article 101/Section 4. If the parties have the objective of distorting competition, then this is sufficient. For example, it is not a defence to an accusation of having formed an illegal cartel to claim that the cartel was a failure. Refer to Consten and Grundig ([1966] ECR 299

Front 48

What is significant about Consten and Grundig ([1966] ECR 299 in the context of competition law?

Back 48

The Court of Justice stated in the case of Consten and Grundig ([1966] ECR 299 at 342) that 'there is no need to take account of the concrete effects of an agreement once it appears that it has as its object the prevention, restriction or distortion of competition'. Equally, if the parties do not have the object of distorting competition, but the arrangement has such an effect, then that is sufficient.

Front 49

What are by nature obvious restrictions on competition, i.e. some examples as provided by the handbook?

Back 49

Many restrictions of competition are by nature obvious, in that they clearly restrict the ability of independent undertakings to pursue one or other course of behaviour. Typical examples would be clauses in agreements stating that an undertaking "shall not" do X, Y or Z, or that in a given set of circumstances it "shall do, X, Y or Z", in other words "to the exclusion of doing A, B or C".

Front 50

Describe some subtle restrictions on competition, as provided by the handbook

Back 50

Other restrictions of competition are more subtle in that on their face it is not apparent that undertakings' behaviour is restricted, but competition nevertheless is. For example, if a given set of suppliers in a particular market all share their respective customer data in terms of identity, volumes of purchase, delivery terms, prices paid etc. then those suppliers will thereafter know every detail in respect of those customers, leaving the customers with no room for manoeuvre when negotiating (because the suppliers will know those customers' pressure points). Such an arrangement takes away some of the uncertainty which drives all competitive negotiations (i.e. not knowing exactly how far another party will go before walking away) and is therefore restrictive of competition.

Front 51

What is the Whatif? Private Motor case and why is it significant in terms of competition law?

Back 51

For example, in January 2011, the UK Office of Fair Trading ("OFT") identified an increased risk of price coordination among motor insurers who used a specialist market analysis software tool called "Whatif? Private Motor" (OFT Consultation document 1301: Notice of intention to accept binding commitments to modify a data exchange tool used by Motor Insurers). The tool allowed insurers to access not only the pricing information they themselves provided to brokers but also pricing information supplied by other competing insurers. The OFT warned the firms involved that the information exchanged through the "Whatif?" tool raised competition law concerns because (among other issues) the analysis tool enabled insurers to access individualised and highly disaggregated pricing data (updated on a regular basis) for vast numbers of permutations of customer risks across most competing private motor insurers that sold through brokers. This meant that insurers were able to access information about their competitors' future pricing intentions as the tool was received by insurers in advance of the pricing information going "live" in insurance policies sold by brokers. The insurance companies and software provider involved agreed with the OFT to limit the date accessible through the tool.

Front 52

What does Article 101/Section 4 state about arrangements which have as their object or effect the prevention, restriction or distortion of competition? What are the specific meanings of prevent, restrict or distort? Provide some examples. When is competition law breached here?

Back 52

Article 101/Section 4 prohibits arrangements which have as their object or effect the prevention, restriction or distortion of competition. The terms "prevent, restrict or distort" are largely interchangeable. Examples of preventing, restricting or distorting competition include fixing purchasing or selling prices or other terms of trade; limiting or controlling production, markets, technical development or investment; sharing markets or sources of supply; discriminatory prices; or tying arrangements. The competition rules are breached whenever there is a prevention, restriction or distortion of either actual or potential competition.

Front 53

In order to bring an arrangement within the scope of Article 101, the prevention, restriction or distortion of competition must be what? What is the de minimus doctrine (quote reference)?

Back 53

In order to bring an arrangement within the scope of Article 101, the prevention, restriction or distortion of competition must be "appreciable" both quantitatively and qualitatively. The Commission considers that agreements between undertakings with small turnovers and small market shares are not as a general rule, capable of having an appreciable effect on competition. This is known as the de minimis doctrine (Commission Notice on Agreements of Minor Importance [2001] C 368/07).

Front 54

Is the de minimus doctrine of competition law recognised in Ireland? What is the effect on Section 4?

Back 54

This doctrine is not generally recognised at Irish law and there is therefore no requirement that the effect on competition is appreciable to fall within the terms of Section 4 of the Competition Act (although the doctrine is recognised to a limited degree in the Competition Authority's rules on vertical distribution agreements. Effect on Inter-State Trade If an arrangement has an effect on inter-State trade, it will fall within Article 101 of the TFEU. If it does not, national competition law will apply.

Front 55

The European Commission has outlined there is an effect on inter-State trade whenever what happens? Quote reference

Back 55

The Commission has outlined that there is an effect on inter-State trade whenever it is possible 'to foresee with a sufficient degree of probability on the basis of a set of objective factors of law or fact that the agreement or practice may have an influence, direct or indirect, actual or potential, on the pattern of trade between Member States' (Commission Notice, Guidelines on the Effect of Trade contained in Articles 101 and 102 of the Treaty [2004] C 101/07).

Front 56

In the context of competition law, where 'agreements' cover the territory of a single Member State, what is necessary? Why is this necessary? Quote two references to support

Back 56

Where agreements cover the territory of a single Member State, a more detailed inquiry will be necessary to establish whether there is an effect on trade between Member States. It has been acknowledged by the Commission (Commission Notice, Guidelines on the Effect of Trade contained in Articles 101 and 102 of the Treaty [2004] C 101/07 at Para. 77) and the Court of Justice (See Case C-8/72 Cementhandelaren v Commission [1972] ECR 977) that horizontal cartels covering the whole of a Member State are normally capable of affecting trade between Member States because, by their very nature, they have the effect of partitioning the State from the rest of the EU.

Front 57

In the context of competition law, where 'agreements' cover the territory of a single Member State, where there is no effect on inter-State trade but there is an effect in 'any part of' Ireland what happens?

Back 57

Where there is no effect on inter-State trade but there is an effect on competition in 'any part' of Ireland, Section 4 of the Competition Act will apply.

Front 58

What is the effect of a breach of Article 101 or Section 4?

Back 58

An arrangement which breaches Article 101 or Section 4 is void, unless the arrangement is covered by a block exemption or declaration or individually comes within the efficiency criteria in Section 4(5) or Article 101(3). The arrangement is void 'ab initio' (from the outset) and therefore unenforceable. Undertakings and individuals which are involved in such an arrangement may also be liable to criminal and civil sanctions.

Front 59

The Commission and the Competition Authority have the power to exempt certain categories of arrangements from Article 101/Section 4 which are known by the Commission, as "block exemption regulations" and by the Competition Authority as "declarations". What block exemption regulations have been adopted in the past?

Back 59

The Commission has adopted block exemptions in regard to vertical agreements (i.e. distribution and reseller agreements) [Commission Regulation 330/2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices], technology transfer (e.g. licensing of IPRs) [Commission Regulation (EC) No. 772/2004], motor vehicle distribution [Commission Regulation (EC) No. 1400/2002 and Commission Regulation (EU) 461/2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices in the motor vehicle sector], specialisation [Commission Regulation (EU) No. 1218/2010], insurance [Commission Regulation (EU) No 267/2010 on the application of Article 101(3) of the Treaty to certain categories of agreements, decisions and concerted practices in the insurance sector] and research and development agreements [Commission Regulation (EU) No. 1217/2010].

Front 60

The Commission and the Competition Authority have the power to exempt certain categories of arrangements from Article 101/Section 4 which are known by the Commission, as "block exemption regulations" and by the Competition Authority as "declarations". What declarations have been adopted in the past?

Back 60

The Competition Authority has adopted exemptions with regard to vertical arrangements (i.e. distribution agreements) [Declaration in Respect of Vertical Agreements and Concerted Practices Declaration No. D/03/001, 1 December 2010], and for the agreements involving the resale of cylinder liquefied petroleum gas (LPG) [Declaration in Respect of Exclusive Purchasing Agreements for Cylinder LPG (as amended), Declaration No. D/05/001, 31 March 2005]. It is necessary to fall within the specific conditions contained in these block exemptions and declarations for an agreement to be automatically exempted from the full application of Article 101/Section 4.

Front 61

What is important to note about an exemption from Article 101/Section 4?

Back 61

It is important to note that an exemption from Article 101/Section 4 does not exempt the undertakings from a challenge under Article 102/Section 5.

Front 62

Breaches of Article 101 and Section 4 are divided into "hardcore offences" and "non-hardcore offences". What does Section 6(2) define hardcore offences as?

Back 62

Hardcore offences are defined in Section 6(2) of the Competition Act as agreements, decisions or concerted practices among competing undertakings to directly or indirectly fix prices; to limit output or sales; or to share markets or customers. These categories of agreements are viewed more seriously than other anti-competitive agreements by the authorities and also attract more severe penalties including significant fines at EU level and potential imprisonment at national level.

Front 63

What attitude does the European Commission, in its capacity as competition authority, take to price fixing investigations? Quote some statistics / notable investigations

Back 63

Price fixing investigations conducted by the Commission can result in very significant fines on the companies involved. Statistics published by the Commission indicated that the Commission imposed more than €7.54 billion in cartel fines during the period January 2008 to March 2012 (including fines of over €500 million on individual undertakings including EON and GDF Suez (gas) and Saint Gobain (car glass)). Fines for this period ranged between one and 10 per cent of the global turnover of the undertakings involved, with over 10 per cent of undertakings being fined the maximum amount of 9-10 per cent of global turnover [European Commission Cartel statistics, situation as of 28 March 2012].

Front 64

What is the significance of the Lombard Club in terms of competition law?

Back 64

On 11 June 2002 the Commission imposed fines on eight Austrian banks for participating in the so-called "Lombard Club" cartel [IP/02/844. Cases T-259/02 to T-264/02 and T-271/02 OJ 30.12.2006 C 331/65]. This highly institutionalised price-fixing scheme covered the entire territory of Austria "down to the smallest village", as one bank stated. Banks participating in the cartel fixed deposit, lending and other rates to the detriment of businesses and consumers in Austria. The cartel started prior to the accession of Austria to the EU in 1994, and ended when the Commission carried out surprise inspections at the banks' premises in June 1998. The Commission levied fines on eight Austrian banks of €124,260,000. In December 2006, the European Court of First Instance dismissed an appeal by eight Austrian banks seeking to set aside the Commission's June 2002 decision.

Front 65

What did the Court of First Instance state regarding horizontal price cartels?

Back 65

The Court of First Instance stated that: "A horizontal price cartel ranks as a serious infringement within the meaning of the Guidelines on the method of setting fines imposed pursuant to Article 15(2) of the Regulation No 17 and Article 65(5) of the ECSC Treaty, even in the absence of other restrictions on competition such as partitioning of the markets. Such a cartel, in a sector as important as the banking industry, covering a wide range of banking products and involving the great majority of economic operators, cannot, in principle, escape classification as a very serious infringement, whatever its context".

Front 66

Section 4 of the Competition Act also prohibits price fixing - what are Irish examples of combating this crime?

Back 66

Section 4 of the Competition Act also prohibits price fixing. In recent years the DPP has successfully brought charges against companies and individuals for participation in cartels in a number of sectors including the supply of home heating oil in the West of Ireland and car sales dealerships. A number of criminal convictions have been secured carrying penalties for both companies and individuals (up to €80,000) to date and (suspended) custodial sentences (up to nine months).

Front 67

What are the principal forms of market sharing in terms of competition law? Give examples

Back 67

The principal forms of this type of cartel arrangement are the sharing out of geographic markets or the sharing out of customers. Geographic market sharing arises where competitors agree between themselves to supply only within specific areas. For example, it may be agreed at a trade association meeting that one member, (Company A) will supply its product within Leinster only, while another member (Company B) will supply the remainder of the State. Customer sharing arises where competing undertakings agree between themselves to divide up customers, e.g. that Company A will only supply the particular product to small to medium size businesses, while Company B will supply only to the larger corporations.

Front 68

What is the significance of Solvay /ICI [Commission Decision 91/297 OJ 1991 L152/1] in terms of competition law?

Back 68

In Solvay /ICI [Commission Decision 91/297 OJ 1991 L152/1] the Commission found that certain soda-ash producers had established a market sharing cartel whereby Solvay (a Belgian firm) agreed to stay out of the UK and Ireland while ICI (a British firm) agreed to stay out of continental Europe. The Commission imposed a heavy fine for this market sharing arrangement.

Front 69

What is resale price maintenance?

Back 69

Resale Price Maintenance (RPM) is a practice whereby a producer or supplier seeks to determine the price at which goods produced or supplied by him may be resold by another e.g. where a manufacturer informs a retailer that he will cease to supply to him if the retailer sells the products for less than a certain minimum price.

Front 70

What are the Competition Authority's views on RPM?

Back 70

The Competition Authority has a strict policy of opposition to RPM in any form, including situations where there is evidence of a reseller being put under pressure to abide by the wishes of the supplier on minimum resale prices. The Competition Authority has investigated a number of businesses allegedly involved in such practices and its first criminal conviction was for such a practice.

Front 71

Looking at competition law, Competition Authority, and RPM, what are Irish examples of the Authority's battle against this?

Back 71

For example, a "Price Support Agreement" between Statoil Ireland Limited and independent petrol retailers in Letterkenny, Co. Donegal was the subject of a Competition Authority investigation in March 2003. Under the Price Support Agreement, retailers could take advantage of a financial contribution from Statoil to enable them to match any lower price charged by specified local rival retailers. However, such support was conditional on the retailer not independently cutting price and not discounting below the lower price of the relevant rival retailer. The Competition Authority considered that the Price Support Agreement effectively imposed a price ceiling (Statoil's recommended retail price) and a price floor (the price charged by certain local rivals) on retailers who were party to the agreement. Two further decisions - Independent Newspapers [Competition Authority Decision No. E/03/003, November 10, 2003 (Case COM/132/02B)] and The Irish Times [Competition Authority Decision No E/03/004, July 24, 2003 (Case COM 132/02A)] - were issued following an investigation by the Competition Authority into possible resale price maintenance in the newspapers and periodicals industry.

Front 72

In the context of competition laws, what are non-compete clauses? Can these be lawful?

Back 72

The most common type of non-compete clause prohibits one party from competing in the same type of business as the other party for a specified period within a specified geographical area. Such a clause will often be contained in the contract for sale of a business and provide that the purchaser requires that the vendor does not compete in the same type of business for a set period, so that the purchaser can obtain the full value of the business he has bought, including the goodwill. Such clauses may be valid provided they are limited in duration, geographic area and subject matter to what is objectively necessary to protect the goodwill transferring.

Front 73

Article 102 of the TFEU and Section 5 of the Competition Act provide for what? Include details

Back 73

Article 102 of the TFEU and Section 5 of the Competition Act provide that any abuse by one or more undertakings of a dominant position shall be prohibited. Such abuse may, in particular, consist of: • directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions; • limiting production, markets or technical development to the prejudice of consumers; • applying dissimilar conditions to equivalent transactions with other parties, thereby placing them at a competitive disadvantage; • making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which by their nature or according to commercial usage, have no connection with the subject of such contracts.

Front 74

Looking at abuse of dominant position, when does Article 102 apply and when does Section 5?

Back 74

Article 102 applies to the abuse by an undertaking of a dominant position in the common market or any part of it insofar as it affects trade between Member States. Section 5 applies to the abuse of a dominant position in the State, or in any part of the State.

Front 75

What are the critical elements of Article 102 / Section 5?

Back 75

The critical elements of Article 102/Section 5 are that: • the accused undertaking has been found to occupy a dominant position; • the accused undertaking has been found to have abused its dominant position; and • the abuse has an adverse effect on trade between Member States (in the case of Article 102), or an adverse effect on trade in Ireland or a substantial part of it (in the case of Section 5).

Front 76

In terms of competition law, what is the first element of Article 102/Section 5? How does the Court of Justice define this (quote reference)?

Back 76

The first element of Article 102/Section 5 is that the accused undertaking has been found to occupy a dominant position in the "relevant market". According to the Court of Justice decision in United Brands v. European Commission [C-27/76 [1978] ECR 207], a dominant undertaking is one that can, because of its large market power in the market, determine its course of action in the market for long periods of time largely free from any constraints that its competitors, customers or consumers might place on its freedom of action. It is not required that all competition be eliminated from the particular market before the accused undertaking will be deemed to be dominant.

Front 77

Looking at competition law, the case law of the Court of Justice indicates that there are certain features which may point towards dominance - what are these?

Back 77

The case law of the Court of Justice indicates that there are certain features which may point towards dominance. They include: • a high and stable market share on any given market; • the ability to maintain that market share despite aggressive competition; • the ability to absorb losses, which other market players would not be able to sustain; • control of important intellectual property rights; and • ownership or control of an essential facility.

Front 78

What is important to remember before determining a breach of Article 102/Section 5?

Back 78

No breach of Article 102/Section 5 will arise merely because an undertaking is found to be dominant. It must further be demonstrated that there has been an abuse of that dominant position. In other words, it must be shown that the dominant undertaking has taken unfair advantage of its market power in a manner which is regarded as objectionable and to the detriment of fair competition.

Front 79

A classic sign of abuse of dominant position is refusal to supply - what is this? Are they considered breaches?

Back 79

Unilateral refusals to supply are considered to breach Article 102 and Section 5. A refusal to supply also includes a constructive refusal, for example by charging unreasonable prices or by imposing unfair trading conditions. A refusal to supply will only be considered to infringe competition if carried out by a firm enjoying a dominant position in the market and if the refusal is made with the object or effect of restricting competition.

Front 80

What is the Euroclear example of a refusal to supply in the context of competition law?

Back 80

By way of example in June 2004 the Commission adopted a decision finding that Clearstream Banking AG ("CBF") and its parent company Clearstream International SA (together Clearstream") had violated Article 102 by refusing to supply certain clearing and settlement services to one of their customers, Euroclear Bank SA ("Euroclear"), and by applying discriminatory prices to that same customer [IP/04/705. Case COMP/38.096, Clearstream Banking AG and Clearstream International SA, 2 June 2004]. Although the infringements had been terminated, the Commission adopted the decision to provide the necessary legal clarity to Clearstream and to other companies active in post trading services given the importance of cross-border trading in securities within the EU. In September 2009, the CFI upheld the Commission's decision in its entirety [Case T-301/04 OJ 24.10.2009, C 256/21]. It confirmed Clearstream's dominant position on the market for primary clearing and settlement and pointed out that intermediaries, such as CSDs and ICSDs, can only provide clearing and settlement services for securities issued in Germany to their customers if they can make use of CBF's services. The CFI held that CBF's monopoly for custody services stipulated in. German law resulted in a corresponding monopoly for clearing and settlement services. In its judgment the CFI also confirmed that Clearstream had abused its dominant position by not providing Euroclear with access to the services it had requested for more than 2 years. In contrast, it had provided access to other customers including Clearstream Banking Luxembourg in a matter of months. The CFI pointed out the special responsibility of undertakings in a dominant position not to allow their conduct to impair the genuine undistorted competition on the common market and rejected Clearstream's arguments. As to the question of charging a higher per transaction fee to Euroclear than to other similar customers, the CFI held that the primary clearing and settlement services for cross-border transactions provided by CBF to ICSDs and CSDs were equivalent services and consequently Clearstream's behaviour amounted to discriminatory pricing which was also prohibited by community law.

Front 81

What is the Visa example of a refusal to supply in the context of competition law?

Back 81

Similarly in April 2011, the General Court in Visa [Case T-461/07 Visa OJ 28.05.2011 C 160/18] confirmed a Commission decision of 2007, finding that Visa had infringed EU rules on restrictive business practices by refusing to admit, for six and a half years, Morgan Stanley Bank as a member to its payment card network without objective justification. In particular, the General Court confirmed that the entry of a new player, such as Morgan Stanley, would have created scope for further competition and that the essential factor on which such an assessment must be based was its ability to enter the market. The General Court also upheld the €10.2 million fine imposed on Visa.

Front 82

Refusal of Access and the "Essential Facilities" Doctrine - what is the relevance of this under competition law?

Back 82

Ownership or control of an essential infrastructural facility can lead to a finding of dominance against the undertaking operating the facility and may lead to a finding of abuse of a dominant position under Article 102 or Section 5 of the Competition Act where the undertaking concerned does not share the facility with its competitors.

Front 83

Refusal of Access and the "Essential Facilities" Doctrine - what is the Microsoft example of this?

Back 83

In March 2004, the Commission issued a decision fining Microsoft nearly €500 million for abusing its near monopoly in PC operating systems by (among other conduct) refusing to disclose to competitors the interfaces required for their products to be able to "talk" with Microsoft's Windows Operating System. Microsoft was ordered to disclose the relevant specification to competitors within 120 days of the Commission's decision, which was later upheld by the General Court [Case Number 37792/Microsoft; see also case T-201/04 Microsoft v Commission].

Front 84

Predatory Pricing - what is this?

Back 84

Predatory pricing normally involves an undertaking trading at a loss for a short period in order to increase its market share and eliminate competitors. Once the competitor is eliminated, the undertaking then raises its prices. Predatory pricing will infringe the competition law rules only if it is carried out by a firm in a dominant position.

Front 85

Predatory Pricing - what is an example of this?

Back 85

In the leading case of AKZO v. Commission [C-62/86 [1991] ECR I-3359] the Court of Justice considered a Commission decision finding that AKZO had abused a dominant position, which had resulted from an initial complaint made by ECS, a small UK company which sold benzoyl peroxide to be used as an additive in flour milling or in the plastics industry. ECS claimed that AKZO (a dominant undertaking) had commenced selling at a predatory price to drive ECS from the market. The Court of Justice upheld the Commission's decision that AKZO had abused its dominant position by offering customers artificially low prices in order to damage a competitor.

Front 86

Illegal Rebates - what is this?

Back 86

Volume rebates are a perfectly acceptable and legitimate means of rewarding customers who do business with a dominant undertaking. They are compatible with Article 102/Section 5 provided they are transparent, standardised and genuinely linked to the particular transactions entered into between the parties. However target or "loyalty" rebates which have the effect of tying the customer to the dominant operator are generally illegal.

Front 87

Illegal Rebates - what is an example of this?

Back 87

On 13 May 2009 the Commission imposed a fine of €1.06 billion on Intel for implementing a series of conditional or loyalty rebates. Intel had given rebates to computer manufacturers on condition that they bought all, or almost all their x86 central processing units ("CPUs") from Intel. Intel had made direct payments to Europe's largest PC retailer - Media Saturn Holdings on condition that it stocked only computers with x86 CPUs and had also made direct payment to computer manufacturers to stop or delay the launch of specific products containing a competitor's x86 CPUs and to limit the sales channels available to these products [Comp/C-3/37.990 - Intel]

Front 88

Tying - what is this? In terms of competition law

Back 88

"Tying" usually refers to situations where customers that purchase one product (the tying product) are required also to purchase another product from the dominant undertaking (the tied product) [Communication from the Commission - Guidance on the Commission's enforcement priorities in applying Article 82 of the EC Treaty to abusive exclusionary conduct by dominant undertakings (2009/C45/02) at paragraph 48]

Front 89

Tying - in terms of competition law, what is an example of this?

Back 89

The Commission's case against Microsoft fined Microsoft for "tying" its Windows operating system to its Windows Media Player. Microsoft was required by the Commission to offer a version of Windows for client PCs which did not include Windows Media Player [Case COMP/C-3/37.792].

Front 90

Penalties for Breach - Civil Proceedings and Penalties - what are the penalties under Articles 101 and 102 for breaches?

Back 90

Articles 101 and 102 Pursuant to the Modernisation Regulation, the Commission has the power to impose fines of up to 10% of an undertaking's worldwide turnover for breaches of Articles 101 and 102. Furthermore, the Commission may impose periodic penalty payments not exceeding 5% of the undertaking's average daily turnover in the preceding business year per day in order to compel the undertaking to put an end to an infringement or to compel compliance with a Commission decision.

Front 91

Fines imposed by the Commission have grown rapidly over time - give examples

Back 91

Fines imposed by the Commission have grown rapidly over time. In May 2009, the Commission imposed its highest fine on a single transaction to date, imposing a fine of €1.06 billion on Intel for violating antitrust rules on the abuse of a dominant market position (Article 102). The Commission has also imposed fines totalling over €10 billion for cartel offences (Article 101) over the last five years.

Front 92

Council Regulation (EC) No. 1/2003 (the "Modernisation Regulation"), became binding on EU Member States on May 1 2004, and Part 2 of the Competition Act. What did it change regarding the enforcement of Articles 101 and 102? What may the Competition Authority also take for breaches of Article 101 or 102?

Back 92

The Modernisation Regulation also provides for the enforcement of Articles 101 and 102 at a national level. It provides that designated national authorities of the Member States, including the Competition Authority have the power to penalise breaches of Articles 101 and 102. The Competition Authority may also take criminal or civil proceedings in the Irish Courts for breach of Article 101 or 102 of the TFEU.

Front 93

Civil Enforcement of Sections 4 and 5 - The Competition Authority has the right to take what proceedings in which court for breaches of Section 4 and 5 of the Competition Act? The Competition Authority may seek relief how?

Back 93

The Competition Authority has the right to take civil proceedings in either the Circuit Court or the High Court for breaches of Sections 4 and 5 of the Competition Act. The Competition Authority may seek relief by way of an injunction or declaration but has no power to seek damages.

Front 94

In addition to a civil action being taken by the Competition Authority, any person who has been aggrieved as a result of a breach of Section 4 or 5 may take what action? What may an aggrieved person include?

Back 94

In addition to a civil action being taken by the Competition Authority, any person who has been aggrieved as a result of a breach of Section 4 or 5 may take a civil action in either the Circuit Court or High Court for relief by way of an injunction, declaration or damages (including exemplary damages). An aggrieved person may include customers, competitors and consumer groups affected by the anti-competitive action.

Front 95

In both Competition Authority and private civil cases, where the action is in respect of a breach of Section 5, what discretion does who have?

Back 95

In both Competition Authority and private civil cases, where the action is in respect of a breach of Section 5, the Court may at its own instance or on the application of the Competition Authority require the adjustment of the dominant position or require that the dominant position be discontinued unless specified conditions are complied with. This power has not been used by the Courts in any case to date.

Front 96

What are the criminal penalties for breaches of Article 101 or 102 or a breach of Section 4 or 5?

Back 96

A breach of Article 101 or 102 or a breach of Section 4 or 5 is also a criminal offence in Irish law. Criminal proceedings may be bought by the Competition Authority or, in more serious cases proceedings on indictment may be taken by the Director of Public Prosecutions (DPP) at the request of the Competition Authority.

Front 97

For criminal penalties of Article 101 or 102 or a breach of Section 4 or 5, what does the level of penalty depend on? Where are hardcore offences defined?

Back 97

The level of penalty imposed depends on the type of offence involved. As outlined above there is a distinction made between "hardcore offences" and "non-hardcore offences". Hardcore offences are defined in Section 6(2) of the Competition Act as agreements, decisions or concerted practices among competing undertakings to directly or indirectly fix prices; to limit output of sales; or to share markets or customers. Non-hardcore offences are those that are caught by the prohibition in Section 4 but do not fall within the category of agreements, decision or concerted practices giving rise to hardcore offences.

Front 98

What are the penalties for breaches of hardcore offences?

Back 98

Undertakings found guilty of such hardcore offences are liable to maximum fines of greater of €4 million or 10% of global turnover in the proceeding financial year. Provision is also made for maximum daily default fines of €40,000 for each day an offence continues after the date of its first occurrence. Individuals (including company directors, managers or similar company officers who consented to anti-competitive behaviour) may also be criminally prosecuted for hardcore offences and if found guilty are liable to the same fines for undertakings and/or imprisonment for up to five years.

Front 99

Looking at anti-competitive behaviours, what is the presumption on directors and managers?

Back 99

Directors and managers are presumed to have consented to anti-competitive behaviour of their company unless they can prove to the contrary.

Front 100

What is notable about custodial sentences imposed to date for competition offences?

Back 100

What does Mr Justice Liam McKechnie have to say about this in what case? With the exception of one case (where an individual, Mr Jim Bursey, was sentenced to 28 days in prison for failure to pay the fines imposed on him in respect of his membership of a price-fixing cartel covering Citroen vehicles), all custodial sentences imposed to date for competition offences in Ireland have been suspended by the Courts. However, Mr Justice Liam McKechnie, has indicated (DPP v Patrick Duffy & Duffy Motors (Newbridge) Limited) that the practice of suspending custodial sentences for cartel activity or price fixing is likely to cease in the near future as, in his view, the imposition of fines does not constitute a sufficient deterrent to cartel activity. Justice McKechnie in that case stated that notwithstanding the level of fines available for serious competition offences (e.g. involvement in a cartel): "...the availability of a custodial sentence is critical... I see no room for any lengthy lead in period before use is commonly made of this supporting form of sanction... Every purchaser of goods or services now has a strong and definite appreciation of what competition can do for him or her. Therefore it must be realised that serious breaches of the code have to attract serious punishment" [Judgment of Mr. Justice McKechnie, Director of Public Prosecutions v Patrick Duffy and Duffy Motors (Newbridge) Limited, 23 March 2009, at paragraphs 40 and 41]

Front 101

Undertakings or individuals found guilty of non-hardcore competition breaches are subject to what penalties under what section of what legislation?

Back 101

Undertakings or individuals found guilty of non-hardcore breaches of Section 4 or of breaches of Section 5 are liable to maximum fines of the greater of €4 million or 10% of turnover. For such infringements, provision is also made for maximum daily penalties of €40,000 for each day an offence continues after the date of its first occurrence. There is no provision for the imprisonment of individuals found guilty of non-hardcore breaches of Section 4 or breaches of Section 5.

Front 102

Under what legislation is Ireland's merger control regime found? What legislation did it replace and it transferred primary decision responsibility from whom to whom?

Back 102

Ireland's merger control regime is governed by Part 3 of the Competition Act. The Competition Act replaced the previous regime governed by the Mergers Acts and transferred primary responsibility for decisions on merger review from the Minister for Enterprise, Jobs and Innovation to the Competition Authority.

Front 103

Under what conditions must a merger notification be sent to the Competition Authority?

Back 103

Where a merger falls within the type of transaction caught by the Competition Act and where the transaction satisfies the financial thresholds set out in the Competition Act, a merger notification must be made to the Competition Authority.

Front 104

When must. Proposed merger be notifiable to the European Commission rather than to national authorities? What legislation provides for this? Is this legislations detailed in the handbook? What rights does the Competition Authority have in this scenario?

Back 104

It should be noted that where the financial thresholds set out in the European Merger Regulation [Council Regulation 139/2004 on the Control of Concentrations between Undertakings OJ L 24/1, 29 January 2004] (the "EUMR") are met, a merger will be notifiable to the European Commission rather than to a national competition authority or authorities. It is not proposed to consider the EUMR within the scope of this chapter. However, it should be noted that even if a merger is notifiable to the Commission under the EUMR, the Competition Authority may request the referral back of jurisdiction over part or all of the transaction where the effect of the transaction on competition occurs almost entirely in Ireland.

Front 105

What was a recent Irish merger notification made to the European Commission? What happened to it?

Back 105

Ireland made its first request under this provision in 2002 in relation to a proposed joint venture between Allied Irish Banks and Bank of Ireland which had been notified to the Commission [M.2855 - Allied Irish Banks/Bank of Ireland/JV]. However the parties decided to withdraw their notification just some few days before the Commission was due to take a decision on Ireland's request for referral of the case [Philip Lowe, "The interaction between the Commission and Small Member States in Merger Review" 10/10/2003]

Front 106

What mergers or acquisitions require mandatory prior notification to the Competition Authority?

Back 106

A "merger or acquisition" will require a mandatory prior notification to the Competition Authority where the following (cumulative) thresholds are met: • the worldwide turnover each of at least two of the undertakings involved in the transaction is not less than €40 million; and • two or more of the undertakings involved in the transaction carry on business in any part of the island of Ireland (Ireland and Northern Ireland); and • any one of the undertakings involved has turnover in the State (Ireland) of not less than €40 million.

Front 107

Who are the undertakings involved in a merger? What is important to remember regarding undertakings involved for the purposes of calculation of turnover and of assessing whether business is carried on in the island of Ireland?

Back 107

The 'undertakings involved' in a merger are the parties to the proposed transaction, i.e. in a simple bi-partite merger, the purchaser and the target. It should be noted that, for the purposes of calculation of turnover and of assessing whether business is carried on in the island of Ireland, the term "undertaking involved" includes the entire group of undertakings to which an undertaking involved belongs. However, the vendor is not an undertaking involved.

Front 108

Looking at mergers, when is an 'undertaking involved' regarded as carrying on business in Ireland?

Back 108

An undertaking involved is regarded as "carrying on business" in the island of Ireland (this includes Northern Ireland), if it has a physical presence in the island of Ireland and makes sales or supplies services to customers in the island of Ireland, or without necessarily having a physical presence in the island of Ireland, it has made sales into the island of Ireland of at least €2m in the last financial year.

Front 109

Looking at mergers and competition law, what does 'turnover in the State' comprise?

Back 109

'Turnover in the State' comprises revenue from sales made or services supplied to customers within the State.

Front 110

When and who must notify the Competition Authority of proposed mergers?

Back 110

Mandatory Notification Mergers and acquisitions which satisfy the thresholds must be notified to the Competition Authority within one month of the conclusion of the agreement or the making of a public bid. All the 'undertakings involved' are obliged to notify (this does not include the vendor), although in practice most notifications are submitted jointly.

Front 111

Describe at a high level (e.g. one sentence) the examination process under the Competition Act for proposed mergers

Back 111

The Competition Act provides for a two-phase examination process for mergers.

Front 112

Describe Phase 1 of the Competition Authority's merger review process

Back 112

Phase 1 allows the Competition Authority an initial period of one month from notification to decide whether to allow the transaction to be put into effect on the grounds that the transaction would not substantially lessen competition, or to carry out a more detailed investigation (Phase 2). The one-month Phase 1 period may be extended where the parties and the Competition Authority negotiate undertakings or commitments to secure "measures which would ameliorate the effects of the merger" or if the Competition Authority makes a formal request for further information to be provided.

Front 113

Describe Phase 2 of the Competition Authority's merger review process

Back 113

If the Competition Authority is not in a position to determine during Phase 1 that there is not a substantial lessening of competition, a Phase 2 investigation or "full investigation" is initiated. In such cases, the Competition Authority has four months from notification, or from receipt of the response to a formal information request if applicable (i.e. normally an additional three months), within which to investigate the merger and decide whether it should be cleared, blocked, or cleared subject to conditions. A Phase 2 investigation involves a more detailed investigation of the market and may involve an oral hearing if the parties so wish.

Front 114

What was the purpose of the Credit Institutions (Financial Support) Act, 2008 and what did it do with respect to merger law (quote section) at a high level?

Back 114

In October 2008, emergency legislation, the Credit Institutions (Financial Support) Act, 2008 (the "Credit Institutions Act") was enacted to give effect to the provision by the Irish Government of a guarantee to certain credit institutions in the wake of the global credit crisis. Pursuant to Section 7 of the Credit Institutions Act, a special merger review regime will be applied in circumstances where the merger involves a credit institution and the Minister for Finance is of the opinion that the merger is necessary to maintain the stability of the financial system in the State.

Front 115

Under the Credit Institutions (Financial Support) Act, 2008, relevant mergers are notifiable to whom?

Back 115

Such mergers are notifiable to the Minister for Finance, rather than to the Competition Authority, and may not be implemented without ministerial approval.

Front 116

Under the Credit Institutions (Financial Support) Act, 2008, what is unusual about the authority granted to which Minister?

Back 116

The Credit Institutions Act authorises the Minister for Finance to approve a merger, even where the effect of the transaction will be to substantially lessen competition, where he believes the merger is necessary to maintain the stability of the financial system in the State; to avoid a serious threat to the stability of credit institutions; and to remedy a serious disturbance in the economy of the State.

Front 117

Describe the first utilisation of merger powers granted under what section of the Credit Institutions (Financial Support) Act, 2008, and the associated rationale

Back 117

Section 7 of the Credit Institutions Act was utilised by the Minister for Finance for the first time in June 2011 when he approved the takeover of EBS Building Society by AIB. On the basis of his opinion that the result of the acquisition will not be to substantially lessen competition in the Irish banking market. The rationale for this opinion is that there is no realistic alternative which would ensure that competition from EBS would be preserved (Department of Finance press release dated 28 June 2011, "Proposed Acquisition by Allied Irish Banks, plc, of EBS Building Society. Voluntary Notifications)

Front 118

What is CISA and why is it important in terms of mergers? Under what section of CISA is the mandatory notification to the Competition Authority not applicable?

Back 118

In December 2010, the Credit Institutions (Stabilisation) Act ("CISA") was enacted to provide the Minister with certain powers to assist with the re-organisation of credit institutions in the State following the global financial crisis. CISA provides the Minister with the power to carry out certain actions in respect of a relevant credit institution which may otherwise qualify as a merger or acquisition, including a Transfer Order or a Direction Order. Under section 54 of CISA, the mandatory obligation to notify the Competition Authority in respect of certain actions taken pursuant to such orders does not apply.

Front 119

Under what section of CBCIRA is the mandatory notification to the Competition Authority not applicable? What is CBCIRA?

Back 119

A similar waiver of the obligation to notify the Competition Authority is provided for in section 96 of the Central Bank and Credit Institutions (Resolution) Act 2011 ("CBCIRA"). Specific rules also apply to media mergers.

Front 120

What is the SLC Test? How does the Competition Authority interpret the SLC Test?

Back 120

The substantive test for assessment of a merger is 'whether the result of the merger or acquisition would be to substantially lessen competition in markets for goods or services in the State' (known as the 'SLC test'). The Competition Authority interprets this test in terms of consumer welfare and, in particular whether a merger would be likely to result in a price rise to consumers.

Front 121

In making its assessment of a proposed merger, the Competition Authority considers what issues"

Back 121

In making its assessment, the Competition Authority considers a number of issues including the following: • market structure - degree of market concentration including relative market shares of competitors; • the likely effect of the merger on the behaviour of the merged entity; and • the likely reaction of competitors and consumers.

Front 122

The Competition Act expressly provides what if a merger or acquisition is notified to the Competition Authority and cleared by it? What does the Competition Authority also consider however in light of Part 3 in this context

Back 122

The Competition Act expressly provides that if a merger or acquisition is notified to the Competition Authority and cleared by it, it is immune from subsequent challenge under Sections 4 and 5 of the Competition Act. The Competition Authority considers, however, that Sections 4 and 5 can apply to mergers and acquisitions which are not cleared in accordance with Part 3. The Competition Act therefore provides for a voluntary merger notification system to take account of the possible application of Sections 4 and 5 to a non-notifiable merger (i.e. one that does not meet the financial thresholds set out above).

Front 123

The Competition Authority has published a notice in respect of the review of non-notifiable mergers and acquisitions in which it states what? What if the merger has already been completed?

Back 123

The Competition Authority has published a notice in respect of the review of non-notifiable mergers and acquisitions in which it states that it is its policy to "seek to prevent the implementation of any unnotified merger that would substantially lessen competition in any market in the State" [Notice in respect of review of non-notifiable mergers and acquisitions, Decision No. N/03/01 (Sept.30, 2003)]. Where such a merger has already been implemented the Competition Authority may seek to have it reversed.

Front 124

Following its review, what are the possible determinations the Competition Authority may issue?

Back 124

Following its review, the Competition Authority may unconditionally approve a merger, approve a merger subject to certain conditions being complied with by the parties, or prohibit the merger.

Front 125

What are the three* mergers that the Competition Authority blocked? * i.e. the three that remain blocked - what was the fourth that the High Court annulled?

Back 125

The Competition Authority has blocked only 3 cases to date: (1) the proposed merger in 2004 between IBM and Schlumberger [Determination No. M/04/032, IBM Ireland Limited/ Schlumberger Business Continuity Services (Ireland) Limited, 28 October 2004] (the two largest suppliers of business recovery hotsite services in the State); (2) the proposed 2006 merger of Kingspan and Xtratherm. (both parties were active in the manufacture and provision of insulation materials in the State) [Determination No. M/06/039 Kingspan/Extratherm 25 October 2006]; and (3) in August 2008, the Competition Authority blocked the proposed acquisition by Kerry Group plc of the former Dairygold Co-operative (Breeo Foods Limited and Breeo Brands Limited). (Both parties are involved in the production, distribution and supply of consumer foods) [Determination No. M/08/009 Kerry/Breeo 28 August 2008].

Front 126

What is the significance of Rye Investments Ltd v The Competition Authority [2009] IEHC 140?

Back 126

In March 2009 the High Court annulled the decision of the Competition Authority prohibiting the merger, overturning the finding of a substantial lessening of competition in the market [Rye Investments Ltd v The Competition Authority [2009] IEHC 140. In April 2009, the Competition Authority initiated a further appeal to the Supreme Court. This appeal is pending at time of writing.

Front 127

Is a failure to notify of a merger a civil or criminal penalty? What are the penalties if found guilty on summary conviction? On conviction on indictment?

Back 127

Failure to notify a merger, which meets the thresholds, is a criminal offence. The person in control of the undertaking who is found guilty of such an offence is liable on summary conviction to a fine up to €3,000, or on conviction on indictment to a fine up to €250,000. Where a contravention continues for one or more days after first occurring, an additional fine of €300 (on summary conviction) or €25,000 (on conviction on indictment) may be imposed for each day of continuing contravention. Prosecutions can be taken by the Competition Authority or the DPP as appropriate.

Front 128

Which statutory body has responsible for administering and enforcing the Competition Act?

Back 128

The Competition Authority (www.tca.ie) is a statutory body responsible for administering and enforcing the Competition Act.

Front 129

What Investigative Functions does the Competition Authority have?

Back 129

To assist it in the carrying out its functions, the Competition Authority has powers to summon witnesses and compel documentary evidence, and to authorise officers to carry out dawn raids.

Front 130

What Power to Compel Oral and Documentary Evidence does the Competition Authority have?

Back 130

The Competition Authority generally initiates its investigations by means of written requests for information and documents addressed to the parties concerned. In most cases, undertakings comply voluntarily with these requests and the Competition Authority may not need to resort to witness summons or dawn raid searches. If required however, the Competition Authority has powers under Section 31 of the Competition Act to summon witnesses to appear before it, to examine such witnesses under oath, and to require such witnesses to produce to the Competition Authority any document in their possession or control.

Front 131

Compare witnesses before the Competition Authority with witnesses before the High Court

Back 131

Witnesses before the Competition Authority are entitled to the same immunities and privileges as they would be if they were a witness before the High Court. This means that witnesses are entitled to assert their privilege against self-incrimination and to refuse to provide documents covered by legal professional privilege. Refusal to answer questions or produce documents, which are not covered by such immunities or privileges, is a criminal offence, as is any other act which in normal court proceedings would amount to contempt of court.

Front 132

What are Dawn Raids and under what section of what act does the Competition Authority have this power?

Back 132

Section 45 of the Competition Act gives the Competition Authority the power to appoint authorised officers to enter and search business premises and vehicles, as well as the private dwellings of directors, managers, or members of staff. Authorised officers of the Competition Authority may be accompanied and assisted on dawn raid investigations by members of the Garda Síochána.

Front 133

When may dawn raids be carried out pursuant to what?

Back 133

Dawn raid investigations may only be carried out pursuant to a warrant issued by the District Court, within one month of the date of issue of the warrant.

Front 134

When would a judge from what court issue a warrant allowing the Competition Authority to conduct a dawn raid?

Back 134

A District Court judge may issue a warrant if he is satisfied from information provided on oath that it is appropriate to do so.

Front 135

Does a dawn raid warrant extend to allowing entry into private dwellings?

Back 135

The power to enter private dwellings may, however, only be exercised where there are reasonable grounds for believing that records relating to the business are being kept there.

Front 136

During the dawn raid investigation, what may authorised officers do?

Back 136

During the investigation, authorised officers may inspect, copy, seize and/or retain for a given period books, documents and records relating to the business or take appropriate steps to preserve them.

Front 137

During the dawn raid investigation, may authorised officers question the firm's employees and management? What if someone obstructed an authorised officer during the raid, is this obstruction an offence?

Back 137

Authorised officers may also question directors or employees about the carrying on of the business or any other information they may reasonably require. Obstructing an authorised officer in the legal execution of any of the above dawn raid powers is a criminal offence.

Front 138

Describe the cartel immunity programme, who is involved when it was launched, what it does...

Back 138

In December 2001, the Competition Authority, in conjunction with the DPP, launched its cartel immunity programme. The programme provides for immunity from prosecution for criminal offences under the Competition Act for the first applicant to come forward with sufficient evidence to warrant a referral of a completed investigation file to the DPP.

Front 139

What are the market studies that the Competition Authority conducts from time to time? Why do they do it - give an example of what happened after one study?

Back 139

From time to time the Competition Authority conducts market studies which are intended to assess competition in a particular area and recommend ways of improving it and so maximise consumer benefit. For example, in 2005 the Competition Authority published market studies in respect of both the non-investment banking and non-life insurance sectors in Ireland in which the Competition Authority made recommendations both to Government and to the appropriate regulators as to how competition could be improved in these sectors. These recommendations include: making it easier for a consumer to switch a current account to a different bank; making it easier for SMEs to move loans and current accounts to a different bank; and facilitating new members joining the payment clearing system [Competition in the (non-investment) banking sector in Ireland, September 2005].

Front 140

Compare the Competition Authority and the European Commission in their capacities as competition authorities

Back 140

The Commission has similar functions to those of the Competition Authority although it has greater enforcement powers including the power to directly impose fines of up to 10 per cent if global turnover.

Front 141

What are the primary functions of European Commission in its capacity as a competition authority? What authority does it have under what EU regulation regarding mergers?

Back 141

Its primary function, with regard to competition law, is to investigate breaches of Articles 101 and 102 of the TFEU. The Commission may also issue block exemptions pursuant to Article 101(3) and issue guidelines on the interpretation of European Competition law. It is also responsible for assessing mergers and acquisitions notified under the EU Merger Regulation.

Front 142

Does the European Commission have any investigative powers in its role as a competition authority?

Back 142

The Commission has a number of investigative powers. It may issue information requests or formal decisions to require undertakings to provide information [Article 18 of Regulation 1/2003]. The addressees of a formal decision are obliged to supply the requested information while the addressees of simple information requests are not. Undertakings who supply incorrect or misleading information in reply to a simple information request or a formal decision are liable to fines that may amount to up to 1% of the total annual turnover. The Commission also has the power to take statements from any person on a voluntary basis [Article 19 of Regulation 1/2003].

Front 143

Des the European Commission have similar authority to the Competition Authority regarding dawn raids or does it differ in ways?

Back 143

The Commission has similar powers to the Competition Authority with regard to dawn raids [Article 20 of Regulation 1/2003]. Commission officials often rely on the cooperation of Member States' authorities, as they are not permitted to use force to enter premises. Forcible entry may require a court warrant under the applicable national law. Where an undertaking does not submit to an inspection ordered by the Commission, periodic penalty payments up to 5% of average daily turnover may be imposed to enforce compliance.

Front 144

Does the European Commission offer a leniency / whistle blowing programme (in terms of competition law) similar to the Competition Authority? Quote reference

Back 144

The Commission also operates a leniency programme [Commission Notice on Immunity from Fines and Reduction of Fines in Cartel Cases (2006/C 298/17)], whereby parties to cartel activities may come forward and whistleblow (i.e. inform) on the other parties involved, in return for more favourable treatment by the Commission.

Front 145

Looking at the European Commission's leniency / whistle blowing programme (in terms of competition law) - full immunity is granted when? When is favourable treatment granted?

Back 145

Full immunity will be granted either to the first company to provide the Commission with sufficient evidence to enable the Commission to take a decision to carry out a dawn raid or to the first company to submit evidence enabling the Commission to find an infringement of Article 101. Favourable treatment (i.e. a reduction of a fine) is also available to companies which do not qualify for full immunity but which provide evidence of 'significant added value' to the Commission's investigation and which terminate their involvement in the cartel activity. Provided these conditions are met, the cooperating company may receive a reduction of up to 50% in the level of fine that would have been imposed if it had not cooperated.

Front 146

Describe in broad outline the principal restrictions imposed under European and Irish competition law on the activities of businesses?

Back 146

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Front 147

Give an example of an anti-competitive arrangement. What is the legal definition of such an arrangement?

Back 147

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Front 148

What is the difference between "hardcore" and "non-hardcore" offences, and what are the consequences for a business that engages in (i) a hardcore offence and (ii) a non-hardcore offence?

Back 148

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Front 149

When will a business be found to have a dominant position in the marketplace, and when might it be held to have abused that position?

Back 149

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Front 150

Explain when a merger will need to be notified to and approved by the Irish Competition Authority.

Back 150

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Front 151

Give an account of the role of the Irish Competition Authority in the enforcement of competition law.

Back 151

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