Richard Bruton (Dublin North Central, Fine Gael)

The purpose of this Bill is to strengthen the enforcement of competition law in Ireland. A breach of competition law is a white collar crime and, as with all other forms of crime, those who commit it must be punished accordingly. This legislation will provide a more effective deterrent and an improved sanctions regime for those who engage in price fixing, cartels, abuse of dominant position and other anti-competitive practices.

Under the terms of the EU-IMF programme of financial support for Ireland, the Government was required to bring forward legislation to strengthen the enforcement of competition law by the end of quarter three of 2011. The publication of this Bill last September met this commitment. Since then, my officials have engaged with officials of the troika on developing amendments which have further strengthened the enforcement capability of the Competition Authority.

In terms of competition law enforcement, we are not starting from scratch. The introduction of the measures I propose builds on what I believe is already a strong enforcement regime. Ireland is unique in Europe in having criminalised anti-competitive behaviour and since the introduction of the Competition Act in 2002, the Competition Authority has a good, indeed enviable, criminal enforcement record, seen from the viewpoint of other member states. A total of 32 criminal convictions have been secured since 2002 in respect of cartel behaviour in the form of price fixing by home heating oil companies in the west and by car dealerships in Leinster and countrywide.

Crimes under competition law are often viewed as victimless but where the operation of the free market is restricted by collusion or other nefarious practices, the result is that consumers, whether in heating their home or buying a car, pay more than should be the case. We are all the victims of such crimes. The State, and Senators and I as taxpayers, are the victims if companies engage in bid-rigging in respect of public procurement contracts or any of the services purchased by the State. In 2007, Mr. Justice McKechnie referred to price fixing as "particularly pernicious as it was against consumers in general and not just one or two individuals". The activities in question had, in the view of the judge, done a shocking disservice to the public at large. I share Mr. Justice McKechnie's view that "there are good reasons as to why courts should consider the imposition of custodial sentences in such cases". At present, the courts can impose fines up to the greater of €4 million or 10% of turnover, and a custodial sentence of up to five years. These are significant penalties that make our enforcement regime one of the strongest there is and I look forward to the day when the full rigours of the law are fully applied. It is interesting to note that during the sentencing in the price fixing case referred to, Mr. Justice McKechnie commented that he could see no room for a lengthy lead-in period before jailing convicted persons becomes commonplace under this legislation.

I turn now to the provisions of this Bill, as passed by the Dáil, and will explain what each is designed to achieve. Sections 1, definition, and 10, Short Title, commencement and collective citation and construction, of the Bill are standard legislative provisions while the core provisions of the Bill are contained in sections 2 to 9.

Section 2 amends the penalties set out in section 8 of the 2002 Competition Act and provides for larger increases in fines for competition offences across the board. I propose increasing the fine for criminal conviction of hard-core offences from €4 million to €5 million and doubling from five to ten years the maximum prison sentence for such a conviction. Fines for summary convictions are increased from €3,000 to €5,000 and the daily fine for a continuing contravention is also increased in respect of both summary and indictable offences.

As a further indication of how seriously I view these crimes, I propose that the Probation of Offenders Act 1907 will no longer be capable of applying to competition law offences. That Act allows a judge to dismiss a proven case based on the trivial nature of the offence, with the result that in such cases a conviction is not incurred against the defendant. I see nothing trivial about price fixing, bid rigging, or an abuse of dominant position. These practices act to the detriment competitors and consumers alike. Judges will no longer have the option to apply the Probation of Offenders Act where the Competition Authority or the Director of Public Prosecutions have proved a case. The conviction will be recorded and the guilty party punished in accordance with the enhanced enforcement regime.

From detection to investigation to prosecution, bringing an offender to justice can be a long, complex and expensive process. Investigations can span years as evidence is gathered and examined in a forensic manner. Witnesses must be questioned and their statements scrutinised in detail in order, first, to determine if the behaviour breaches the Act and, second, to build a case for the prosecution. This work is carried out by specialist investigators, economists and legal experts within the Competition Authority, in association with members of the Garda, including the bureau of fraud investigation. The cost to the State in undertaking such painstaking investigation can be sizeable. I am, therefore, providing that the court shall order a person convicted of an offence under the 2002 Act to pay to the Competition Authority or ComReg, where the anti-competitive practices are in the electronic communications sector, the cost of undertaking the detection, investigation and prosecution of the offence. The court shall measure the costs and expenses. However, where there are special and substantial reasons for not doing so, I am proposing that the court may decide not to order the payment of such costs.

Sections 3 and 4 result in the separation of the public and private enforcement regimes which currently are contained in a single section, section 14, of the 2002 Act. Section 3 strips the public enforcement right of action from this section 14, leaving it to provide for a right of private action for aggrieved persons, while section 4 recreates the public right of action for the Competition Authority and ComReg.

In so far as section 3 amends section 14, an aggrieved person may bring an action in the Circuit Court or High Court for relief by way of injunction, declaration and-or damages, including exemplary damages, where he or she shows loss as a result of anti-competitive behaviour prohibited by sections 4 or 5 of the 2002 Act or by Article 101 or 102 of the Treaty on the Functioning of the European Union. Where, on foot of a private action under section 14 of the 2002 Act, as amended by this section 3, a court finds that an undertaking has abused a dominant position, the court may require the undertaking to discontinue the abuse or to adopt measures for the purpose of ceasing or adjusting the dominant position by, for example, requiring the sale of assets of the undertaking. Clarity is also provided that the term "injunction" includes an interim injunction, an interlocutory injunction or an injunction of definite or indefinite duration.

Section 4 inserts a new section 14A into the 2002 Act, which gives the competent authority, which is either the Competition Authority or ComReg, a right to pursue civil enforcement measures for infringements. Mirroring the amended private enforcement regime I have just described, the Competition Authority or ComReg also have a right to apply to the Circuit Court or High Court in respect of any agreement, decision, concerted practices or abuse that is prohibited under sections 4 and 5 of the 2002 Act and Articles 101 and 102 of the treaty. Where a case is proven, the court may order an interim or interlocutory injunction, an injunction of definite or indefinite duration or give a declaration that the behaviour in question is in breach of section 4 or 5 of the Act or Articles 101 or 102 of the treaty. The court may also require the discontinuance of an abuse of a dominant position or require corrective measures to be taken by the undertaking.

Section 5, introduced as an amendment to the Bill in the Dáil, provides that the High Court can make a court order in respect of an agreement entered into by the Competition Authority and an undertaking. This will go a long way towards further strengthening competition law.

Where the authority carries out an investigation into an alleged breach of the Competition Act, it can and does enter into commitments or agreements with the undertaking under investigation. This undertaking, without an admission of liability, will agree to either cease and desist from certain behaviour or agree to act in a particular manner. In return for this agreement, the authority agrees not to initiate proceedings under this Competition Act, thus avoiding the significant legal fees and the deployment of huge resources that a criminal or civil prosecution entails. Such agreements are enforceable as a matter of contract law. However, should the undertaking renege on its agreement, the authority is required to go to court to ensure the undertaking complies with the terms of his or her agreement. This involves an examination of the alleged anti-competitive behaviour which can involve complex economic evidence.

What the Bill now provides is a statutory mechanism which will permit the authority 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 would be a contempt of court. In these 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 sequestration for 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 court order.

The section also provides guidance to the High Court on the factors it must take into consideration when deciding on an application. It provides for third party rights to have the order varied or annulled where the third party is affected by the order, and it contains a seven year sunset clause for a court order with the possibility of renewal.

Sections 6 and 7, which were also introduced to the original Bill as amendments in the Dáil, both contain a cross reference amendment arising from the introduction of separate civil enforcement regimes - section 14 for private rights of action and section 14A for public enforcement.

Section 6 also extends from 14 to 35 days the time limit within which the Competition Authority is required to provide a copy of any of the books, documents or records seized by the authority during a search carried out during an investigation.

When the authority carries out an investigation into alleged breaches of the Competition Act, its authorised officers, on foot of a District Court warrant, are entitled to seize and retain books, documents and records, including records that are held electronically. Since the introduction of the 2002 Act, there have been significant developments in the area of technology and computing.

The authority has found it increasingly difficult to make and return copies of electronically stored records within the 14 day deadline contained in that Act. The problem is made worse when the authority has to conduct multiple simultaneous searches at different sites. Given the exponential development in computing and the fact that the authority is increasingly having to seize ever larger and more complicated computer systems during its investigations, this issue is likely to grow in the future. This has led to a number of searches that were planned to be put on hold while alternatives can be looked at.

Extending the deadline currently provided for in section 45(7) to a period of 35 days is a practical solution and it will also help strengthen the enforcement of competition law in Ireland in keeping with the commitment to the EU-IMF.

Europe-wide there are well recognised difficulties in pursuing private litigation for damages in respect of competition law breaches. I want to make it easier for people to take such private actions in this jurisdiction. I am providing that where, following proceedings under Part 2 of the 2002 Act for a breach of section 4 or 5 or Articles 101 or 102 of the treaty, a private litigant taking a follow-on action in respect of the same breach shall, by virtue of section 8 of this Bill, be able to rely on the court's finding of a breach and it shall not be necessary for the second litigant to also prove that the conduct was prohibited. By easing an element of the burden of proof facing a private litigant, I am seeking to facilitate an increased number of private actions, thus to some extent easing the burden on the State resources in pursing public enforcement but also ensuring that the State is a facilitator for subsequent private actions.

At present, a person convicted on indictment of a breach of competition law is automatically disqualified under section 160 of the Companies Act 1990 from being a company director or from being in any manner involved in the promotion, formation or management of a company. That section also provides for a discretionary disqualification for summary company law offences. In section 9of this Bill I am proposing that this discretionary disqualification provision be extended to all contraventions of sections 4 or 5 of the 2002 Act and Articles 101 or 102 of the treaty. In keeping with the discretionary disqualification provisions set out in section 160 of the 1990 Companies Act, the High Court may decide itself or may decide on foot of an application by the Competition Authority or ComReg to make a disqualification order for such period as the court sees fit. This additional sanction will act as a deterrent for those engaging in or contemplating engaging in anti-competitive practices and ties in with the overall thrust of this Bill.

I want to send a clear and unequivocal message to business people and consumers alike that anti-competitive practices will not be tolerated. Offenders will be prosecuted and feel the full brunt of the law. These new deterrents should give further pause to would-be and current cartelists and I strongly urge the courts to follow, where appropriate, the words of Mr. Justice McKechnie and apply the full rigours of the law.

The concept of civil fines was debated at some length both before the publication of the Bill and during the various Stages in the Dáil. By way of background, the memorandum of understanding with the EU-IMF contains a number of structural reforms, of which legislation to strengthen competition law is just one. The purpose of these structural reforms is to open up competition in all areas of the economy and to increase the deterrents for anti-competitive practices. The initial intent of the European Commission in seeking a commitment derived from its desire to see the introduction of civil fines in respect of competition law.

Breaches of competition law are criminal offences, prosecuted to the high standard of beyond reasonable doubt with substantial monetary and custodial penalties available to the courts where a defendant is found guilty. Elsewhere in Europe, the national courts or the national competition authority can impose punitive fines in respect of breaches of competition law. Such a regime is in keeping with their civil law systems. I am advised by the Attorney General that the concept of civil fines is not in keeping with the Constitution and common law system. Therefore, in order to comply with the spirit of the EU and IMF commitment, a suite of alternative enforcement measures was drawn up to strengthen the effective enforcement of Irish competition law. These are in the Bill before the House.

The Attorney General has advised introducing legislation to decriminalise sections 4(1)(d) and (e) and section 5 of the Competition Act 2002, otherwise known as non-hardcore offences, and to introduce civil fines to lower the burden of proof from beyond all reasonable doubt to the civil test of on the balance of probability would pose constitutional difficulties having regard to the protections afforded by Article 38.1 of the Constitution. The Competition Authority and troika have acknowledged that there are constitutional problems with civil fines.

On the wider competition arena, following enactment of this Bill my next legislative priority in this area will be the consumer and competition Bill to give effect to the amalgamation of the Competition Authority and the National Consumer Agency. As both bodies were established under statute, it is necessary to give effect to the newly merged body by way of primary legislation. The Government approved the drafting of the Bill in July 2011. Since being announced as part of the rationalisation plan for State agencies during the 2009 budget speech, my Department has continued to work with both bodies to ensure a smooth transition from the two separate entities to a single dual functioning body responsible for competition and consumer protection.

The Bill will also update existing competition law on foot of a review of the operation and implementation of the 2002 Act, strengthen the public interest test in respect of media mergers in line with the report of the advisory group on media mergers, make some minor amendments to consumer protection legislation and provide for a practice for doing business in the grocery goods sector. While this all-encompassing approach to draft legislation has, to some extent, delayed legislation for the rationalisation of the two agencies, we will be better served in the long run by a single legislative measure that establishes the new agency and provides for the combined and updated consumer competition code.

I know Senators are awaiting publication of the Bill and may avail of the opportunity of the Bill before us to progress issues contained in the other Bill. However, I urge them to wait. The matters to be included in the comprehensive consumer and competition Bill will be considered and debated in due course and, no doubt, in great detail, as is appropriate. I look forward to working with Senators on the Bill before the House and will be happy to reply to any questions that arise. I commend the Bill to the House.