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    FEED FORUM 2004Competition Law Implications for the Grain and Feed Sectors

    Karen Gibbons

    11 November 2004

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    What is competition law all about?

    Ensuring firms compete for business on the basis of their

    ability to serve customers

    Todays purpose:

    Look to challenges and opportunities posed by competition law

    ow you o ge an un ers an ng o e ssues Facilitate discussion

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    The Challenges:

    Legal Consequences of Breach of Competition Law

    Imprisonment terms of up to five years for certain offences

    Possible fines up to 4 million

    Key provisions in agreements being unenforceable

    v ac on nc u ng ac ons or amages y r par essuch as competitors

    Civil action by the Competition Authority

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    The Challenges:

    Non-Legal Consequences of Breach of Competition Law

    Management time and resources used in dealing with an

    investigation

    Negative publicity

    Ongoing surveillance by the Authority

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    Competition Law - Prohibitions

    Anti-competitive agreements between businesses (Section 4

    of the Competition Act, 2002 (CA 2002) and Article 81 of the

    EC Treaty)

    Abusive behaviour by businesses in dominant market

    Treaty)

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    Section 4/Article 81

    Prohibits agreements between undertakings, decisions by

    associations and concerted practices

    Which have as their object or effect

    Prevention, restriction or distortion of competition

    In trade in goods services in the State or part of it/betweenMember States of EU

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    Examples of prohibited practices under Section 4/Article 81

    Agreeing prices

    Estuary Fuels

    Agreeing to limit production

    Sharing markets

    Home heating oil Collective boycotts/blockades

    ITAA/Ryanair

    Natural Dairies

    Drogheda farmers

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    Drogheda Farmers Case

    Summary criminal prosecution by Authority

    Initial convictions in District Court Circuit Court appeal

    Convictions overturned

    Lessons to be learned

    Criminal convictions difficult to obtain

    Contrast with Natural Dairies case

    Agreement having object of distorting competition

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    Abuse of a Dominant Position

    Dominance ability to act independently of suppliers,

    competitors and consumers

    Both a purchaser and a supplier can be dominant

    Indicators of dominance

    Your market share Your competitors market share

    Barriers to market entry/exit

    Mobility/contestability of market

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    Examples of Abuse

    Discriminatory prices

    Predatory behaviour Tying

    Irish League of Credit Unions

    Blemings v- MPP Refusal to deal

    Chanelle Veterinary Products Ltd v Pfizer (Ireland) Ltd

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    Definition of markets

    Product market

    Substitutability

    Geographic market

    Identification of players

    What is their market share?

    Analysis of behaviour

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    The Competition Authority

    Investigation of Breaches

    Dealing with complaints

    200 complaints received in 2003

    5 full investigations

    Enforcement powers Summon witnesses (69 in 2003)

    Dawn raid searches (21 warrants in 2003)

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    Civil Proceedings

    Cases by Authority:

    Beef Industry Development Society

    Licensed Vintners Association

    Irish League of Credit Unions

    Private cases: Chanelle v- Pfizer

    Donovan v- ESB

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    Criminal Proceedings

    Advise Director of Public Prosecutions

    Home heating oil

    Prosecute more minor offences

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    Reach Settlements

    Settlements reached in 2003:

    Newspapers Irish Independent & Irish Times

    Statoil

    Glassmatix Estimation Systems

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    Investigation of Mergers

    Merger = 2 or more undertakings, previously independent of

    one another, merge

    Notification may be advisable

    self-assessed on basis of criteria

    Notification and clearance gives immunity from section 4&5 Authority may investigate

    Monaghan Middlebrook Mushrooms Limited/Carbury

    Mushrooms

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    Challenges and Opportunities

    Competition Law Compliance

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    Opportunities:

    Competition Law A Sword

    Competition Law can come to your aid where:

    Parties are colluding to put you out of business by e.g. refusingto supply you

    Parties seek to bundle goods together, e.g. only supply one

    product on the condition that one or more other products arealso purchased

    Excessive prices are being demanded by a large player on the

    supply market

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    Opportunities:

    Competition Law A Shield

    Competition Law can act as your defence where:

    Parties try to pressurise you to agree or fix prices, terms andconditions, costs or marketing plans

    Parties seek an exchange of confidential information relating to

    your business with you Parties seek to agree to share markets or customers with you

    Parties attempt to control the price at which your goods are

    sold.Recommended

    means just what it says, nothing more. Collective boycott or blockade

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    Opportunities:

    What can you do?

    Complain to Competition Authority

    Complain to EC Commission

    Litigate

    Seek in unction

    Seek damages

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    Trade Association Membership

    Membership of a trade association can raise suspicion

    because it involves co-operation between competitors

    Section 4 of Competition Act, 2002 covers decisions by

    associations of undertakings

    nc u es: Constitution or rules of a trade association

    Recommendations including non-binding recommendations

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    Trade Associations as focus of an investigation:

    Beef Industry Development Society

    Irish Veterinary Union

    Irish League of Credit Unions

    Soft Drinks Beer Bottlers Assocation

    Licensed Vintners Association

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    Permissible Trade Association Activities

    Codes of conduct e.g. customer complaints procedure

    Lobbying providing general information on the industry as a

    whole

    Standard terms and conditions of sale/purchase only where

    use s vo un ary Certification Systems

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    What must a trade association avoid doing?

    Exchanging confidential information on pricing, market

    opportunities, customers etc.

    Boycotts - agreeing not to deal or trade with a particular

    business

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    Dos and Donts of competition law for individual

    companies Do:

    Limit interaction with competitors

    Be aware of the topics that you should not discuss withcompetitors and how to behave if others raise these subjects

    void use of words such as dominance

    destroying a competitorsqueezing out a competitor, eliminating a competitor

    Seek legal advice when you are uncertain about whether

    something might be anti-competitive Keep all correspondence/other communication from external

    legal advisors in a separate file clearly marked to show itscontents

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    Do not Allow a competitor to talk to you about anything anti-

    competitive

    Refuse to supply customers without first seeking legal advice ifyou are a major producer

    you are a major producer Engage in collective action with other producers

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    Challenges:

    Coping with a Dawn Raid

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    Coping with a Dawn Raid

    What are Dawn Raids?

    Unannounced visits by inspectors of the Irish Competition

    Authority or the European Commission

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    Dawn Raid Powers

    Unannounced visit to business (factory or office) and private

    home

    Gardai present

    Power to seize original documents and access all data

    nc u ng compu er recor s

    Power to ask questions

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    Dawn Raid Be Prepared

    Staff awareness

    Inspect warrant

    What are you required to give them?

    Legal privilege

    Answering questions

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    Challenges & Opportunities

    Use Competition Law as a sword and a shield

    Be Competition Compliant

    Be prepared

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    Karen Gibbons

    Matheson Ormsby Prentice30 Herbert StreetDublin 2

    T: +353 1 6199000F: + 353 1 6199010E: [email protected]

    W: www.mop.ie