The PublicCompetitionEnforcement

Review

Law Business Research

Third Edition

Editor

Shaun Goodman

Th

e Pu

blic C

om

petition

Enfo

rc

emen

t Rev

iewT

hir

d Ed

ition

LawBusinessResearch

LawBusinessResearch The Official Research Partner of

the International Bar AssociationStrategic research partners of the ABA International section

ISBN 978-1-907606-16-8

The Public CompetitionEnforcement Review

Reproduced with permission from Law Business Research.

This article was first published in The Public Competition EnforcementReview - Third Edition,

(published in June 2011 – editor Shaun Goodman).

For further information please email Adam.Sargent@lbresearch.com

THIRD EDITION

The Public Competition Enforcement

Review

Third Edition

EditorShaun Goodman

Law Business Research Ltd

PuBLiShER Gideon Roberton

BuSinESS dEvELoPmEnT manaGER

adam Sargent

maRkETinG manaGERS nick Barette, hannah Thwaites

maRkETinG aSSiSTanT

Robin andrews

EdiToRiaL aSSiSTanT Lydia Gerges

PRoduCTion manaGER

adam myers

PRoduCTion EdiToR davet hyland

SuBEdiToRS

Sarah morgan, Caroline Rawson

EdiToR-in-ChiEf Callum Campbell

manaGinG diRECToR

Richard davey

Published in the united kingdom by Law Business Research Ltd, London87 Lancaster Road, London, W11 1QQ, uk

© �011 Law Business Research Ltdwww.TheLawReviews.co.uk

© Copyright in individual chapters vests with the contributors no photocopying: copyright licences do not apply.

The information provided in this publication is general and may not apply in a specific situation. Legal advice should always be sought before taking any legal action based on the information provided. The publishers accept no responsibility for any acts or

omissions contained herein. although the information provided is accurate as of June �011, be advised that this is a developing area.

Enquiries concerning reproduction should be sent to Law Business Research, at the address above. Enquiries concerning editorial content should be directed to the

Publisher – gideon.roberton@lbresearch.com iSBn 978-1-907606-16-8

Printed in Great Britain by Encompass Print Solutions, derbyshire Tel: +44 844 �480 11�

i

aCknoWLEdGEmEnTS

The publisher acknowledges and thanks the following law firms for their learned assistance throughout the preparation of this book:

advokaTSko dRuzhESTvo andREEv, SToyanov & TSEkova in cooperation with SChoEnhERR

aRnoLd BLoCh LEiBLER

aRThuR Cox

CLEaRy GoTTLiEB STEEn & hamiLTon LLP

CuaTRECaSaS, GonçaLvES PEREiRa RL

d’EmPaiRE REyna aBoGadoS

dLa PiPER

dRyLLERakiS & aSSoCiaTES

ELvinGER, hoSS & PRuSSEn

ESTudio BERGSTEin

fERRada nEhmE

fiLiPov, PETRoviC, JERaJ, faBiani o.P. d.o.o. in cooperation with SChoEnhERR

fRoRiEP REnGGLi

GidE LoyRETTE nouEL

JiPyonG & JiSunG aTToRnEyS aT LaW

khaiTan & Co

kiRkLand & ELLiS LLP

L PaPaPhiLiPPou & Co

LEE and Li, aTToRnEyS-aT-LaW

maRQuES GiLBERTo & oLivEiRa fELix advoGadoS

ii

maRvaL, o’faRRELL & maiRaL

mcCaRThy TéTRauLT LLP

moRavCEviC voJnoviC zdRavkoviC in cooperation with SChoEnhERR

niELSEn nøRaGER

niShimuRa & aSahi

noERR o.o.o.

noRTon RoSE LLP

RaJah & Tann LLP

RiTCh muELLER, SC

SChoEnhERR

STEPanovSki, PaPakuL & PaRTnERS

STiBBE BRuSSELS

voGT & WiiG

vouGa & oLmEdo LaW fiRm

zhonG Lun LaW fiRm

acknowledgements

iii

Editor’s Preface .................................................................................................ix Shaun Goodman

Chapter 1 Argentina ................................................................................. 1Alfredo O’Farrell and Miguel del Pino

Chapter 2 Australia ................................................................................ 14Zaven Mardirossian

Chapter 3 Austria ................................................................................... 34Franz Urlesberger and Anastasios Xeniadis

Chapter 4 Belarus ................................................................................... 50Tatiana Ignatovskaya and Yana Chirko

Chapter 5 Belgium ................................................................................. 58Hendrik Viaene and Delphine Gillet

Chapter 6 Brazil ..................................................................................... 7�André Marques Gilberto, Natália Oliveira Felix and Natali de Vicente Santos

Chapter 7 Bulgaria ................................................................................. 8�Christoph Haid and Mariya Papazova

Chapter 8 Canada ................................................................................... 90Randy Hughes, Donald Houston, Oliver Borgers and Michele Siu

Chapter 9 Chile .................................................................................... 110Sander van der Voorde and Benjamín Mordoj

Chapter 10 China ................................................................................... 1�0Wu Peng, Michael Z P Gu and Xue Yi

Chapter 11 Croatia ................................................................................. 137Christoph Haid

Chapter 12 Cyprus ................................................................................. 148Stephanos Mavrokefalos

ConTEnTS

Contents

iv

Chapter 13 Czech Republic ................................................................... 154Martin Nedelka and Mario Vogl

Chapter 14 Denmark ............................................................................. 161Henrik Peytz and Katrine Lapp

Chapter 15 European Union .................................................................. 173Shaun Goodman and Sarah Jordan

Chapter 16 France .................................................................................. 197Mélanie Thill-Tayara and Marta Giner Asins

Chapter 17 Germany .............................................................................. �1�Silke Heinz and Anna Rolova

Chapter 18 Greece .................................................................................. ��5Emmanuel Dryllerakis

Chapter 19 Hungary .............................................................................. �33Miklós Molnár and Christoph Haid

Chapter 20 India .................................................................................... �46Manas Kumar Chaudhuri

Chapter 21 Ireland ................................................................................. �57Pat O’Brien and Fiona McKeever

Chapter 22 Italy ...................................................................................... �70marco d’ostuni and kostandin Peçi

Chapter 23 Japan .................................................................................... �79Kozo Kawai, Futaba Hirano and Tomoyuki Numata

Chapter 24 Korea ................................................................................... �95hyung Sam Park

Chapter 25 Luxembourg ........................................................................ 306Léon Gloden

Chapter 26 Mexico ................................................................................. 317Octavio Olivo Villa

Chapter 27 Norway ................................................................................ 330Christian Bjørtuft Ellingsen and Tage Brigt A Skoghøy

Chapter 28 Paraguay .............................................................................. 34�Julia Schmidt, Jose Ignacio Olmedo and Fernando Gadea

Contents

v

Chapter 29 Poland.................................................................................. 349Dariusz Tokarczuk and Szymon Chwaliński

Chapter 30 Portugal ............................................................................... 359Frederico Pereira Coutinho and Rita Leandro Vasconcelos

Chapter 31 Romania .............................................................................. 369Franz Urlesberger and Mihai Radulescu

Chapter 32 Russia .................................................................................. 381Ilia Rachkov and Tatiana Galakhova

Chapter 33 Serbia ................................................................................... 394Srđana Petronijević and Christoph Haid

Chapter 34 Singapore ............................................................................. 408Kala Anandarajah

Chapter 35 Slovakia ............................................................................... 4��Martin Nedelka and Mario Vogl

Chapter 36 Slovenia ............................................................................... 4�9Christoph Haid and Vid Kobe

Chapter 37 Spain .................................................................................... 44�Juan Jiménez-Laiglesia, Arantzazu Ruiz, Luis Sotelo and Ceyhun Pehlivan

Chapter 38 Switzerland .......................................................................... 457Alessandro Celli, Boris Wenger and Nicolas Diebold

Chapter 39 Taiwan ................................................................................. 468Stephen Wu, Rebecca Hsiao and Wei-Han Wu

Chapter 40 Ukraine ................................................................................ 486Franz Urlesberger and Pavel Grushko

Chapter 41 United Kingdom ................................................................. 494Shaun Goodman and Annabel Borg

Chapter 42 United States ....................................................................... 509Ian Conner

Chapter 43 Uruguay ............................................................................... 5�0Leonardo Melos

Chapter 44 Venezuela ............................................................................. 530José H Frías

Contents

vi

Appendix 1 aBouT ThE auThoRS .................................................. 539

Appendix 2 ConTRiBuTinG LaW fiRmS’ ConTaCT dETaiLS .. 563

ix

Editor’s prEfacE

While 2010 largely represented a return to ‘business as usual’ for the Us and EU authorities following the challenges of 2009 in responding to the financial crisis, the year also saw the arrival of a number of new players on the antitrust enforcement stage.

foremost among this new breed is the competition commission of india (‘cci’), which took rein of its functions in March 2009, charged with investigating all trade-related competition disputes in india. in its first decision, adopted in december 2010, the cci rejected a complaint that banks and home finance companies in india had acted anti-competitively by imposing prepayment penalties on borrowers switching lenders to obtain improved rates or facilities. The decision displays an admirable confidence for a new regulator, choosing to adopt as its first decision not only a finding of non-infringement, but also one that has apparently attracted the ire of the banking regulator, the reserve Bank of india. With a compendium of ongoing cases across a diverse range of sectors including cement, glass, sugar, air transport and oil, the cci looks set to assert its authority from the outset.

More established, but no less active, is russia’s federal antimonopoly service (‘fas’). according to recent statistics published by the fas, the authority initiated a staggering 5,437 competition cases during the first six months of 2010, including 1,289 cases related to abuse of a dominant market position, 277 cartel cases, 2,907 cases of anti-competitive actions by public authorities and 427 cases of unfair competition. Notable among the fas’s early successes was its decision of december 2010 finding that three companies engaged in the production and wholesaling of power-generating coal had infringed the competition act by participating in anti-competitive agreements aimed at fixing prices for power-generating coal and allocating the market among themselves. criminal proceedings have also been initiated in the same case by the Ministry of the interior. The case is notable as the first occasion on which the fas has investigated

Editor’s Preface

x

and proved a cartel existed in close cooperation with the Ministry, and on the basis of materials and information obtained through investigative activities, including court-sanctioned interception of telephone communications.

Not to be outdone, during the last week of 2010, two of china’s antitrust enforcement agencies, namely the National development and reform commission (‘Ndrc’) and the state administration for industry and commerce (‘saic’) respectively issued the long-awaited rules implementing the anti-monopoly Law of the prc (‘aML’). These new rules clarify key areas of the agencies’ antitrust enforcement practice, in particular, the constituent elements of monopoly agreements and abuse of dominance, and the defensive justifications potentially available to undertakings. The rules also provide practical guidance on investigative procedures, the leniency programme and delegation of investigation powers, and address certain key concerns. The new rules, which came into force on 1 february 2011, represent a significant milestone in the effective enforcement of the aML.

These developments confirm the increasingly global nature of public antitrust enforcement, and reinforce the importance of cooperation and convergence at all levels, both public and private.

as ever, i would like to thank all of the contributors for their support and cooperation in the preparation of this review, and the publishing team at Law Business research for their encouragement and enthusiasm.

Shaun GoodmanKirkland & Ellis international LLpLondonJune 2011

257

Chapter 21

IrelandPat O’Brien and Fiona McKeever*

I OVERVIEW

i Prioritisationandresourceallocationofenforcementauthorities

The Irish Competition authority (‘the authority’) is responsible for enforcing Irish and eC competition law within Ireland. To carry out its enforcement function, the authority is organised along six divisional lines, which correspond to the authority’s areas of activity. each division is headed by one of the members of the authority.

during the course of 2010, the authority was lead by four members, three of whom were on temporary six-month contracts. In early 2011, the fourth member announced his decision to leave the authority.1 This upheaval in the leadership of the authority as well as other departures at a lower level affected its allocation of resources and workload throughout 2010. notwithstanding this, its strategy remains focused on cartel detection.

The Cartels division continues to be the most resourced division within the authority, reflecting the priority given to detecting, investigating and prosecuting cartels.2 during 2010, the division comprised nine staff,� including one detective

* Pat O’Brien and Fiona McKeever are partners at arthur Cox.1 Section �5(1) Competition act 2002 provides that the membership of the authority shall

consist of a chairperson and between two and four other whole-time members. This means in order to be quorate, at least two more Members must be appointed to the authority. a quorum is a requirement for taking merger control decisions and instituting proceedings.

2 enforcement against cartels is one of the authority’s ‘strategic goals’ which is set out in its Strategy Statement for 2009–2011. The Competition authority’s mission statement is ‘[t]o ensure that competition works well for consumers and the Irish economy’. To fulfil this, the Competition authority has identified five ‘strategic goals’: raising awareness, enforcement, merger review, compliance and advocacy.

� down from 11 in 2009.

Ireland

258

sergeant on secondment from the Garda Bureau of Fraud Investigation (‘GBFI’). The division’s staff is generally made up of former members of other law enforcement agencies experienced in investigating white-collar crimes. This division is responsible for the initial investigation of an alleged cartel and the preparation of a file to be sent to the director of Public Prosecutions (‘dPP’) if the authority recommends a trial prosecution. The dPP is ultimately responsible for bringing criminal proceedings on indictment against individuals and companies. during 2010, the Cartels division was headed by Mr Gerald FitzGerald.

The second largest division within the authority continues to be the Monopolies division, which investigates non-hard-core infringements of the competition rules such as non-cartel agreements (e.g., resale price maintenance and other vertical agreements) and abuse of dominance cases. during 2010, this division comprised a team of seven members of staff. If an investigation results in obtaining evidence of an infringement, the division may initiate civil proceedings before the court seeking declaratory or interlocutory relief but not civil fines or damages. The authority has also in the past entered into settlement agreements with companies to close investigations without having recourse to civil litigation. during 2010, the division was headed by Mr Stanley Wong, who left the authority in early 2011.

The remaining staff are positioned in four other divisions, responsible for mergers, corporate services, advocacy and policy.

ii Enforcementagenda

The authority’s enforcement regime is primarily focused on deterring hard-core price-fixing, bid-rigging and market-sharing cartels, which the authority considers to be serious crimes against the public. during 2010, the authority received �1 new complaints of alleged criminal cartel behaviour, in addition to continuing a number of ongoing investigations. One file has been sent to the dPP with a recommendation to prosecute on indictment. The authority has indicated that the file was extremely complex.

In light of the authority’s strategic goals it is anticipated that enforcement of competition law through the criminal courts will remain a priority during 2011, although it remains to be seen the extent to which the continuing personnel changes will affect delivery of this objective. Civil enforcement of non-cartel activity is also likely to remain a priority for the authority, particularly abuse of dominance cases.

II CARTELS

i Significantcases

Irish competition law is contained in the Competition act 2002 (‘Competition act’). although it is modelled on the competition provisions of the eC Treaty, now Treaty on the Functioning of the european Union (‘TFeU’), there are some differences between the two regimes in terms of substance, burden of proof and penalties. These are briefly described below.

Section 4(1) of the Competition act (‘Section 4’), is based on article 101(1) TFeU. arrangements that infringe Section 4(1) of the Competition act will not be unlawful where they satisfy the efficiency conditions listed in Section 4(5), which are the

Ireland

259

same criteria as those listed in article 101(�) TFeU. Section 5(1) of the Competition act (‘Section 5’) prohibits the abuse of a dominant position in Ireland, or any part of Ireland and is modelled on article 102 TFeU (‘article 102’).

all infringements of Sections 4 and 5 are criminal offences and can be tried either summarily, that is in the lower criminal courts, or on indictment. all convictions on indictment carry a penalty of a fine not exceeding the greater of €4 million or 10 per cent of the turnover of undertaking in the previous completed financial year. any person convicted of an indictable offence is deemed disqualified from being a director for five years from the date of conviction.4 an important feature of the Irish legislative framework is enforcement through the courts system. Unlike the european Commission (‘the Commission’), the authority may not issue an infringement decision, or fine individuals or companies.

Irish legislation distinguishes cartel offences as described in Section 6(2) of the Competition act5 and other anti-competitive behaviour in two manners: first, the evidential burden on the prosecutor is lessened in relation to the first category, and second, cartel activity is punished more harshly than non-cartel activity.

In particular, when prosecuting cartel offences, the court must presume that those activities have as their ‘object’ the prevention, restriction or distortion of competition, unless the defendant can prove otherwise. The prosecution thus has to prove less of the constituent elements of the crime when prosecuting cartel offences. Second, on conviction of a cartel offence, in addition to being fined, an individual can be sentenced to five years’ imprisonment. no other competition offence carries a custodial sentence. The reversal of the burden of proof, and the tougher sentencing regime reflect the fact that cartels are generally considered to have no consumer welfare enhancing attributes, therefore the prosecution of such offences should be made easier and the penalty should be sufficiently harsh so as to promote deterrence.

Criminal conviction successes Criminal sentences were first imposed by the courts in 2002 against companies and individuals involved in cartel activities, affecting many industrial sectors including petrol retailing, home heating and motor vehicles. Since 2002, two convictions secured by the dPP were european firsts.

4 Section 160(1) of the Companies act, 1990.5 Cartel activities are not defined as ‘cartels’ as such but are covered by Section 6(2) of the

Competition act as: ‘an agreement between competing undertakings, a decision made by an association of competing undertakings, a decision made by an association of competing undertakings or a concerted practice engaged in by competing undertakings the purpose of which is to: (1) directly or indirectly fix prices with respect to the provision of goods or services to persons not party to the agreement, decision or concerted practice, (2) limit output or sales, or (�) share markets or customers’.

Ireland

260

October 2005 saw the first person being sentenced to six months’ imprisonment, suspended for one year, which was the first custodial sentence to be imposed on an individual for a cartel offence in europe.6

another first followed in March 2007 when the dPP secured a conviction following a jury trial. The case of DPP v. Denis Manning7 remains one of the most important competition law criminal case brought before the Irish courts. Central to that judgment was Judge McKechnie’s position that custodial sentences for individuals should become commonplace, rather than exceptional, on conviction of cartel activities.

Developments in 2010The major cartel enforcement event of 2009 was the judgment of Judge McKechnie in DPP v. Patrick Duffy where Judge McKechnie identified the factors that courts should consider when approaching the sentencing of individuals convicted of a cartel offence and in particular whether any of these factors could be considered as mitigating features. He considered the position of the defendant under a number of headings, some of which merit comment here.8

The court considered whether the offence was out of character or was a first offence. The court downplayed the relevance of this for sentencing purposes of cartel convictions. Given the nature of cartel activity, the Court held that it was unlikely that any defendant would have committed a prior offence. The Court also considered whether the defendant had pursued any lawful aims. again, the court downplayed the relevance of this factor. although the trade association originally had a legitimate purpose, the court stated that ‘legal activities do not shroud or insulate illegal ones with any form of justification or mitigation.’

The court also considered the application of one other principle, which is the principle of equality before the law. Prior to the prosecution of Mr duffy, two other prosecutions arising out of the same cartel, which were heard in the lower courts, resulted in suspended custodial sentences for the two individuals involved. Judge McKechnie stated that had he dealt with those cases he would not necessarily have imposed the sentence that the court imposed on those individuals. He considered himself, however, to be constrained by those two precedents and the principle of equality before the law, and had to deal with Mr duffy in a similar manner to the two earlier convictions. Consequently, ‘fortunate from Mr duffy’s point of view’, Mr duffy was sentenced to a sentence of six and nine months (for two convictions), suspended for five years.

6 Mr J P lambe pleaded guilty to aiding and abetting Corrib Oil Company in the commission of a criminal offence in the dublin Circuit Court.

7 DPP v. Denis Manning, unreported judgment, 9 February 2007.8 The complete list of factors were: ‘out of charater/first offence/unlikely to re-offend’; ‘distress/

coercion’; ‘some lawful aims’; ‘‘object’/‘effect’ offences’; ‘cheating’; ‘cooperation’; ‘guilty plea’; and ‘ancillary order’.

Ireland

261

2010 did not result in any major criminal successes for the authority or the dPP. In early 2010, the dPP initiated a case alleging bid-rigging before the higher criminal courts, the Central Criminal Court. a trial date has been fixed for June 2011.9

One of the major cartel investigations that the authority has undertaken in recent years related to a home-heating oil price-fixing cartel in the west of Ireland resulting in 17 criminal convictions. In 2010, one case from its investigation remains outstanding. In DPP v. Patrick Hegarty, the defendant challenged the proceedings against him on the basis that the prosecution had not first issued proceedings against his employer and secured a conviction. The defendant’s case is that he cannot be convicted unless his employer has first been convicted. The Irish Supreme Court heard the parties’ legal arguments in november, 2010 and has indicated that it will issue its judgment in 2011.

ii Trends,developmentsandstrategies

2009 saw a clear hardening of judicial attitudes towards individuals engaged in cartel activity and the penalties being imposed on them following conviction. 2010 did not result in any major criminal success for the authority but it is likely that judicial attitudes will not be affected by the absence of cases in the short term.

One of the strategies adopted by the authority to increase the effectiveness of its enforcement is to encourage individuals or companies that may have been involved in cartel activity to come forward to the authority and ‘blow the whistle’ on the cartel. In return for being the first to provide evidence to the authority, the individual or company (provided that person is not the ringleader in the cartel) can avail of the cartel immunity programme jointly operated by the dPP and the authority. It is not clear the extent to which individuals or corporations have availed of this programme as detailed information on its operation is not made public, although the authority has indicated that it continues to be active.10 during 2010, the authority had a consultation on the operation and proposed revision of the Cartel Immunity Programme. according to the authority: ‘[t]he Programme has been instrumental in providing important sources of evidence for the investigations of alleged cartel activity.’11

The importance of the Programme appears even greater in circumstances where the authority did not obtain any search warrants permitting them to carry out dawn raids. 2011 should see publication of the revised Programme.

iii Outlook

during the prosecution of cartel offences, the authority encountered significant challenges, which were more formidable than those normally encountered in prosecuting other crimes. as a consequence, the authority has called for changes to the current legislative framework that will improve its investigative tools and the protection of

9 DPP v. Oliver Dixon (and others).10 arthur Cox has represented a number of companies who have considered making an application

under the Irish Programme and the summary application under the eCn model.11 Competition authority annual report 2010.

Ireland

262

sources, and enhance the penalties and deterrents that apply under Irish legislation.12 a draft had been expected to become available during the course of 2010, however this did not take place. a draft may now be delayed again following the General election in Ireland in February, 2011.

If the authority is successful in having its proposals signed into law, the outlook for public enforcement of competition law is one of a strengthening regime. revised legislation, coupled with the very clear judicial statements that have been expressed on convicting those involved in cartel activity, means that enforcement of cartel activity is moving inexorably towards non-suspended sentencing.

III ANTITRUST: RESTRICTIVE AGREEMENTS AND DOMINANCE

i Significantcases

The BIDS case during 2010, the Competition Authority v. Beef Industry Development Society (BIDS) case came again before the High Court.

The importance of this case became clearer in 2010 with the decision by the european Commission to submit written observations to the Court. This is only the fourth time that the Commission has intervened in this way before a national court.

This case involved an agreement between competitors to reduce capacity in the Irish beef processing industry. The agreement involved the major players in the industry agreeing to pay those players who would voluntarily leave the industry. In return for that payment, the players leaving would agree to decommission their plants, refrain from using the associated lands for processing for a period of five years and sign a two-year non-compete clause with regard to processing anywhere in Ireland.

The Competition authority took the view that the scheme was incompatible with both Section 4(1) and article 101(1) of the TFeU and took legal action in 200�. The case has gone through a number of stages since then.

In July 2006, the High Court held that the agreement had neither the object nor the effect of preventing, restricting or distorting competition and therefore did not breach article 101 TFeU.

The Competition authority appealed this judgment to the Supreme Court.In March 2007, the Supreme Court sought a preliminary ruling from the

european Court of Justice (‘eCJ’) on the question of whether an agreement like the BIdS agreement, where the competitors in that industry agreed between themselves to restructure the entire industry, had the object of restricting competition.

On 20 november 2008, the eCJ found that the BIdS agreement had as its object the restriction of competition and was incompatible with article 101(1) TFeU.

On � november 2009, the Irish Supreme Court held that the BIdS agreement had infringed article 101(1) TFeU but could satisfy each of the conditions of article

12 S/07/008 Competition authority submission to the department of enterprise, Trade and employment, december 2007.

Ireland

26�

101(�) TFeU. That said, the Supreme Court did not dispose of the matter but remitted the case to the High Court to decide whether the conditions for exemption set out in article 101(�) TFeU were satisfied.

during the High Court proceedings in 2010, the Commission decided to intervene in the case and submitted written observations pursuant to Council regulation (eC) no. 1/200�. Under article 15(�) of that regulation, the Commission may submit written observations to courts of the Member States where the coherent application of articles 101 or 102 TFeU requires doing so. Before the High Court had the opportunity to reach any decision on the application of article 101(�) to the BIdS agreement, BIdS withdrew its claim for exemption under article 101(�) and the case was settled.

The principal reason why BIdS decided not to pursue the case was that the trial judge had made it clear that BIdS could not rely on evidence produced in the original High Court hearing in 2005 supporting its case that the conditions of article 101(�) were satisfied.

Investigation not resulting in court actionThe Competition authority conducted a number of investigations during 2010, three of which were concluded during the year. as there was no evidence to suggest that an offence was committed under the act, the Competition authority decided to close these investigations without taking any further action.

One of the most high-profile complaints alleging anti-competitive behaviour is summarised below.

during 2010, the Competition authority assessed a complaint alleging that the contract for the operation of the proposed Poolbeg Waste-to-energy Incinerator contained breaches of competition law. There were a number of aspects to this complaint. Some aspects of the investigation have been completed while other aspects are continuing.

The Poolbeg incinerator is to be constructed and operated by dublin Waste-to-energy ltd (‘dWel’) on behalf of dublin City Council (‘dCC’) and the other dublin area local authorities. dWel is a joint venture between dong energy Generation aS and Covanta energy. The agreement between dWel and dCC is set out in a public private partnership (‘PPP’) contract.

Under the terms of the contract, dCC must, for each year of the lifetime of the contract, provide enough waste to fill an agreed proportion of the incinerator’s capacity.

The Irish Waste Management association (‘IWMa’), the trade association representing private waste management companies in Ireland, complained that various terms of the contract breached both Section 4 and Section 5. The IWMa also publicly announced that it had made a complaint.

The IWMa alleged that the contract contained price-fixing arrangements contrary to Section 4. The Competition authority rejected this investigation and concluded that the contract was akin to a partnership arrangement where the two parties are sharing the benefits and risks of an enterprise. ancillary issues such as discussions and consultations between the parties concerning the management of the facility, including pricing were also considered by the authority and ultimately cleared by the authority.

Ireland

264

The IWMa also complained that the scale of the incinerator, and the fact that dCC is a public body with statutory functions in relation to waste management, meant that dCC or dWel, or both, were: a dominant in the waste processing market in the dublin area; andb would engage in conduct that could amount to an abuse of dominance in the

waste processing market. The Competition authority concluded that the alleged abuses were unlikely, given the current structure of the waste processing market and the related waste collection market.

after a detailed evaluation of the various aspects of the complaint, the Competition authority found that, while the incinerator and the PPP contract would affect the market for waste collection and disposal, it would not affect these markets in an anti-competitive way.

The IWMa also made complaints relating to dCC’s role as both the issuer of waste collection permits and a competitor in the waste collection market in dublin. The authority continues to investigate this aspect of the complaint.

ii Trends,developmentsandstrategies

during 2010, the Competition authority consulted on three existing declarations that it had issued. a declaration is a category of agreements, decisions or concerted practices that are not considered to be anti-competitive and are exempt from Section 4.

The most important declaration is the one in respect of vertical agreements and concerted practices (d/10/001). This came into force on 1 december 2010. The new declaration is now similar but not identical to the new eU Vertical Block exemption regulation.

In addition, the Competition authority published a new Guidance notice (n/10/01) for businesses on how to assess their vertical agreements and the difference between the declaration and the eU’s Vertical Block exemption regulation. In light of these Guidelines, the Competition authority will generally follow the european Commission’s approach.

The most significant change between the previous declaration and the new declaration is that it now applies to vertical agreements on condition that, among other things, the market share of the buyer is less than �0 per cent. Previously this was only relevant to exclusive supply restraints.

One difference between the Irish declaration and the eU regulation is the treatment of buyer pools. retailer buyer pools are exempt under the eU regulation where no individual member (or its connected undertakings) of a buyer pool has an annual turnover in excess of €50 million. a similar exemption is not found in the Irish declaration as the authority considered inclusion would be inappropriate in an Irish context.

a review of the Vertical agreements declaration will take place after six years. The new Vertical agreements declaration is due to expire in 10 years on 1 december 2020.

Ireland

265

iii Outlook

The most recent Competition authority annual report published at the end of February 2011 signals that the Competition authority faces ‘uncertainty’ because the current Chairperson holds only an interim position and the other two Competition authority members only hold temporary positions. They were appointed under emergency legislation when respective Ministers failed to hold statutory competitions to select qualified permanent members. It is hoped that the new government following the elections in Ireland will prioritise competition law enforcement and the authority’s need for resources.

IV SECTORAL COMPETITION: MARKET INVESTIGATIONS AND REGULATED INDUSTRIES

i Significantcases

The authority may carry out studies on competition in any market in Ireland and can make recommendations on the basis of its findings. That said, while it can use powers to compel the production of documentation, it may not implement reforms in the sectors examined as part of the studies. This is the role of government and the public and sometimes private authorities responsible for regulating the sectors concerned.

In general, public enforcement of competition law rests primarily with the authority but there are independent sector-specific regulators in areas such as communications, energy and aviation. In some cases it is appropriate for the authority to liaise with the relevant regulator to decide who is best placed to deal with competition issues arising in a regulated sector. In addition, the national regulatory authority for the purposes of the european regulatory framework for electronic communications (the Commission for Communications regulation, ‘Comreg’) also enjoys concurrent competition law powers with the authority in relation to the provision of electronic communications networks and services. a cooperation agreement between the two authorities is designed to facilitate the performance of the respective functions of both under the Competition act, avoid duplication of activities and ensure consistency in their practice.

ii Trends,developmentsandstrategies

Comreg has not officially used its powers under the Competition act. However, on 2� december 2010, Comreg published an Information notice providing Guidance on the Submission of Competition Complaints relating to the electronic Communications Sector. Comreg indicates that while it would expect that the pursuit of ex ante regulation in the context of the regulatory framework for electronic communications may provide a more immediate and appropriate means of resolving complaints, it will use its complementary competition enforcement powers where appropriate to ensure fair competition in the provision of electronic communications.

iii Outlook

The authority acknowledges that in some cases, the exercise of specific regulatory power by a regulator may have a better prospect of a satisfactory outcome in a quicker time

Ireland

266

frame than the authority could achieve through legal proceedings. This is consistent with the position recently adopted by Comreg in relation to its respective reliance on its competition law and regulatory powers.

V STATE AID

i Significantcases

The banking sector continued to be the focus of state aid measures in Ireland during 2010. In summary, the measures involved recapitalisations of various credit institutions, extensions of the issuance window under the Credit Institutions (eligible liabilities Guarantee) Scheme 2009 (‘elG Scheme’), transfers of tranches of bank assets to the national asset Management agency (‘naMa’) under an asset relief scheme (‘naMa Scheme’) operated by naMa under the national asset Management agency act 2009 (‘naMa act’) and restructuring plans for credit institutions that have received state support.

On �0 March 2010, the european Commission (‘Commission’) approved under eU state aid rules a recapitalisation of Irish nationwide Building Society (‘InBS’) of up to €2.7 billion.1�

On �1 March 2010, the Commission approved under eU state aid rules a second recapitalisation of anglo Irish Bank Corporation limited (‘anglo’) of up to €10.44 billion.14 By the same decision, the Commission initiated a formal investigation procedure under article 108(2) TFeU in relation to the restructuring plan for anglo notified to the Commission on �0 november 2009.

On 2 June 2010, the Commission approved under eU state aid rules a recapitalisation of eBS Building Society (‘eBS’) of up to €875 million.15 On 11 October 2010, the Commission initiated a formal investigation procedure under article 108(2) of the TFeU in relation to the restructuring plan for eBS notified to the Commission on �1 May 2010.

On 15 July 2010, the Commission approved under eU state aid rules a restructuring plan for the Governor and Company of the Bank of Ireland (‘Bank of Ireland’) which was rendered necessary by the €�.5 billion recapitalisation of the bank by Ireland in 2009 and other state aid assistance received by the bank including under the naMa Scheme and the Irish bank guarantee schemes.16 Under the restructuring plan, Bank of Ireland will reduce its presence in certain market segments through the transfer or winding down of assets and through divestitures. In order to enhance competition, the bank will also offer certain services to new entrants or to small banks already active in Ireland to reduce the cost for competitors to develop business in Ireland. Finally,

1� State aid nn 11/2010 – Ireland – rescue measure in favour of InBS, Official Journal C14�/2010.

14 State aid nn12/2010 and C11/2010 (ex n667/2009) – Ireland – Second recapitalisation of anglo Irish Bank and restructuring of anglo Irish Bank, Official Journal C214/2010.

15 State aid n 160/2010 – Ireland – recapitalisation of eBS, Official Journal C 217/2010.16 State aid n 546/2010 – Ireland – restructuring of Bank of Ireland.

Ireland

267

the Irish authorities committed to a number of market opening measures in order to enhance competition in the Irish banking market by facilitating the entry and expansion of competitors and by increasing consumer protection in the financial sector.

On 9 december, 2009, the government introduced the elG Scheme, which provides for the state guarantee of eligible liabilities with a maturity of up to five years. The elG Scheme was intended to facilitate the issue of longer-term debt securities by participating institutions. The elG Scheme was approved by the Commission under eU state aid rules on 20 november, 2009 with an initial issuance window to 1 June 2010.17 In a decision dated �1 May 2010,18 the Commission approved under eU state aid rules an extension of the issuance window under the elG Scheme to �0 June 2010. In a decision dated 28 June 2010,19 the Commission approved an extension of the issuance window to 29 September 2010 for senior unsecured commercial paper, senior unsecured certificates of deposits with a maturity of less than three months, interbank deposits, corporate deposits with a maturity of less than three months (together ‘Short Term liabilities’). Under the same decision, the Commission approved an extension of the issuance window to �1 december 2010 for all other categories of eligible liabilities and approved increases of the fees payable under the elG Scheme for eligible liabilities issued from 1 July 2010 onwards. In a decision dated 21 September 2010,20 the Commission approved an extension of the issuance window for Short Term liabilities to �1 december 2010, bringing the issuance window for Short Term liabilities in line with the issuance window for other categories of eligible liabilities. On 10 november 2010, the Commission approved an extension of the issuance window for all eligible liabilities to �0 June 2011 with different fees applying to different categories of eligible liabilities.21

On � august 2010, the Commission approved under eU state aid rules the transfer of the first tranche of bank asset transfers to naMa under the naMa Scheme.22 The total balance of loans transferred under the first tranche amounted to €15,284 million. On 29 november 2010, the Commission approved under eU state aid rules the transfer of the second tranche of bank asset transfers to naMa under the naMa Scheme.2� The total balance of loans transferred under the second tranche amounted to €11,917 million.

17 State aid n �49/2009 – Ireland – eligible liability Guarantee Scheme, Official Journal C/72/2010.

18 State aid n 198/2010 – Ireland – Prolongation of the eligible liabilities Guarantee Scheme, Official Journal C/191/2010.

19 State aid n 254/2010 – Ireland – extension of the elG scheme until december 2010, Official Journal C/2�8/2010.

20 State aid n �47/2010 – Ireland – Short term guarantees under the elG scheme from September to december 2010.

21 State aid n 487/2010 – Ireland – extension of the elG Scheme until June 2011.22 State aid n ��1/2010 – Ireland – Transfer of the first tranche of assets to naMa.2� State aid Sa.�1919/n529/2010 – Ireland – Transfer of the second tranche of assets to

naMa.

Ireland

268

On 10 august 2010, the Commission approved under eU state aid rules a third recapitalisation of anglo of up to €10.054 billion.24 On 21 december 2010, the Commission approved under eU state aid rules a fourth recapitalisation of anglo of up to €4.946 billion and a guarantee of certain liabilities of anglo Irish Bank.25

On the same date, the Commission approved under eU state aid rules a second recapitalisation of InBS of up to €2.7 billion26 and a second recapitalisation of allied Irish Banks plc (‘aIB’) of up to €9.8 billion.27

ii Trends,developmentsandstrategies

as can be seen, the government’s support measures taken in response to the impact of the global financial crisis on the banking sector have continued to dominate state aid developments in Ireland. during the course of 2010, the issuance window under the elG Scheme has been extended to �0 June 2011 and the asset transfers to naMa under the naMa Scheme have to a large extent been implemented. In addition, capital injections into Irish banks in excess of €41 billion in total have been approved by the Commission during 2010. While a restructuring plan for Bank of Ireland has been approved by the Commission under eU state aid rules, the assessments by the Commission of the restructuring plans for aIB, anglo, eBS and InBS are ongoing.

iii Outlook

On 28 november 2010, the government announced that it had agreed in principle to the provision of €85 billion of financial support to Ireland by Member States of the european Union through the european Financial Stability Fund and the european Financial Stability Mechanism; bilateral loans from the UK, Sweden and denmark; and the International Monetary Fund’s extended Fund Facility on the basis of specified conditions (‘Programme for Support’). The Programme for Support includes a Programme for the recovery of the Banking System. This provides for a recapitalisation, fundamental downsizing, restructuring and reorganisation of the banking sector. It is intended that this will lead to a smaller banking system more proportionate to the size of the economy, capitalised to the highest international standards, with renewed access to normal market sources of funding and focused on strongly supporting the recovery of the economy. The shape of further support measures in the banking sector will be dictated by the targets agreed under the Programme for the recovery of the Banking System.

24 State aid nn �5/2010 – Ireland – Temporary approval of the third recapitalisation of anglo Irish Bank.

25 State aid Sa.�2057 – Temporary approval of the fourth rescue recapitalisation of anglo Irish Bank and guarantee in respect of certain liabilities in favour of anglo Irish Bank.

26 State aid nn 50/2010 – Ireland – Second rescue recapitalisation of InBS.27 State aid n 55�/2010 – Ireland – Second rescue recapitalisation of aIB.

Ireland

269

VI CONCLUSIONS

i Pendingcasesandlegislation

The authority’s workload in 2010 was no doubt hampered by the reduced resources it had available to it. Public enforcement was not ground breaking in 2010 but the authority was able to conduct important enforcement work and carry out consultations designed to improve enforcement. notwithstanding the difficulties it faces, the authority remains positive about its future and the role it has in promoting competition in Ireland. In particular, it cites the Memorandum of Understanding between Ireland, the european Commission, the eCB and the IMF of � december, 2010 which adopts a number of the Competition authority’s recommendations to promote competition, in particular, to introduce civil fines for competition law infringements in order to improve deterrence.

539

Appendix 1

About the Authors

PAT O’BRIEN

Arthur Cox Pat is a partner in the eu and competition law group of Arthur Cox. he obtained a bCL degree from university College, Cork in 1987 and a postgraduate qualification in european law from the College of europe, bruges, in 1988. he went on to practice eC and competition law in brussels for two years before joining Arthur Cox in 1990. Pat qualified as a solicitor in 1993 and became a partner in 2000. In addition to representing clients on competition law and merger control related issues before the Irish Competition Authority and the european Commission, Pat has also been involved in a number of Irish high Court, supreme Court and european Court proceedings involving the application of Irish and eu competition law. he was also the lead instructing lawyer representing the Irish beef industry in the long running bIDs case involving the application of Article 101 of the tFeu. Pat represents a wide variety of clients including many Irish associations of undertakings. Pat was also appointed by the Minister for enterprise, trade and employment as a member of the National Competitiveness Council from 2005 to 2007.

FIONA McKEEVER

Arthur Cox Fiona McKeever is a partner in Arthur Cox’s eu and competition department. her practice includes advising companies on all aspects of eu and Irish competition law, merger control law and state aid law. Ms McKeever has advised on leading eu and Irish merger control cases and investigations carried out by the Competition Authority. her clients include public limited companies, semi-state bodies and privately owned companies operating in sectors as diverse as aviation, FMCG and the waste industry.

About the Authors

540

ARThuR COx

earlsfort Centreearlsfort terraceDublin 2Irelandtel: +353 1 618 0000Fax: +353 1 618 0618mail@arthurcox.comwww.arthurcox.com