Vincent Power, Partner and head of the firm's EU & Competition Law Unit takes a look at the issues which made headlines during 1997.
1997 was an interesting year for competition regulation. The EU competition system continued to carefully control competitive conduct but, more significantly, the Irish system began to mature.
The European Commission has controlled large-scale acquisitions to the exclusion of EU Member States since 1990. In ways, this did not really matter for Ireland until 1997. During the past year, the Tesco/Quinnsworth, Woodchester/GE Capital and Guinness/Grand Metropolitan deals were supervised by Brussels without the Irish Government having any right of veto.
The Irish Government will lose even more power to control acquisitions affecting Ireland after 1st March 1998 when the financial thresholds in the EU's Merger Control Regulation will fall.
Control of acquisitions is moving from Member States to the European Commission exclusively. This will mean that the Irish Minister for Enterprise, Trade and Employment will have a smaller role to play and an "Irish solution to an Irish problem" will no longer be a real option.
The European Commission also challenged the behaviour of two "Irish champions" during 1997. It fined the Irish Sugar Company for price-fixing and restricting sugar imports and threatened to fine Telecom Eireann. The Commission also issued a so-called "Statement of Objections" to the company on aspects of pricing policy.
Interestingly, the most significant fines to date in Ireland have been against the semi-State sector rather than the private sector. The trend is that the Irish semi-State sector will be subject to even more scrutiny in the years ahead and may face substantial fines unless it pays greater heed to the requirements of EU competition law.
The Irish competition law system was established in 1991 and updated in 1996. However, the system only began to mature in 1997. The system has a long way to go but it is on course. The Competition Authority started to flex its enforcement muscles in the last year. However, the Authority has seen fewer notifications than might be expected in a "Tiger Economy" - can it really be the case that there are only two dozen or so agreements in the entire Irish economy requiring notification to the Competition Authority during the whole of 1997?
It was a bad year for trade associations. The Irish Travel Agents' Association, the Irish Road Haulage Association and the Vintners' Federation of Ireland all came under the Competition Authority's spotlight. Some associations were "dawn-raided" by the Authority. Trade associations should adopt a New Year's resolution of briefing themselves on competition law and establishing a compliance programme. Otherwise, it will not be long before some associations and their members will be fined. Indeed, officers of associations could even be imprisoned.
It was a good year for some complainants to the Competition Authority. Since 1996, one can complain to the Authority about unfair economic behaviour. The anonymity of complainants seems to be well preserved. However, those who had their complaints rejected by the Authority may feel aggrieved particularly when they got no explanation from the Authority for the rejections. Those complainants may have to resort to court action in 1998 to remedy those situations left unresolved by the Authority in 1997.
EU and Irish systems largely operate in tandem. The drinks industry is a good example. The industry was centre-stage in competition law terms during 1997. At a global level, Brussels and Washington cleared the Guinness/Grand Metropolitan merger only after undertakings were given to make share and brand disposals. Share disposals are to be made in Ireland.
At a national level, Guinness' bid for United Beverages is still before the competition regulators after six months and faces a very uncertain future following complaints from almost all quarters of the industry.
At a local level, the regime for publicans' licences has been studied by the Competition Authority with a report expected in the near future - a report which could fundamentally alter the century-old system of licensing.
The Irish Minister for Enterprise, Trade and Employment must be careful not to allow dominant "national champions" to be created which are inefficient at home so as to supposedly allow them to have the scale to take on competition abroad. It is only by being used to competition at home that one can seriously compete abroad.
The EU system is continuing to control the mighty and the meek. It will turn its attentions in 1998 particularly to various mergers pending in the accountancy and telecom worlds but it will, as always, have its eye on pricing.
More significantly, the Irish system has started to mature. The dawn-raids have started and the warnings have gone out. The jail sentences have yet to come. No one went to prison for breaching competition law in 1997 but who knows where some poor Irish businessperson may have to spend next Christmas! (Let's hope not).
1997 was an interesting year for competition regulation. The EU competition system continued to carefully control competitive conduct but, more significantly, the Irish system began to mature.
The European Commission has controlled large-scale acquisitions to the exclusion of EU Member States since 1990. In ways, this did not really matter for Ireland until 1997. During the past year, the Tesco/Quinnsworth, Woodchester/GE Capital and Guinness/Grand Metropolitan deals were supervised by Brussels without the Irish Government having any right of veto.
The Irish Government will lose even more power to control acquisitions affecting Ireland after 1st March 1998 when the financial thresholds in the EU's Merger Control Regulation will fall.
Control of acquisitions is moving from Member States to the European Commission exclusively. This will mean that the Irish Minister for Enterprise, Trade and Employment will have a smaller role to play and an "Irish solution to an Irish problem" will no longer be a real option.
The European Commission also challenged the behaviour of two "Irish champions" during 1997. It fined the Irish Sugar Company for price-fixing and restricting sugar imports and threatened to fine Telecom Eireann. The Commission also issued a so-called "Statement of Objections" to the company on aspects of pricing policy.
Interestingly, the most significant fines to date in Ireland have been against the semi-State sector rather than the private sector. The trend is that the Irish semi-State sector will be subject to even more scrutiny in the years ahead and may face substantial fines unless it pays greater heed to the requirements of EU competition law.
The Irish competition law system was established in 1991 and updated in 1996. However, the system only began to mature in 1997. The system has a long way to go but it is on course. The Competition Authority started to flex its enforcement muscles in the last year. However, the Authority has seen fewer notifications than might be expected in a "Tiger Economy" - can it really be the case that there are only two dozen or so agreements in the entire Irish economy requiring notification to the Competition Authority during the whole of 1997?
It was a bad year for trade associations. The Irish Travel Agents' Association, the Irish Road Haulage Association and the Vintners' Federation of Ireland all came under the Competition Authority's spotlight. Some associations were "dawn-raided" by the Authority. Trade associations should adopt a New Year's resolution of briefing themselves on competition law and establishing a compliance programme. Otherwise, it will not be long before some associations and their members will be fined. Indeed, officers of associations could even be imprisoned.
It was a good year for some complainants to the Competition Authority. Since 1996, one can complain to the Authority about unfair economic behaviour. The anonymity of complainants seems to be well preserved. However, those who had their complaints rejected by the Authority may feel aggrieved particularly when they got no explanation from the Authority for the rejections. Those complainants may have to resort to court action in 1998 to remedy those situations left unresolved by the Authority in 1997.
EU and Irish systems largely operate in tandem. The drinks industry is a good example. The industry was centre-stage in competition law terms during 1997. At a global level, Brussels and Washington cleared the Guinness/Grand Metropolitan merger only after undertakings were given to make share and brand disposals. Share disposals are to be made in Ireland.
At a national level, Guinness' bid for United Beverages is still before the competition regulators after six months and faces a very uncertain future following complaints from almost all quarters of the industry.
At a local level, the regime for publicans' licences has been studied by the Competition Authority with a report expected in the near future - a report which could fundamentally alter the century-old system of licensing.
The Irish Minister for Enterprise, Trade and Employment must be careful not to allow dominant "national champions" to be created which are inefficient at home so as to supposedly allow them to have the scale to take on competition abroad. It is only by being used to competition at home that one can seriously compete abroad.
The EU system is continuing to control the mighty and the meek. It will turn its attentions in 1998 particularly to various mergers pending in the accountancy and telecom worlds but it will, as always, have its eye on pricing.
More significantly, the Irish system has started to mature. The dawn-raids have started and the warnings have gone out. The jail sentences have yet to come. No one went to prison for breaching competition law in 1997 but who knows where some poor Irish businessperson may have to spend next Christmas! (Let's hope not).
This article was intended to provide general guidelines. Specialist advice should be sought about specific facts.
