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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
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