Dáil debates

Wednesday, 8 February 2012

Competition (Amendment) Bill 2011: Report Stage

 

12:00 pm

Photo of John PerryJohn Perry (Sligo-North Leitrim, Fine Gael)

I move amendment No. 3:

In page 6, between lines 30 and 31, to insert the following:

5.--The Principal Act is amended by the insertion of the following section:

"14B.--(1) This section applies to an agreement entered into by the competent authority with an undertaking--

(a) following an investigation referred to in paragraph (b) of subsection (1) of section 30, and

(b) that requires the undertaking to do or refrain from doing such things as are specified in the agreement in consideration of the competent authority agreeing not to bring proceedings under section 14A (inserted by section 4 of the Competition (Amendment) Act 2012) in relation to any matter to which that investigation related or any findings resulting from that investigation.

(2) The High Court may, upon the application of the competent authority, make an order in the terms of an agreement to which this section applies if it is satisfied that--

(a) the undertaking that is a party to that agreement consents to the making of the order,

(b) that undertaking obtained legal advice before so consenting,

(c) the agreement is clear and unambiguous and capable of being complied with,

(d) that undertaking is aware that failure to comply with any order so made would constitute contempt of court, and

(e) the competent authority has complied with subsection (3).

(3) Where the competent authority proposes to make an application for an order under subsection (2) in respect of an agreement to which this section applies, it shall, not later than 14 days before the making of the application--

(a) publish the terms of that agreement on a website maintained by the competent authority, and

(b) publish a notice, in not fewer than 2 daily newspapers circulating throughout the State--

(i) stating that it intends to make such application,

(ii) specifying the date on which such application will be made, and

(iii) stating--

(I) that the agreement to which the proposed application relates is published, in accordance with paragraph (a), on a website maintained by it, and

(II) the address of that website.

(4) An order under subsection (2) shall not have effect--

(a) until the expiration of the period of 45 days from the making of the order, or

(b) where an application is made to the High Court under subsection (5) in respect of the order, until the making of a final determination in relation to that application.

(5) The High Court may, upon the application of any person (other than the competent authority or the undertaking to which an order under this section applies) made during the period referred to in paragraph (a) of subsection (4), make an order varying or annulling an order under subsection (2) if it is satisfied that the agreement in respect of which the order was made requires the undertaking to which the order applies to do or refrain from doing anything that would result in a breach of any contract between the undertaking concerned and the applicant or that would render a term of that contract not capable of being performed.

(6) The High Court shall not make an order under subsection (5) if it is satisfied that the contract or term of the contract to which the application for such order relates contravenes section 4 or 5, or Article 101 or 102 of the Treaty on the Functioning of the European Union.

(7) The High Court may, upon the application of the competent authority or an undertaking to which an order under subsection (2) applies, make an order varying or annulling the first-mentioned order if--

(a) the party (other than the applicant for the order) to the agreement to which the first-mentioned order applies consents to the application,

(b) the first-mentioned order contains a material error,

(c) there has been a material change in circumstances since the making of the first-mentioned order that warrants the court varying or annulling the order, or

(d) the court is satisfied that, in the interests of justice, the first-mentioned order should be varied or annulled.

(8) Subject to any order under subsection (9), an order under subsection (2) shall cease to have effect upon the expiration of 7 years from the making of the second-mentioned order.

(9) The High Court may, upon the application of the competent authority made not earlier than 3 months before the expiration of an order under subsection (2), make an order extending the period of the first-mentioned order (whether or not previously extended under this subsection) for a further period not exceeding 3 years.

(10) Paragraphs (a), (b), (c) and (d) of subsection (2) shall apply in respect of the determination of an application referred to in subsection (9) as they apply in respect of the determination of an application referred to in subsection (2).

(11) In this section 'undertaking' includes an association of undertakings.".

Since Committee Stage, officials in my Department, the Competition Authority and the Office of the Attorney General have been working on a proposal whereby the High Court can make a court order in respect of an agreement entered into by the authority with an undertaking. I am pleased to move this amendment, which will further strengthen company law. Where the authority carries out an investigation into an alleged breach of the Competition Act, it can enter into commitments or agreements with the undertaking under investigation. This undertaking, without an admission of liability, would agree to cease and desist from certain behaviour or to act in a particular manner. In return for this agreement, the authority agrees not to initiate proceedings under the Competition Act, thus avoiding the significant legal fees and the deployment of resources that a criminal or civil prosecution entails.

Such agreements are enforceable as a matter of contract law. However, should an undertaking renege on its agreement, the authority is required to go to court to enforce compliance. This involves an examination of the alleged anti-competitive behaviour, which can involve complex economic evidence and so on.

The amendment proposes a statutory mechanism that will permit the authority to apply to the High Court for an order to give court backing or support to the agreement. If the undertaking breaches the order, such breach will constitute a contempt of court. In such circumstances, the authority could apply to court to have the undertaking penalised for the breach. Breach of a court order can ultimately be punished as a contempt of court, with remedies such as committal and attachment for persons or the sequestration of assets. Rather than being a hearing on the merits of the competition and economic aspects, a contempt hearing would relate to the breach of the terms of the order.

Subsection (1) of the new section 14B in the principal Act, as inserted by amendment No. 3, provides that this section applies to an agreement between the competent authority and an undertaking arising on foot of an investigation carried out by the authority into an alleged breach of competition law. The agreement involves the undertaking refraining from certain agreed actions and, in return, the authority agreeing not to initiate civil enforcement proceedings under section 14A. The term "competent authority" refers to the Competition Authority and the Commission for Communications Regulation, ComReg, where it is performing its competition enforcement functions in regard to the electronic communications market.

Subsection (2) provides guidance for the High Court in its consideration of an application. The court must be satisfied that the undertaking concerned consents to the making of the order and has obtained legal advice before so consenting, that the agreement itself is clear, unambiguous and capable of being complied with, that the undertaking is aware that failure to comply with the order constitutes a contempt of court, and that the authority has complied with the requirements of subsection (3). Subsection (3) requires the authority, in advance of making an application to the High Court, to publish the terms of the agreement on its website and to publish in at least two daily newspapers a notice to the effect that it intends to make an application, the date on which the application will be made and a direction to the publication of the agreement on its website.

Subsection (4) provides that the High Court order shall have effect until 45 days after the making of the order or, where an application is made to the court within the period by a third party under subsection (5), until the court has made a determination on that application. Subsection (5) provides that the High Court may, on foot of the application, make an order varying or annulling an order made under subsection (2) where it is satisfied that the agreement in respect of which the order was made would result in a breach of contract between the undertaking and the applicant or render a term of that contract incapable of being performed.

Subsection (6) clarifies that where a contract or term of a contract between the undertaking and a third party contravenes section 4 or 5 or Article 101 or 102 of the Treaty on the Functioning of the European Union, the High Court will not make an order varying or annulling the original order. A third party cannot enforce a contract or terms of a contract where to do so would cause a breach of competition law.

Subsection (7) sets out the circumstances under which the High Court may, on foot of an application from the competent authority or the undertaking, vary or annul an order made under subsection (2). The court may do so where the other party to the agreement consents to the application, the original order contains a material error, there has been a material change in circumstances since the original order was made that warrants the court varying or annulling that order, or the court is satisfied that in the interests of justice, the original order should be varied or annulled. These are the standard provisions relating to court orders.

Subsection (8) provides for a seven year sunset clause for an order made under subsection (2). Subsection (9) provides for the extension of the order made under subsection (2) and allows the competent authority to apply to the High Court for such an extension not earlier than three months before the order is due to expire. The original order may be extended for a period of up to three years. More than one extension can be applied for. Given changing market circumstances, if an order becomes redundant with the passage of time, a sunset clause is considered appropriate to remove out-of-date orders from the list of court orders. However, it is also necessary to provide for the extension of an order where it remains relevant.

Subsection (10) applies paragraphs (a) to (d) of subsection (2) to the application under subsection (9) for an extension to the period of the original order. These paragraphs set out the conditions on which the High Court must be satisfied before making an order, namely, that the undertaking concerned consents to the making of the order, that the undertaking obtained legal advice before so consenting, that the agreement is clear, unambiguous and capable of being complied with, and that the undertaking is aware that failure to comply with the order constitutes contempt of court.

Subsection (11) provides that the term "undertaking" includes an association of undertakings.

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