Oireachtas Joint and Select Committees
Tuesday, 2 February 2021
Joint Oireachtas Committee on Jobs, Enterprise and Innovation
Pre-legislative Scrutiny of the General Scheme of the Competition (Amendment) Bill 2021
I thank members and witnesses for participating in today's meeting in line with the exceptional circumstances we are experiencing under Covid-19. I remind them that apart from myself and members of the committee secretariat, all members and witnesses are participating remotely and all members are required to participate from within the Leinster House complex.
I am pleased that we are able to commence our pre-legislative scrutiny of the competition (amendment) Bill 2021. The principal objective of the Bill is to transpose the EU's European Competition Network, ECN, directive that will make the Competition and Consumer Protection Commission, CCPG, and the Commission for Communications Regulation, ComReg, more effective in overseeing and enforcing competition law. The directive was adopted in 2019 with a transposition deadline of 4 February 2021. The Minister for Enterprise, Trade and Employment, Deputy Varadkar, recently sent the general scheme of the Bill to the committee asking that we prioritise our consideration of this matter. Today, we are receiving a first briefing on the matter after which members can indicate how they wish to proceed with our conversation on the matter.
From the Department of Enterprise, Trade and Employment, I welcome Ms Clare McNamara, who is accompanied by Ms Gráinne O'Carroll and Mr. Seán Smith and will make an opening statement explaining what is involved after which members can discuss this matter. The witnesses are participating remotely. In line with normal practice, members have been provided with opening statements from the Department.
Before we start, I will explain some limitations to parliamentary privilege and the practice of the Houses as regards references witnesses may make to other persons in their evidence. The evidence of witnesses physically present or who give evidence from within the parliamentary precincts is protected pursuant to both the Constitution and statute by absolute privilege.
However, today's witnesses are giving their evidence remotely from a place outside the parliamentary precincts. As such, they may not benefit from the same level of immunity from legal prosecution from proceedings as a witness physically present does.
Witnesses are reminded of the long-standing parliamentary practice that they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable, or otherwise engage in speech that may be regarded as damaging to the good name of that person or entity. Therefore, if their statements are potentially defamatory in relation to an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative that they comply with any such direction.
I now invite Ms Clare McNamara to make her opening statement. As her written statement has been circulated, it may be helpful to just highlight the main issues in it.
Ms Clare McNamara:
I thank the Chair and the committee for the opportunity to discuss the scheme of the Bill. I am joined by my colleagues, Gráinne O’Carroll and Seán Smith. We very much welcome the opportunity to contribute to the committee’s scrutiny of the scheme and to assist it in any way we can. I will outline the background to the scheme and set out its main provisions after which we look forward to hearing the members' views and answering questions.
The Bill has three broad aims: to transpose the ECN+ directive which will make the CCPC and ComReg more effective in overseeing and enforcing competition law; to introduce other powers additional to the EU directive to assist in this regard; and to do so in a way which establishes a clear and uniform regime for businesses and national competition authorities so as not to have differing requirements under national and EU law.
In terms of the background to the scheme, it is useful to recall some important milestones along the way. In 2013, the European Commission began its assessment of the functioning of Regulation 1 of 2003 on the implementation of the rules on competition laid down in Articles 101 and 102 of the treaty. The Commission highlighted divergences in national powers, procedures and sanctions available to national competition authorities, which has resulted in uneven enforcement of EU competition rules. It is important to note that the Commission made direct reference to the inability of Irish NCAs to impose civil fines.
Arising from the findings of the Commission communication and following additional stakeholder engagement and consultation, the Commission presented its formal proposal for a directive on 22 March 2017. It was adopted and subsequently published in the Official Journal of the European Union on 14 January 2019 with a transposition deadline of 4 February 2021. As the directive introduces the concept of administrative sanctions there were constitutional matters that had to be considered before the general scheme could be finalised. The directive also introduces other measures that are novel in the Irish legal context such as periodic penalty payments, interim measures and leniency provisions. Legal advice was needed on these also in order to progress the general scheme.
Given the time limitation, I ask the committee to please excuse me for not going through the scheme provision by provision, but I will summarise as far as possible. The scheme aims to ensure the full and accurate transposition of the ECN+ directive. Parts 1 to 7, inclusive, of the scheme of the Bill deal directly with that transposition.
Part 2 of the scheme deals with the competent authorities themselves, including their independence and resourcing, as well as ensuring they conduct their investigations in accordance with the fundamental rights set out in the European Convention on Human Rights and the Charter of Fundamental Rights of the European Union.
Part 3 of the scheme deals with investigations, including powers to inspect, requests for information and powers to summon witnesses. This Part also deals with, in head 13, the concept of interim measures which is where the competent authority, if concerned that certain behaviours or actions could result in a very serious breach of competition law, can impose interim measures seeking the ceasing of such practices in advance of the completion of the overall investigation. The remainder of this Part of the scheme covers such matters as expedited appeals against the imposition of interim measures, the statement of objections and actions arising from same, structural and behavioural remedies and binding agreements or commitments.
Part 4 of the scheme is entitled sanctions and covers administrative fines, including their calculation, maximum amounts, court confirmation of fines, the appeals system and the concept of periodic penalty payments.
Part 5 of the scheme covers the immunity programme, incorporating the leniency programme, and sets out the process for immunity from administrative fines, the conditions whereby such fines may be reduced, the general conditions for leniency, the forms of leniency statements, markers for application for immunity, summary applications for leniency and the interplay between applications for immunity from administrative fines and sanctions on natural persons.
Part 6 of the scheme covers mutual assistance. All heads in this part set out the requirements of the competent authorities in terms of co-operation with competent authorities in other member states.
That includes requests from other member states for the notification of preliminary objections or the enforcement of decisions such as administrative sanctions or periodic penalty payments. Part 7 of the scheme sets out the procedural provisions such as the role of the competent authorities before the courts, the access to files and admissibility of evidence.
Part 8 of the scheme covers provisions unrelated to the transposition of the directive. These heads deal with such matters as creating a criminal offence in the case of bid-rigging at the request of the Competition and Consumer Protection Commission, CCPC, and recommended in the Hamilton review, powers in the area of covert surveillance as well as giving it additional powers to allow for the taking of summary prosecutions in the event of gun-jumping in mergers. Some of these heads also clear up some inadvertent errors in existing legislation such as correcting cross-referencing errors.
I am happy to discuss the provisions of the scheme in more detail and to respond to questions from members of the committee.
Before I invite members to discuss the issue with the witnesses, I remind them to use the raise-hand function on Microsoft Teams and, more importantly, to cancel the function once they have spoken if they do not want to come in on a second round. I call Deputy O'Reilly who has 14 minutes.
This is a bit complicated, so I have written down my questions. I thank our witnesses for giving their time and for the presentation given by Ms McNamara. Does Ms McNamara believe that our national competition authorities, NCAs, have the necessary resources to tackle white collar crime? I am referring to the Competition and Consumer Protection Commission, CCPC. Does Ms McNamara feel that it has the resources to tackle white collar crime considering a huge amount of the resources on transposition will be directed to consumer related matters? Does she think there is a need for additional resources or does she believe the resources are adequate for the moment?
Ms Clare McNamara:
In terms of resources, budget 2021 has given provision for the Competition and Consumer Protection Commission, CCPC, to have quite a significant increase in its overall budget to cover resources required for the implementation of the powers this Bill will give it. In looking at its budget ask, two areas were considered - resources for dealing with Brexit and the fallout from Brexit, particularly around consumer protection, market surveillance and product safety and specifically in the area of this Bill and the additional powers it will give the Competition and Consumer Protection Commission, CCPC.
Could Ms McNamara talk a little bit about the creation of the offence of bid-rigging? I have spoken to, as I am sure have all the Deputies and Senators at this meeting, small bidders, small builders and people who would be bidding for these contracts. They will say it is their view - this is their view as relayed to me - that bid-rigging happens and that it happens in State contracts. The issue was raised with me in relation to large-scale projects where one might have a number of people bidding for those contracts. It came very much to the fore in the building of a hospital. I will not name it but I am sure we all know the one I am speaking about. Has Ms McNamara conducted any research into bid-rigging to prompt this and the transposition? Does she have any information to back up the fact it is happening and that there is a need for us to stop it in respect of State contracts in the first instance but then more broadly?
Ms Clare McNamara:
Yes, the Competition and Consumer Protection Commission, CCPC, has evidence that bid-rigging is happening, particularly in public procurement. The Competition and Consumer Protection Commission, CCPC, has been asking for bid-rigging to be made a specific offence in law for quite some time. It made a submission to us and to the Hamilton review group. As it turns out, at the same time as we were considering putting it into this Bill, the Hamilton review group report said it needed to be made a specific offence.
It is important to note cartel behaviour is criminal behaviour. Bid-rigging is a form of cartel behaviour. It is where firms bid in a procurement process but agree among themselves which firm submits the most advantageous tender. This enables them to attract a higher price because the bidders that agree to lose submit inflated bids or agree not to bid at all which in its own way is also bid-rigging.
It is taken very seriously. The CCPC's experience is that because it is not treated as a separate offence, for example when it comes to taking court cases, the practice is to regard it as a form of price fixing or market sharing. It was considered in some court cases to go beyond the existing scope of anti-competitive behaviour because it is not a specific offence. That is why we are trying to make it clear in this Bill that this is criminal behaviour. It is a specific offence and will be dealt with in that way.
I welcome that. What interests me more is whether we can put a money amount on how much will be saved as a result of this. There is recognition from the CCPC that this is a serious problem. As Ms McNamara says, it happens with public contracts. It is not the fault of any one person or whatever. It is most likely because of the size of the contracts. Those contracts are so lucrative that it is certainly in the interests of people to ensure they get them. I will not put it any stronger than that. Has Ms McNamara an estimate of what kind of money we would be looking at saving if we could stamp out this practice? At the end of the day, the taxpayer is on the hook for many of these projects. Making it an offence is one matter but it would be interesting if we could quantify what the savings that might accrue to the State as a result of it could be.
Ms Clare McNamara:
I would love to be able to answer the Deputy in the positive. I am afraid it would not be possible to identify the quantum of costs to the economy of bid-rigging. It is only when it is an offence and the CCPC is able to start prosecuting a specific offence of bid-rigging that we might be able to work backwards to assess what the costs have been to the economy in the past.
It is enough anyway in as much as there is recognition and the link to public contracts.
I refer to the video and audio surveillance powers. We had the Office of the Director of Corporate Enforcement, ODCE, in here two weeks ago. It was looking for similar additional powers. Obviously, Ms McNamara feels that more powers are needed. It is in this Bill. I am trying to hone in on something. With the Criminal Assets Bureau, CAB, and others, for instance, there is quite a high bar in terms of that surveillance. Obviously, it goes through the Garda. There is a structure. The courts must be involved or else a superior officer. It seems that these powers would be granted outside of that process. It raises the question that we are only looking at similar powers now. The CCPC will have similar powers to the CAB. How will that operate? These powers will operate separate to members of An Garda Síochána. There is no provision for the use of those powers to be overseen in any way by either a judge or a member of the Garda. Could Ms McNamara talk about that?
Ms Clare McNamara:
I can assure the Deputy at the beginning that the CCPC would only do so under a warrant from the court. I accept it is probably not clear from the general scheme. Also, the CCPC would only be doing this in very restricted circumstances, purely in the investigation of cartels because cartel behaviour is criminal behaviour. It would only be in the investigation of cartels and it would always require a warrant from the court.
It would only be in exceptional circumstances where they need to do it immediately and do not have time to get involved in asking the Garda to get the warrant on their behalf. They want to be able to apply directly for a warrant. Sometimes it happens with cartel behaviour that the CCPC can get very late notice that there is a meeting about to happen in a hotel room and it knows that the meeting could have very serious implications in terms of a cartel's operations.
In such an scenario, the recourse is not to the Garda. The recourse is direct to the courts. In terms of time, as Ms McNamara said, much of this activity happens at short notice and people will not give the CCPC six months' notice in time to get its affairs in order. Is there a worry that the courts might somehow delay it and that might be an obstacle? Is there a facility for them to bypass the courts or is it only with the imprimatur of the courts that it can happen?
Ms Clare McNamara:
As a Department, we could never envisage granting that power without some court oversight. One must be very careful about safeguarding people's rights under the European Convention on Human Rights and the Charter of Fundamental Rights. From that perspective, we would have to ensure that there is the imprimatur of the courts.
I am concerned about infringements of human rights. It is not clear from my reading of it, which is not a deficiency on anyone's part but my own, whether there is a scenario where it could happen without the imprimatur of the courts. Is Ms McNamara saying - I am not trying to box her into a corner; it is a straight question - that she does not think it would ever happen or is it specifically not allowed? In the latter case, I have not seen that part of the proposed Bill and I will read it again.
Ms Clare McNamara:
I am saying specifically that as a Department, I cannot ever see us allowing for this to happen in the legislation without the imprimatur of the court when the Bill is drafted. We would have to make sure, as the Bill is drafted, that it is very clear that it would be done with a warrant. It is also important to point out that there is always a garda on secondment to the CCPC all the time to assist the commission. We are looking to expand its current powers while including the current safeguards.
I am not very technical as members of the committee will have learned by now. Does it apply to the cloud or digital communications? It refers specifically to surveillance and audio surveillance, which to my mind is the traditional thing of people sitting in a car taking pictures or whatever. Communication is much more sophisticated. They are less likely to be meeting in a hotel room and more likely to be meeting across Zoom. Is it anticipated that those powers will cover that online area too?
Ms Clare McNamara:
The plan is to try to get access to as much of the actual content of the communications as possible. The Deputy is absolutely right when she suggests that cartels require communication but as communication technology has improved over time, cartels have become much more sophisticated in taking advantage of technological developments. The CCPC has the power to obtain communications from metadata which will show it that individuals have been communicating but it does not provide the content of the communications. We are trying to overcome that with this provision.
Okay. It was reported recently that Ireland's rating in the corruption perception index has slipped. We have gone backwards, which is clearly not good. There is a perception - I will not put it more strongly than that - among the people we meet when we are able to be out and about, canvassing or knocking on doors about the extent to which white-collar crime is happening. I have to be straight - this perception extends to the extent to which people perceive that the State is ignoring it. People feel that someone who goes to work in a suit is less likely to be prosecuted, etc. That is the perception that people have and it is genuinely held. Does Ms McNamara believe the general scheme as outlined can ensure that our National Consumer Agency can rigorously tackle white-collar crime to the point where people are reassured? There is no point in sitting here pretending that people think everything is all right and every piece of white-collar crime is coming across the desk of the relevant person and being investigated. There is a perception that a certain amount goes on that is never tackled. Does Ms McNamara have confidence that the powers proposed in this Bill will make a real and substantial difference in the area of white-collar crime? I have spoken to the ODCE, which describes the people it deals with as litigious and having deep pockets. We know who these people are. They are not small-time operators. As Ms McNamara has said, they are bidding for big contracts and we are talking about serious money. I am conscious of the perception and I appreciate that rigorous action must be taken to address that. I would be interested to hear whether it is Ms McNamara's position that the powers proposed in the Bill are sufficient?
Ms Clare McNamara:
The Deputy is correct about our position on the corruption index. One of our biggest problems around the CCPC and its predecessors is that they have not had the power to impose administrative sanctions.
As a result, if they follow a civil route, the person who is taken to court gets a slap on the wrist and that is it. Certainly people who are breaching competition law will factor the cost of the court cases into the benefits of what they are doing.
In terms of what we believe the Bill will do, we are very confident that it will give the CCPC and ComReg the powers to slap on some significant administrative fines on undertakings that are in significant breach of competition law. We are very confident. When we speak about the index, in terms of competition enforcement the CCPC found itself in competition with all of the EU member states that have the administrative fine facilities that Ireland never had. I mentioned in my opening statement that when the Commission did its review of its own regulation Ireland was singled out in its communication because it did not have a civil fines regime. This is a sea change in terms of competition enforcement in Ireland.
I welcome the introduction of administrative fines. The political system has long wanted this and it was continually blocked by legal advice. It is great to see it lifted. The problem with a lot of these cartels and the abuse of dominance is the burden of proof. I know administrative fines will probably allow the Department to be less selective in what cases it pursues but will there be a lower barrier to taking on big players? It is well known we have very limited competition in many sectors, including banking, telecommunications and insurance. They fight tooth and nail if there is any suggestion of taking them on. I would like an understanding of this.
My next question is on new technologies creating dominance of a sort we would not have typically considered. The control of data is now a new source of dominance. Is this adequately embraced by what we call abuse of dominance in competition law? It seems there are many new sources of potential dominance coming in. Has the law caught up on this? We have seen some cases where it has been challenged.
The Bill will introduce specific offences on rigging. Are there other specific offences we need to contemplate? Is the Department working on further legislation, either on specific offences or powers, to get to grips with the changing competitive environment?
Ms Clare McNamara:
I thank the Deputy and I will work backwards through his questions. With regard to other offences, the CCPC and ComReg had the opportunity while the ECN+ directive was being negotiated to come to us with a wish list, in particular of the type of offences it wanted us to examine if we were going to do this by primary legislation. The two areas it came to us with were bid rigging and gun jumping. We are dealing with both of these in the Bill. Gun jumping is where somebody goes ahead with a merger without waiting for the approval of the competition authority, and I already covered bid rigging in answering Deputy O'Reilly's questions. They are the only issues the CCPC and ComReg asked us for with regard to specific offences. This is not to say we are not always looking at developments in the area.
This brings me on to the question about data sharing and ownership in the digital world. This particular Bill will not necessarily deal with abuse of dominance in these areas but it is worth noting developments are already taking place at EU level. The Digital Services Act and Digital Markets Act are looking at this area of data, online content and gatekeepers.
There will be further legislation coming down the tracks in transposing EU legislation in this area. Competition law is constantly evolving and the Deputy is absolutely right that there can be abuse of dominance in different areas. The legislation being considered now concerns the dominance of the key market gatekeepers, to use the term in EU legislation, in terms of market dominance. I will not name any players in the area and members could guess who is being referred to by the European Commission.
In terms of the burden of proof, the issue we have had up to now is that the Competition and Consumer Protection Commission and ComReg have required the criminal burden of proof in order to be able to take criminal cases. Whereas cartel behaviour will always be considered criminal behaviour, the criminal burden of proof is required now but in taking a civil case all that results is a slap on the wrist for the undertaking, so there will be a lower burden of proof. It will not be of the criminal level that is now required. There will be significant fines in comparison with the type of fines applied even in criminal cases now where there has traditionally been a lower level of fines.
There will be a lower burden of proof with higher fines. How that interacts with the criminal system or regime is something we will focus on with drafting in order to ensure the interplay between the two is dealt with.
I am on my phone because the machine did not work for some reason this morning. Again, I welcome the officials to the committee. Will they speak to the matter of gun jumping or its prevalence? There are a number of heads dealing with leniency and immunity so could those be fleshed out a bit? It appears that if somebody co-operates and discloses information about their comrades in any alleged offence, they may be treated in a more lenient way. There may be implications in doing that and they may be endangering parties, depending on the alleged offence. Would protection be furthered to somebody in a position where he or she is involved with serious criminal organisations?
The Bill speaks about sealing business and books for the duration of an investigation. Is there a limit to how long a business can be sealed? We might envisage a case where a business could be closed for a considerable period, leading to a loss of income and turnover, as well as damage to reputation. Will the witnesses speak to that? If the process takes an inordinate period in the courts, a party may feel that a business has been shut after doing nothing wrong and may want to appeal to a court. The business may have no way of opening until somebody decides the investigation is over. One can see how that might be an issue.
I notice as well there are also unannounced inspections allowed in people's comes. CRH has been mentioned and it has been noted that documents, books and information can be stored in people's homes. Will the witnesses speak to that? There is an issue with ComReg having the main powers in this as well.
It was mentioned that a garda would be on secondment but would other officials have some form of warrant cards or identification? This came up previously when I dealt with a copyright Bill and people were going to premises and had to prove who they were. Somebody else should not be able to pretend to be from the competition authority, for example. The question of technology and surveillance comes in as well. Data is the new oil, people tell me, so are the powers going far enough when we consider what is changing? Is flexibility built into this in case we see further change?
Ms Clare McNamara:
I thank the Deputy. I will start with gun jumping and give him an explanation of what is involved in that. Under Irish competition law, mergers or acquisitions which reach certain thresholds have to be notified to the Competition and Consumer Protection Commission, CCPC, and they cannot be put into effect without obtaining clearance from the CCPC. Failure to notify any such merger or acquisition or putting it into effect before clearance by the CCPC is referred to as gun jumping. Currently, the offence of gun jumping is under section 89 of the 2002 Act and it can be prosecuted on a summary basis or on indictment by the Director of Public Prosecutions, DPP, only. What we are trying to do here is put in a provision that the CCPC can bring a summary prosecution in respect of gun jumping. It will ease the burden on the DPP and, in effect, is trying to deal with that.
In terms of the level of incidence of it, I do not have that information to hand. I can certainly inquire of the CCPC, but as I say, the intention of the provision is to allow the CCPC to take the summary prosecutions for gun jumping offences to reduce the burden on the DPP and to increase the enforcement in that area.
With regard to leniency and immunity, there is a non-statutory immunity programme that the CCPC operates with the DPP in terms of cartel behaviour. However, this Bill will be dealing with immunity from administrative sanctions and leniency in terms of such sanctions by having the fine reduced if there is co-operation with the CCPC. The decision on immunity from criminal prosecution will always be a matter for the DPP. This is around reduction in administrative fines in return, it is hoped, for co-operation leading to the prosecution of the cartel.
The directive also puts in place a system of a marker for immunity. If a person is applying for leniency, for example, head 30 of the Bill refers to applications for immunity from administrative fines. It sets up the system for the competent authority, for example, the CCPC, to grant applicants for immunity from administrative fines a marker in their place in the queue, effectively. It gives them the time to gather all the evidence they need to provide to the CCPC to get the immunity or the leniency they are seeking. It is a brand new provision in Irish law and this is one of the more novel aspects of this directive. It is intended to support the administration of this new provision for those who assist the competent authority. It means that if more than one undertaking is co-operating, whoever gets to the authority first marks their place in a queue and cannot be jumped in the queue by the second undertaking that comes to assist. I hope that sets out or clarifies some of what is involved in terms of the leniency and immunity programme.
The question the Deputy asked about the inspection powers and the time to seal the premises shows the importance of having pre-legislative scrutiny with his committee because it is a very important question. It is one we will have to talk to the Parliamentary Counsel about in terms of making sure that this head, when it is being drafted, puts into place a very strict timeframe, because in the same way as the level of fines are not meant to be putting undertakings out of business, the same should be true of sealing premises and gathering evidence. We should not be in the business of impacting upon the profitability of an undertaking in the meantime. That is certainly something we have taken note of, and we will make sure that, when we are talking to the Parliamentary Counsel, that is looked at closely.
The Deputy spoke about data. I am hoping that my response to Deputy Bruton's question around this area and the fact that there are new developments at EU level all the time in this area answered that question. Already there are two new proposals around the Digital Services Act and the Digital Markets Act, which are looking at the gatekeepers of those data. I hope that has answered that question.
In terms of the surveillance, I cannot add to what I said when I was answering Deputy O'Reilly on that. This is very important in terms of cartel behaviour.
Additional covert surveillance powers are something we only see in terms of the criminal investigations of cartel behaviour, not in investigations of other anti-competitive behaviour that would result in fines. I hope that answers the Deputy's questions
Yes. Will Ms McNamara deal with the issue of identification and official warrant cards for officials who might be visiting premises, business and so forth? Will she also address unannounced inspections and what authority officials will have?
Ms Clare McNamara:
On warrant cards, the Competition and Consumer Protection Commission's existing procedures for authorised officers will continue. I am not 100% sure if they have warrant cards. I can examine that but I know they must have identification. The 2014 Act already sets out what an authorised officer of the Competition and Consumer Protection Commission is, and that will continue.
On access to data in people's homes, it is only if they are data that are of relevance to the investigation. We have to be careful as to what data they can gather. It would only be data that are absolutely relevant to the investigation under way.
On the issue of inspections without notice taking place in people's homes, will the authority come from a senior Garda officer or a court? I am not saying these types of inspection should not happen. However, to ensure it works properly, how will it be managed?
Ms Clare McNamara:
My colleague has just pointed me to the 2014 Act. It would be the authorised officer of the Competition and Consumer Protection Commission on production of a warrant issued to him or her authorising that officer to exercise powers. I do not know whether that is a court-issued warrant. I will have to look into that.
Under existing legislation, an authorised officer has the powers under a warrant issued to him or her. We do not envisage that changing.
I thank our guests. I thank Ms McNamara for a refreshingly frank and impressive presentation.
I want to drill down into a couple of key sectors that I know will be of interest to people watching at home, such as the powers of ComReg and the role Eir has played in recent years. I will start with a political point which needs to be made. The privatisation of Eir has been an absolute disaster. When the telecoms companies appeared before the committee a couple of years ago, they said as much. They said that the regulatory structure is failing the markets. This includes a lack of regulation of the incumbent and main wholesale provider, Eir. There is an imbalance in the marketplace to the detriment of consumers. This situation is not only bad for other competing operators but also for citizens with fixed broadband prices among the highest in Europe.
The European Commission's report last year, Digital Economy and Society Index, showed that Ireland has the third most expensive fixed broadband in the EU. On fixed and mobile offers, Ireland had the second most expensive. Eir is, of course, one of the most profitable incumbent telcos in Europe. Last October, ComReg looked at the Eir wholesale price and it has gone out to review. ComReg's actions seem to be taking a much more lenient approach than that advocated by the European Commission in this regard. Last year, the European Commission told the communications regulator to reduce rates for fixed-line telecommunications as a matter of urgency.
Clearly, the market is not working and householders are not benefiting. What is contained in this legislation that would benefit the householder and address the issues about Eir's powers in the marketplace?
Ms Clare McNamara:
I have to point out that ComReg has two sets of powers. It has powers as a regulator of the telecommunications market, which is totally outside the remit of our Department. That is within the remit of ComReg's parent Department. It then has powers as a competition authority.
The powers that ComReg would be given under this Bill deal specifically with the implementation of competition law both in terms of Articles 101 and 102 of the Treaty on the Functioning of the European Union and the 2002 Competition Act.
It is only specifically breaches of competition law, whether that is cartel behaviour or abuse of dominance. ComReg will have powers to investigate any breaches it sees in those areas within the telecommunications sector. It does not have any impact on ComReg's overall powers. This Bill has nothing to do with its overall powers as a regulator of the telecommunications sector. That is a matter for the Department of the Environment, Climate and Communications.
I will move on to the energy market. We pay the fourth highest electricity prices in Europe, though when VAT and environmental levies are taken into account, we are the most expensive. The shocking thing is that consumers pay just under 50% higher than the EU average. The Commission for Energy Regulation seems to use the level of customer switching as the factor to determine competition in the market. Will this legislation allow greater investigation of energy sector profits and transfer of information across regulators? The energy regulator already has access to the profit margins of the companies, which it has never published. Could this be given to the competition authority?
Ms Clare McNamara:
The Commission for Regulation of Utilities, CRU, is not a competition authority in Irish law. It is a regulator of the sector. It is totally a sectoral regulator so it is not one of the four competition authorities. The four competent authorities in Irish law for competition legislation are ComReg, the Competition and Consumer Protection Commission, the Office of the Director of Public Prosecutions and the Courts Service. It is not a role for the CRU. Anybody who believes there is a lack of competition, a breach or an abuse of dominance in the energy area can make a formal complaint to the CCPC and help the CCPC by providing evidence. The CCPC will investigate to see if there is abuse of dominance in that area.
How will the administrative financial sanctions work? Is the constitutional question still present? Will the courts ultimately still have to sanction the level of the penalty or will these administrative sanctions be independent of the courts?
Ms Clare McNamara:
The Department's policy in this area, first and foremost, was that we did not want differentiation of treatment between sanctions for breaches of EU law versus sanctions for breaches of Irish law. This was often because when an investigation is commenced by the competition authority, it does not necessarily know if there is a cross-border effect on what it is investigating. The constitutional question arises because of the particular role of the courts in Irish law and the fact that there is a clearly defined principle in Irish law regarding the administration of justice and who has the role in the administration of justice. In that context, the constitutional question has impacted on the decisions we have made in terms of policy related to the role of the courts. We want to see court confirmation of finds, regardless of whether it is a fine for a breach of EU competition law or of Irish competition law. There will be court confirmation of the fines, or that is what is envisaged.
Ms Clare McNamara:
That is why it is important the court has a role in the confirmation of fines. We have set out in the general scheme taken from the directive how fines are calculated and the things that are taken into consideration. It is always important that a fine is not of a level that will put an undertaking out of business. That was taken from a Law Reform Commission report into this area on administrative sanctions. However, this is talking about a high level of fines and that is why it is important that the court will have a role. We are also building the appeal process into it to protects rights of the undertakings and of the people involved in those undertakings. They have to have the right to appeal.
I mentioned the RSM Robson Rhodes report last week when I was chatting to the Tánaiste. Back in 2007, that report estimated that we were losing €2.5 billion per year from economic crime.
That equates to a potential loss to the economy of €35 billion over the past 14 years. Why has the State been so slow to tackle this aspect of economic crime, given the potentially severe losses, compared with other areas we have been particularly keen to address, such as through the campaigns against so-called welfare cheats? There seems to have been a significant gap over the past 14 years in tackling this massive sector of economic crime.
Ms Clare McNamara:
The Senator will have to forgive me but I cannot comment on Government policy since 2007, when that report was published. We are bringing in a Bill that will result in quite significant crimes for serious breaches of competition law. If that report is correct and there has been a loss of €2.5 billion a year, a great deal of money will be coming into the Exchequer once the Bill is enacted, one would hope.
Head 12 concerns persons required to attend before the competent authority under section 18 of the 2014 Act to answer questions and so on. I do not have to hand a copy of the 2014 Act. If someone is summoned and has to answer questions and so forth, can he or she be assisted by members of the legal profession, whether solicitors, barristers or whatever? If so, who covers the cost? My sense is it would be possible for the person to have someone with him or her to assist from a legal point of view but I am not sure from reading the heads of the Bill, and I have not referred back to the other Acts to check.
Ms Clare McNamara:
I am looking at section 18 of the 2014 Act at the moment, which provides that such persons should be entitled to the same immunities and privileges as witnesses before the High Court. It does not necessarily go into who they may or may not bring with them but if they are entitled to the same privileges as witnesses before the High Court, they probably would be entitled to legal representation, although that is a good question. We will certainly examine it when we begin drafting that part of the Bill and I thank the Deputy for raising it.
I thank Ms McNamara and her colleagues for assisting the committee in this important matter. As I indicated earlier, the committee will decide as soon as possible how it wishes to proceed.
I remind members that today is the final date by which submissions can be made to the report on the sale of tickets (cultural, entertainment, recreational and sporting events) Bill 2020.
The next meeting of the joint committee is scheduled to take place in private session at 9.30 a.m. on Wednesday, 10 February 2021, and will be conducted remotely. A meeting of the select committee in private session is scheduled for 11.30 a.m. tomorrow, to be conducted remotely. I thank all members for their participation in the meeting under exceptional circumstances due to Covid-19 and appreciate their help and support in conducting these meetings as effectively as possible.