Competition Sanctions

Structural or behavioural remedies

A decision of an adjudication officer may  impose a structural or behavioural remedy. A structure or behavioural remedy (remedy) is “any remedy or obligation requiring an undertaking or association of undertakings to take, or to refrain from taking, any action relating to the behaviour or structure of an undertaking or association of undertakings”. This includes requiring the undertaking / association or undertakings in question to do one or more of the following:

• to sell or divest itself of any matter, including business, assets, shares, real property or intellectual property;
• to modify or constrain its conduct in specified ways;
• to grant specified undertakings access to assets, facilities, technology, infrastructure, information or services;
• to implement ring-fencing arrangements to prevent the sharing of specified competitively sensitive information;
• to cease a specified conduct or practice;
• to unbundle two or more products which were previously offered to customers jointly;
• to discontinue customer rebate schemes, or a part of any such schemes;
• to prevent the flow of competitively sensitive information between undertakings or within divisions, units, departments or other organisational units within an undertaking.

The adjudication officer is only confined to applying such a remedy where it is necessary to bring an existing infringement of relevant competition law to an end or prevent a similar infringement in the future and is proportionate to the infringement of competition law committed. Where more than one remedy is available, the adjudication officer is required to choose the remedy that is least burdensome for the undertaking / association of undertakings.

Decisions to apply a remedy must be confirmed by the High Court. An adjudication officer may impose a remedy at any point after a referral by a competent authority , provided that the competent authority consents to this and the undertaking / association of undertakings acknowledges the commission of an infringement and also consents to the remedy being imposed.

Administrative Financial Sanctions

In certain circumstances an adjudication officer may impose an administrative financial sanction on an undertaking / association of undertakings. The sanction must be effective, proportionate and dissuasive and may be made in relation to a decision of an adjudication officer on any of the five matters set out.

However, there are some limitations to these enforcement powers. Firstly, where an administrative financial sanction is applied for a matter that constitutes an offence, the undertaking / association of undertakings involved may not be prosecuted or punished for that offence. Inversely, where an undertaking / association of undertakings are the subject of criminal proceedings for the same infringement of relevant competition law, or breach of a procedural requirement, then administrative financial sanctions may not be applied unless the criminal proceedings have been determined by way of a nolle prosequi.

Decisions to impose an administrative financial sanction must be approved by the High Court and the section makes further provision for administrative financial sanctions to be imposed on subsidiary undertakings if the adjudication officer considers that doing so would be effective, proportionate and dissuasive.

There are  criteria for the calculation of an administrative financial sanction. It provides for the matters that an adjudication officer must have regard to when imposing a sanction. It also sets out matters to be considered in imposing or not imposing an administrative financial sanction on the members of an association of undertakings and for ensuring the full payment of the administrative financial sanction by the members of an association of undertakings. However, provision is also made for undertakings, that prove on the balance of probabilities that they did not implement, were unaware of or actively distanced themselves from the infringements, to not contribute to the full payment of an administrative financial sanction.

Sanction Issues

The legislation provides for the application of decisions of the competent authority by the adjudication officer in relation to immunity or reduction of an administrative financial sanction. This takes place after the sanction has been determined and prior to any decision on periodic penalty payments. An adjudication officer is prohibited from varying any decision of a competent authority on the level of reduction of an administrative financial sanction. Finally, the relevant Minister may make further rules on the implementation of the section.

There are maximum amounts of administrative financial sanctions that may be applied by an adjudication officer. The maximum amounts set for infringements of relevant competition law or the failure to comply with a structural or behavioural remedy, prescribed form of commitments or a prohibition notice are as follows, with lower maximum amounts for breaches of procedural requirements. How this maximum is set differs slightly depending on whether the infringement relates to the activities of members of an association of undertakings.

Maximum amounts

 

Infringement	Maximum Amount
Infringement of relevant competition law. Failure to comply: –         with structural or behavioural remedies, –         prescribed form of commitments, or –         a prohibition notice.	The greater of €10 million or 10% of total worldwide turnover of the undertaking or association of undertakings in the preceding financial year.
Breach of procedural requirements	The greater of €1 million or 1% of total worldwide turnover of the undertaking or association of undertakings in the preceding financial year.

Where the infringement relates to the activities of members of an association of undertakings, the turnover requirement is based instead on the sum of the total worldwide turnover of each member active on the market affected by the infringement of the association.

Periodic penalty payments

An adjudication officer may impose a periodic penalty payment on an undertaking / association of undertakings. The purpose of a periodic penalty payment is to compel the undertaking or association to do any of the following:

• Comply with a search conducted by a competent authority
• Provide complete or correct information in response to a requirement
• Attend at an interview, or otherwise give evidence or produce information or documentation, before a competent authority;
• Comply with a prohibition notice;
• Comply with prescribed form of commitments; or
• Comply with structural or behavioural

An adjudication officer may also apply a periodic penalty payment on an undertaking / association of undertakings in order to compel them to comply with a hearing requirement, with provision also made to allow an adjudication to make such a decision without a referral. The procedures for issuing a notices of periodic penalty payments are also set out in the section. The maximum amount of a periodic penalty payment is set at 5% of the average total worldwide turnover of the undertaking or the association of undertakings concerned in the preceding financial year.

Where an undertaking / association of undertakings fails to comply with an obligation concerned before the date or expiration of the period specified in the notice:

• In relation to matters (i) to (vi) above, the competent authority is required to prepare a statement of objections and may refer the matter to an adjudication officer;
• In relation to a hearing requirement, an adjudication officer may make a decision under on their own motion.

Provision is also made for the setting and imposition of a periodic penalty payment and the section express provides that such an imposition does not affect the imposition of administrative financial sanctions for a breach of a procedural requirement or a failure to comply with prescribed form of commitments, the imposition of a structural or behavioural remedy or the issuing of a prohibition notice. Decisions to impost periodic penalty payments must also be confirmed by the High Court.

Commitments

Prescribed form of provides for a commitments process where an undertaking or association of undertakings may propose to the competent authority, at any time during an investigation or prior to a decision of the adjudication officer, measures appropriately addressing the suspected or alleged infringement. This process follows a number of steps, which are as follows:

• On receiving such a proposal, the competent authority may:
  • consult publicly, with other undertakings or persons participating in the market(s) concerned;
  • request further information from the undertaking or association of undertakings; and
  • where it considers necessary at any time before the proposal is subject to a commitment agreement, propose modifications, alterations, additions or other changes to the proposal.
• Before agreeing to the proposal, competent authority must inform the undertaking / association of undertakings that it is entitled to obtain legal advice and that failure to comply with the commitments may have legal consequences, including the imposition of administrative financial sanctions.
• After doing so, if the competent authority is satisfied that the proposal, subject to any changes proposed by the competent authority, appropriately addresses the matters relating to or findings of an investigation, the competent authority may notify the undertaking / association of undertakings that it agrees to the proposal.
• On receiving this notification, the undertaking / association of undertakings is required to notify the competent authority of its consent to the terms of the proposal.
• The competent authority and undertaking / association of undertakings enter into a commitment agreement, which must be published on the former’s website. This must be done as soon as practicable and have due regard to commercial confidentiality. The commitment agreement itself is legally binding between dates specified in the

Once a commitment agreement is in place, the competent authority may not issue a prohibition notice, refer the matter to adjudication officer, or continue any proceedings under the Principal Act, unless the undertaking / association of undertakings fails to comply with the agreement.

There are further requirements in relation to the amendment or termination of an agreement where there is a material change to the facts, and the termination of an agreement where it is no longer necessary, the undertaking fails to comply with it or where the undertaking / association of undertakings has submitted false, incomplete, incorrect or misleading information. The competent authority may also monitor and review commitments or other terms in the agreement.

Guidelines may be made with respect to certain matters by the competent authority and matters that it must have regard to when doing so. Subject to such guidelines, as well as rules made =, a competent authority may follow such procedures for the conducting of an investigation that it considers appropriate.

Leniency Programmes

Competent authorities must  put a leniency programme in place, that would enable them to grant undertakings that disclose their participation in a cartel or voluntarily cooperate with an investigation of a competent authority. Competent authorities must prepare a policy on how they will operate their leniency programmes, and to publish their leniency programmes on their respective websites. A leniency programme may also address the approach of a competent authority to leniency for other serious infringements of competition law.

Under a leniency programme, a competent authority may grant immunity from an administrative financial sanction to an undertaking that is the first to come forward with evidence of an infringement, provided certain conditions are met. There are further provisions on undertakings requesting reduced administrative financial sanctions where an application for immunity has been rejected and provides for cooperation between the CCPC and ComReg.

There are provisions in relation to the reduction of administrative financial sanctions for undertakings that do not qualify for immunity. Competent authorities are required to include provision for the reduction of administrative financial sanctions in their leniency programmes. To qualify for a reduction, an undertaking must:

• Disclose its participation in a cartel;
• Provide evidence of the alleged cartel that, in the view of the competent authority, represents added value relative to evidence already in its possession; and
• Otherwise satisfy the general conditions for leniency set out.

Where an undertaking that has applied for a reduction submits compelling evidence that leads to the increase of administrative financial sanctions on other undertakings or associations of undertakings, the adjudication officer setting that undertaking’s administrative financial sanction must not take that evidence into account when doing so.

A competent authority may take the timing when evidence was submitted and its overall value to an investigation when determining the appropriate level of reduction for an administrative financial sanction, but the level of reduction cannot exceed 50%. Competent authorities may publish guidelines on what is considered significant added value and compelling evidence.

Leniency Issues

There are  general conditions for leniency to be applied to an undertaking that has applied for leniency. These include the ending of its involvement in the cartel, its cooperation with the competent authority, and that it has neither destroyed, falsified or concealed evidence relevant to the application, nor disclosed the fact of or content of the application it is contemplating except to other competent authorities, competition authorities of the Member States, or the European Commission. All these requirements must be satisfied for an undertaking to be eligible for leniency.

There are procedural elements to an application for leniency and for offences in relation to applications for immunity from or a reduction of administrative financial sanctions or summary applications for leniency if it intentionally or negligently provides false or misleading information, or destroys, falsifies or conceals evidence.

An undertaking may apply for leniency by making an oral or written statement describing its role and knowledge it has of a cartel. It also provides that the competent authorities must publish guidelines on the precise form of such statements and further provides that they shall not be admissible in proceedings except those brought under the Principal Act as amended, except for summary applications for leniency.

A marker is a protection for undertakings whereby they attain a specified period to gather the necessary information and evidence to meet the evidential threshold for leniency. This allows the applicant for a marker to retain their place in the queue in respect of applications for immunity or reductions in administrative financial sanctions. Competent authorities are further required to publish guidance on the application for markers online. Further provision is made for the contents of an application to be relied upon in any appeal where an application for immunity from an administrative financial sanction is rejected and such a sanction is imposed. Undertakings may also apply for a marker with regard to applications for a reduction in an administrative financial sanction.

There is a  procedure for summary applications for leniency from undertakings that have applied to the European Commission for leniency. Such applications may be accepted by competent authorities as applications for markers or a full application in relation to the same cartel. Such applications may only be accepted where the application to the European Commission covers more than three Member States as affected territories. The section sets out the details required in a summary application and further provides rules and procedures that may be prescribed by the relevant Minister.

There are applications for immunity from administrative financial sanctions and natural persons, providing that conditions set out are met, then current and former directors, managers and other members of staff of the undertaking concerned are fully protected from any sanctions in administrative and non- criminal judicial proceedings. They are also protection from criminal prosecution for infringements of sections 4 or 5 of the Principal Act, if they meet the conditions set out in guidelines. The section also provides for contact between competent authorities and the authorities of other Member States and for the publication of guidelines relating to the operation of an immunity from administrative financial sanctions where another Member State is investigating the same cartel.

Competent authorities may put leniency programmes in place for infringements of relevant competition law other than cartels and further provides that the relevant Minister may prescribe procedures, conditions, appropriate scales and factors relevant to decisions under such leniency programmes, for which the competent authorities may also publish guidance.