I welcome the Minister of State at the Department of Enterprise, Trade and Employment, Deputy Treacy, and his officials. I understand the Minister will shortly join the meeting. Members have been circulated with a brief provided by the Bills Office.
Competition Bill, 2001 [Seanad]: Committee Stage.
I did not receive one. We have been provided with amendments. I attended a meeting at 7 a.m. to consider another matter and when I returned to my office I received a raft of amendments at 10.30 a.m.
We all got a grouping list a few minutes ago.
Given that we are about to consider the Bill in detail I would like to think the Opposition spokespersons were supplied with the brief given to me. It should have been provided to them by the Department. It would be enormously beneficial in progressing each section of the Bill.
Officials in the Department offered to make themselves available but I was not able to take up that offer.
I am pleased to note that because it is the way to proceed.
Members of the committee received submissions from interested parties, including the Law Society, of which I am a member. However, this has not unduly influenced me.
That is noted.
I am not a member of the Law Society.
Would the Deputy like to be?
It is important that legislation as significant as this would get the kind of scrutiny it deserves. That is not possible in the dying days of the Dáil. Both the Fine Gael Party and the Labour Party have agreed to the request of the Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Harney, to facilitate the enactment of the legislation, but there are some major concepts in the Bill that warrant more extensive scrutiny and discussion than we are likely to be able to give them. As Deputy O'Malley stated on Second Stage, that is regrettable.
I ask the Minister of State to bear in mind that we received a raft of amendments at 10.30 a.m. today and we have not had an opportunity to go through them. It may be that some of the amendments in the Minister's name will recommend themselves to the committee but there has been no opportunity for us to examine them.
I repeat what I have said about officials offering to make themselves available but, as the Chairman has said, there are a number of different pressures on Deputies and my commitment to the Committee of Public Accounts and to the mini-CTC sub-committee today have been mentioned. I do not want to have to come back to that, Chairman, but in terms of your request for expedition, my party's view is that we are in a circumstance in which we may as well facilitate the enactment of the legislation. However, there are amendments before us which we are seeing for the first time and it will be necessary for the Minister of State to explain them.
Thank you, Deputy Rabbitte. I concur with your bottom line with regard to the explanation of amendments which were put before you less than an hour and a half ago.
I received the amendments and documentation at 11 a.m. today. I am stepping in for my colleague, the Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Harney. I appreciate the co-operation of the Opposition pertaining to this Bill and I have been assured by my officials that many of the amendments recommended by the Opposition are being taken into account in what is proposed. I am satisfied that there can be a meeting of minds and that we can put through sustainable legislation. Like Deputy Rabbitte, I want to declare that I have neither faculty or parchment.
That is very helpful. Initially I was afraid Deputy Rabbitte was going to look for a wig and gown when he referred to the Incorporated Law Society but, without wig and gown, we might move forward and deal with the Bill.
Sections 1 and 2 agreed to.
SECTION 3.
Amendment No. 1 is in the name of the Minister. Amendment No. 2 is consequential. Therefore, we will discuss amendments Nos. 1 and 2 together. Is that agreed? Agreed.
I move amendment No. 1:
In page 6, subsection (1), line 9, after "means" to insert "the District Court,".
These amendments are technical in nature. They are introduced to clarify that summary offences under this Bill would be prosecuted in the District Court and, on appeal, in the Circuit Court as is normal practice. I hope the committee can agree to these proposals.
Was the reference to the Circuit Court in the original Bill a mistake or has there been some rethinking which has led to the District Court being appropriate?
It was intended at the outset that both would be included in the Bill.
Now it is the District Court only.
They will be prosecuted in the District Court and, on appeal, in the Circuit Court, which is the normal procedure of court superiority on appeal.
Amendment agreed to.
I move amendment No. 2:
In page 6, subsection (1), line 10, after "appeal, the" to insert "Circuit Court, the".
Amendment agreed to.
Amendment No. 3 is in the name of the Minister. Amendment No. 4 is an alternative. Therefore, we will discuss amendments Nos. 3 and 4 together. Is that agreed? Agreed.
I move amendment No. 3:
In page 6, subsection (1), line 27, after "Authority", to insert ", any Minister of the Government or a statutory body".
Amendment No. 3 is introduced to clarify that the term published can include posting a notice on a website maintained by a Minister or statutory body such as that of the Director of Telecommunications Regulation.
I agree with the intention of amendment No. 4 but I consider it unnecessary. The only determinations that the authority will make under the legislation relate to mergers and they are already required to publish such determinations by section 21(4)(b). Accordingly, the purpose of this amendment is already served by another provision in the Bill.
My concern is that the full text of the determination would be available to the public and that the notice would ensure full disclosure rather than it being a notice of sorts. If the Minister of State can assure me to that effect, I have no difficulty with it.
That is the case.
Amendment agreed to.
Amendment No. 4 not moved.
I move amendment No. 5:
In page 6, between lines 32 and 33, to insert the following subsection:
"(2) In this Act references, however expressed, to an agreement being concluded in respect of a merger or acquisition shall be construed as including references to an agreement (of whatever kind and whether expressed to be in respect of a merger or acquisition or not) being entered into the result of which will, if the agreement is implemented, be that a merger or acquisition occurs.".
Section 17 provides that where a merger or acquisition is agreed, the parties to that merger or acquisition are obliged to notify the transaction to the Competition Authority within one month of the conclusion of that agreement. However, it has been represented that not all mergers and acquisitions arise as a result of a formal agreement. For example, a controlling interest may be obtained where there is a public bid. This amendment is proposed to clarify that, irrespective of whether there is an agreement, if the result of the transaction is, in fact, a merger or acquisition as defined in section 15, for the purposes of this Bill the merger or acquisition can be considered agreed.
Does this have anything to do with the question of thresholds?
No.
Do thresholds come into it?
No, I am so assured. It is to do with when an agreement arises and has been concluded, irrespective of how that conclusion has been arrived at.
By reference to section 15(3).
I am informed that it is more to do with section 17(1), the concept of agreement - in other words, that the notification takes place once agreement is reached or is conceived to have been reached.
I am interested in the reference to controlling interest, which is obviously relevant and which I welcome. However, it is not given explicit expression in the amendment. Do I take it the Minister is saying it is not considered necessary?
I am informed it is not necessary as it does not undermine any of the provisions already proposed in section 17.
Amendment agreed to.
Section 3, as amended, agreed to.
SECTION 4.
I move amendment No. 6:
In page 7, subsection (1), lines 28 to 34, to delete paragraphs (d) and (e).
This is one of the most important sections of the Bill where we deal with what we can describe as the hard-core offences under the competition rules and enforcement. Sections 4(1)(a), (b) and (c) point out in fairly specific terms what is at stake here and the criteria which are applied to determine the nature of the offence. I have no difficulty with sections 4(1)(a), (b) and (c) in terms of their explicit import. However, paragraphs (d) and (e) seem to be more applicable to section 5 offences rather than to the hard-core offences provided for under section 4. It appears that these paragraphs are less rigid, in terms of interpretation, than are paragraphs (a), (b) and (c). I would have thought they would be more appropriate to section 5 rather than to section 4.
These points were made to us in the submission from the Incorporated Law Society, which sought to draw distinction between paragraphs (a), (b) and (c) and (d) and (e). I would have thought the points raised have some merit. I do not understand why it is not possible to use the term “it shall be an offence for undertakings to fix prices” or some similar, simple wording. I am concerned about the complexity of the offences which will attract criminal sanction in terms of being able to make them stand up, on one hand, and whether, on the other, the definition of hard-core is not broader than it ought to be. The distinction the Incorporated Law Society draws is that vertical agreements would attract a similarly severe penalty and that these are generally accepted to be less grave in nature than horizontal arrangements. As Deputy Flanagan stated, the paragraphs in question appear to be more relevant to section 5 than to section 4.
The Minister of State may wish to comment on the matters in respect of which the Incorporated Law Society has made submissions.
With specific regard to amendment No. 6, section 4(1) is one of the core provisions in existing legislation and in the Bill. It sets out the general prohibition of anti-competitive arrangements, specifying, in particular, five types of anti-competitive practice. The subsection is closely aligned to the comparable European Union provisions in article 81 of the European Union treaty. The proposed amendment would repeal two of the five types of anti-competitive practice and would introduce a dichotomy between our domestic competition law and European Union competition law. Consequently, we cannot accept the amendment.
Article 81 of the European Union treaty has been part of the corpus of law since 1991. In response to Deputy Rabbitte's comments, section 4(1) defines all breaches and section 6(2) defines all hard-core breaches and includes hard-core and non hard-core offences.
I accept the Minister of State's reply and I will withdraw the amendment.
Will the Minister of State respond specifically to the proposition that, in the words of the Incorporated Law Society, paragraphs (d) and (e) are either “redundant” or “misleading”, since they give the impression that such arrangements are always prohibited under section 4(1) when that is clearly not the case?
I am assured they do not give that impression and that they are prohibited only when they are anti-competitive. We will be dealing with the question of hard-core offences when we discuss amendment No. 15.
Amendment, by leave, withdrawn.
Amendments Nos. 7, 8 and 20 are related and may be taken together by agreement.
I move amendment No. 7:
In page 7, subsection (3), line 44, after "conditions", to insert "; the Authority shall issue a declaration which would, in effect, replace the category certificates provided for under the 1991 Act".
I am anxious that there should be contained in the legislation a statutory basis for the authority to issue a declaration. I am not sure if there is a statutory reference within the Bill. Amendment No. 7 seeks to give statutory effect to the authority's power to issue a declaration. I wish to inform the Chairman of my intention not to move amendments Nos. 8 and 20.
I thank the Deputy for withdrawing the two later amendments. With regard to amendment No. 7, the Bill proposes to abolish the notification system for a number of reasons. First, the number of notifications has dwindled considerably in recent years suggesting that companies and their advisers are now much more confident in their ability to interpret the legislation than used to be the case. Second, the European Union is proposing to abolish its equivalent system. Third, and last, abolishing the notification system should free up the Competition Authority to concentrate on its role of enforcement.
In the context of abolishing the notification system, it seems to make no sense to retain category certificates. Category licences are being retained in the form of category declarations provided for in section 4(3) and would, in some respects, serve the purpose of the former category certificates. The authority has been empowered to publish notices containing practical guidance as to how the provisions of the legislation may be complied with. In the circumstances, I do not see how the retention of category certificates would add any value.
The Minister of State indicated that the giving of statutory effect to the issue of a declaration is already catered for in section 4(3). However, I would have read this as being an alternative to the category licence. Where is statutory effect given to the declaration?
I am assured that this proposal provides for replacing the licences but is also part of guidance notes. That should provide clarity and reassurance.
Category certificates are being abolished.
Correct.
The alternative to the category licence is contained in section 4(3).
That is being retained.
Where is the statutory basis for the authority to issue a declaration?
I am informed that the statutory authority is vested in section 28(1)(d) which states that one of the authority’s functions shall be to publish notices containing practical guidance as to how the provisions of the legislation may be complied with.
It does not actually mandate the authority to take such action.
It allows it do so in law. The authority was never required to issue certificates.
How stands amendment No. 7?
I will come back to this issue on Report Stage.
Amendment, by leave, withdrawn,
Amendment No. 8 not moved.
Amendments Nos. 11 and 12 are cognate to amendment No. 9 while amendments Nos. 10 and 13 are related. All may be discussed together by agreement.
I move amendment No. 9:
In page 8, subsection (8), lines 29 and 30, to delete "agreements which are ancillary to" and substitute "restrictions which are directly related and necessary to the implementation of".
These amendments are intended to tighten the wording of the Bill, which is important in terms of clarification. Amendment No. 9 relates to agreements that might be necessary and associated rather than ancillary. The wording could give rise to controversy. What does the phrase "the application of section 17 shall not in itself be prohibited" mean? On what grounds is it to be prohibited? I wonder about the use of the phraseology in legislation. If section 17 is not in itself prohibited, with what is it associated in order for it to be prohibited?
These amendments propose much more precise wording and I agree precision is important in this matter and in all legislation. Consequently, I accept amendments Nos. 9, 10, 12 and 13, which deem amendment No. 11 unnecessary. I trust this is to the satisfaction of the committee.
Amendment agreed to.
I move amendment No. 10:
In page 8, subsection (8), line 32, to delete ", in itself,".
Amendment agreed to.
Amendment No. 11 not moved.
Section 4, as amended, agreed to.
SECTION 5.
I move amendment No. 12:
In page 9, subsection (3), lines 9 and 10, to delete "agreements which are ancillary to" and substitute "restrictions which are directly related and necessary to the implementation of".
Amendment agreed to.
I move amendment No. 13:
In page 9, subsection (3), line 12, to delete ", in itself,".
Amendment agreed to.
Question proposed: "That section 5, as amended, stand part of the Bill."
I refer to mergers below the threshold that are vulnerable to challenge. A specific point has been made in submissions to us. Under the notification system, the Bill excludes the application of sections 4 and 5 only in respect of notified mergers, thereby leaving mergers which fall below the threshold in section 17, to which the Minister of State referred, vulnerable to challenge under sections 4 or 5.
If there is dissatisfaction with them, they may be challenged.
It is like double jeopardy.
I am assured there is no double jeopardy. If they are notified, cleared and sanctioned, they cannot be affected by challenge and there is provision for voluntary notification below the threshold under section 17(3).
If it is accepted that mergers below a certain threshold are unlikely to have a significant impact on competition and a straightforward, simple merger control regime is created that provides legal certainty, could someone, who may think he or she has crossed all the necessary hurdles, subsequently be vulnerable to challenge?
I am assured such a person would be vulnerable only if he or she had not crossed all the hurdles and properly notified the authority of the decisions that had been taken. There is nothing conceived in the majority of cases that would create a difficulty. Section 17(3) states: "Any of the undertakings, which have agreed to a merger or acquisition, being a merger or acquisition to which subsection (1) does not apply, may notify the Authority in writing of the proposal to put the merger or acquisition into effect and provide full details thereof within one month after the conclusion of the agreement”.
I am sorry. I obviously have a fundamental misunderstanding. The notification regime, as it has operated up to now, is no longer extant. How will it come into play in regard to mergers below a certain threshold? I am not sure I understand that.
We have made a positive change in that heretofore mergers below the threshold could not be notified. Under the legislation they can be.
On a voluntary basis?
Yes. Prior to the legislation that option was not available.
Does that put certain undertakings at risk where they may not have the knowledge or they may have concluded it is not relevant and may not have exercised the voluntary option but could subsequently be vulnerable to challenge?
Could mergers be open to challenge on the basis of a voluntary disclosure not being made?
No.
Section 17(3) only states that they may notify the authority. However, they may not do so. Is it the case that if they do not notify, it is at their own risk?
If they have concerns that they may be challenged, they can notify to protect themselves. I accept what Deputy Rabbitte is saying and I empathise with him. I am not absolutely certain about the maximum impact of such a scenario. Perhaps the Deputy will consider the matter again for Report Stage, as will I.
Yes. I refer in a broader sense to IBEC's position. Notification of agreements that might have an anti-competitive effect has been abolished under the legislation in line with EU competition law but IBEC states: "It is felt that the principles of competition law are well enough established to allow for self-assessment". IBEC believes an extra safeguard is needed to protect those members of the business community who seek and receive advice from an expert in the field. I do not go along with IBEC's ultimate amendment, which means one could always pass the buck to an expert in the field. IBEC makes the point that businesses in these circumstances might have taken advice to the effect that there was no requirement to notify because the merger did not or was unlikely to have any anti-competitive impact. Despite this, such businesses could find themselves subject to challenge at a later stage.
I am informed that those mergers are at risk only if they infringe sections 4(1) or 5(1). What Deputy Rabbitte said warrants further consideration on Report Stage. I will have my team examine the matter again and perhaps Deputy Rabbitte will table an amendment if he feels it would clarify the position.
I thank the Minister of State.
Question put and agreed to.
SECTION 6.
I move amendment No. 14:
In page 9, subsection (1), between lines 17 and 18, to insert the following:
"(d) directly or indirectly fixes purchase or selling prices or any other trading conditions,
(e) limits or controls production, markets, technical development or investment,
(f) share markets or sources of supply,”.
Section 6 deals with offences in respect of a breach of the Treaty of Rome. From my reading of section 6(1)(a) to (c), inclusive, there is an element of vagueness which could give rise to a number of interpretations or misinterpretations. To minimise the likelihood of misinterpretation and introduce an element of clarity, my amendment adds further provisions broadly similar to the import of those with which we dealt in section 4. I do so because of an element of vagueness in section 6(1) as drafted. What does the Minister of State think of that?
The effect of the amendment would be to criminalise only hard-core practices and, in effect, to decriminalise other breaches of section 4(1) or Article 81.1 of the treaty. I cannot go along with this proposal. We have recognised that some breaches of competition rules are more serious than others in that more serious penalties are provided for the type of practices specified in the proposed amendment. However, other breaches of section 4(1) or Article 81.1 could have serious consequences for consumers and aggrieved businesses and there could be circumstances in which criminal prosecutions would be fully appropriate. To apply the competition provisions of the Treaty of Rome properly, which is one of the objectives of the Bill, we must provide meaningful penalties for any breach of Articles 81 and 82. Accordingly, I cannot accept the proposed amendment.
I have listened to what the Minister of State said and I am still not sure about section 6(1). There is an element of vagueness. I would have thought priority would have been given to clarity, especially in the case of criminal offences. I will consider the matter further.
Amendment, by leave, withdrawn.
Amendments Nos. 16 and 17 are alternatives to amendment No. 15 and amendment No. 22 is consequential. Amendments Nos. 15, 16, 17 and 22 may be taken together by agreement.
I move amendment No. 15:
In page 9, lines 20 to 32, to delete subsection (2) and substitute the following:
"(2) In proceedings for an offence under subsection (1), it shall be presumed that an agreement between competing undertakings, a decision made by an association of competing undertakings or a concerted practice engaged in by competing undertakings which-
(a) directly or indirectly fixes prices with respect to the provision of goods or services to persons not party to the agreement, decision or concerted practice,
(b) limits output or sales, or
(c) shares markets or customers,
has as its object the prevention, restriction or distortion of competition in trade in any goods or services in the State or in any part of the State or within the common market, as the case may be, unless the defendant proves otherwise.".
Three amendments have been proposed to section 6(2). Two propose the deletion of the subsection. Deputy Perry has also proposed a revised wording as an alternative which would have the effect of narrowing the scope of the presumption. The amendment I propose will also have that effect. I should explain clearly the reasons for the inclusion of this presumption in the Bill.
We want to ensure that a person who is proved beyond reasonable doubt to have been party to an agreement of a type that is universally regarded as seriously anti-competitive will not be able to escape conviction merely because of the technical difficulty of proving the economic effect of that agreement beyond a reasonable doubt.
There is nothing radical about this presumption. For many decades the American courts have regarded the types of practices to which the presumption relates as per se illegal, that is, as not requiring proof of their anti-competitive effect. The European Commission does not have to adduce evidence or argument about the anti-competitive effect of such practices before the European Court of Justice. It is sufficient to state that such practices are restrictive by object. It could be argued that the presumption would not be necessary if we were to assume that our courts would follow both European and American practices. However, given the serious consequences of these hardcore practices for the economy generally and for consumers in particular, I am not in favour of leaving anything to chance.
Having considered the arguments made in the Seanad, the amendments put forward in the House and comments made in public debate about the Bill, we have concluded that the scope of the provision is unnecessarily broad. The amendment I propose would narrow the scope of the presumption in three ways. It would relate to a narrower range of practices, these being price fixing for sale to third parties, market sharing and limiting production of sales. No one could reasonably oppose the presumption arising in such cases. It would relate only to the object of such agreements, not to the effect. It would apply only to agreements between the competitors and not to vertical agreements between undertakings at different levels of the economic chain.
I have given further consideration to section 6(3), the so-called ignorance defence. It has been pointed out to us that the defence is not compatible with Article 81.1 of the treaty. I await legal advice and, depending on the advice we receive, we may introduce an amendment to delete this defence on Report Stage. This amendment will have much the same effect as the one proposed by Deputy Perry. I ask the committee to accept the amendment I propose.
I am pleased the Minister of State is proceeding to narrow the scope of the presumption. Obviously in any code of law, the presumption of guilt in legislation should certainly not be dealt with lightly and only in the most extreme of circumstances. The Minister of State, by proceeding to narrow matters, has come some way towards dealing with the concerns as put to us.
There was another related amendment - which I circulated late - which was not included and which I wish to circulate for Report Stage, to the effect that farmers' associations would have the right to negotiate on behalf of their members, which is very important where section 6 is concerned. Farmers must be entitled to their negotiating position and that is not unreasonable. The right of farmers to associate must be fully recognised in law. I am concerned that the application of section 6 would give rise to the type of scenario in the recent beef dispute. I intend to return to this matter in a vigorous way on Report Stage. This will allow the Minister of State the time to take further legal advice on the points raised. In the interim, I accept what he said, albeit with a right to return to this matter.
I suppose it is unfair that the Minister of State is thrown into this position because the senior Minister is probably splashing around in the aquatic centre.
I am not aware that the Minister has dipped her toes yet.
The Minister of State is a master of making sound reasonable a far more complex proposition than he would have us believe. He cannot see why anyone would object to rebuttable presumptions such as this being enshrined in the legislation.
We are familiar with the presumption of innocence until guilt is proven.
I am in favour of that principle.
We are reversing that in this case. I accept and welcome the fact that the Minister of State has somewhat narrowed the scope. However, the rebuttable presumption of guilt still stands.
When one considers the gravity of what might be involved - up to five years in prison - it is a pretty serious step in law. The Minister of State's additional change to excise the word "effect" is valuable. It may have been the Incorporated Law Society which pointed out that someone could be acquitted of not having the object of restricting competition, but could be found guilty of doing so in effect. Therefore, the inclusion of the phrase "the object and effect" is all-embracing.
Amendment No. 16 in my name seeks to delete this subsection. IBEC made a similar submission to the Minister to the effect that it represents an unwarranted abrogation of civil rights. I would also be concerned regarding its constitutionality. To put the burden of proof on the defendant in this fashion could be dubious constitutionally. If it is proven to be constitutionally infirm, it would blow a fairly serious hole in the Bill.
Section 43 confers extensive powers on authorised officers. It stipulates that the authority may appoint authorised officers as appropriate. The section also outlines what they may do for the purposes of obtaining information in terms of dawn raids, the entry to premises, the seizure of documents and so on. I have not tabled an amendment to section 43, although it is far-reaching and some would consider it draconian. This is not a simple issue. Hard-core offences are significant in their implications for consumers and it is difficult under our evidential burden to make cases stand up.
One has only to look at the record since 1996. There were about 100 dawn raids. I do not know how many cases have been compiled and sent to the DPP or whatever, but there has not been one prosecution. I do not know why. Perhaps it is because the DPP demands a level of evidence which means he is likely to win the case. If a garda submits a file to him in a criminal case, it has to be fairly perfect and have a reasonable expectation of success before the DPP would initiate the prosecution. I am lenient in terms of section 43 in that one needs to give powers to the authorised officers which are above the norm in society if they are to compile this evidence.
The Minister of State must presume the legislation can work, but it requires the defendant to prove he or she is innocent and there is exposure to large fines and a period in prison. This reverses the normal burden of proof and I wonder if this would withstand a constitutional challenge. I do not know of the view regarding the matter being referred to the President, but there seems to be a significant prospect of a case being taken.
IBEC made the case that this is a long, unwieldy and expensive way to do business. The Moore McDowells could be in the box for days and they do not come cheap. The other side may bring in whomsoever else to rebut the evidence of that expert. I have some concerns about this issue. I am not going soft on dealing harshly with hard-core offenders. However, once one enshrines this principle in law, it will then emerge in all kinds of company law areas. A special case was made to us by the Minister in respect of the legislation regarding the Director of Company Law Enforcement. In that circumstance we accepted that, given the observance of company law in recent years and the things we are learning every day, the Director of Company Law Enforcement ought to have powers which are different and far-reaching and that we should go along with it. However, this approach is then replicated in this legislation. Once one starts reversing the burden of proof it will begin to emerge from the Parliamentary Counsel to the Government in a variety of areas of law. I am not sure that is wise. It is far-reaching and those who raised concerns about civil liberties or civil rights are correct. However, the constitutional reservations are more serious in terms of the efficacy of the Bill. Where will we be if a case is taken and the legislation is proven to be constitutionally infirm?
I thank Deputy Rabbitte for his strong and wide-ranging statement. I wish to reassure Deputies that we are not presuming the defendant is guilty. That he or she was a party to an anti-competitive agreement such as price fixing must be proved beyond reasonable doubt as is the case in all court cases under the Constitution. Only the economic effect is presumed. In practice this is also presumed in the US and the EU which have total populations of about 1 billion people. These are strong macro economies which have regarded the kind of practice to which the presumption relates as illegal per se. We could have a simplistic situation where there would be an offence, a penalty and no more. There must be proof beyond reasonable doubt. We have consulted the Attorney General and the top law officers of the land. It is very strong on the constitutionality of what is proposed and it is fair, reasonable and correct in legislative terms. The reasonable doubt clause is included to protect the individual situation.
Is the amendment agreed?
As this is a particularly major section, perhaps the Chairman will allow me to tease it out. That the Minister has agreed to the excision of the word "prefect" seems to me to betray a conviction among his officials that arguments made to them in this regard were well founded. It is one thing to have the object of restricting competition, it is a different thing not to have that object but to be liable to conviction because the effect was that the agreement was anti-competitive. Even though I am not a member of the Incorporated Law Society, I recall enough of what I learned one time to know that mens rea is essential if one is to be convicted of a criminal offence. If the original wording of the Bill was let stand I do not understand how that provision was legal. The Minister has excised that, therefore he is admitting that the legality of such a presumption is highly questionable and he has now narrowed it to “object”.
He goes on to argue that this is the practice in the United States. I thought the object here was to become consonant with European practice. It is true that the Americans are absolutely ruthless in the area of anti-trust law. They operate a particular system which has a very long history in the United States. I was not aware - if the Minister of States repeats it I will accept it - that it was the practice throughout European states that we operated on the basis of rebuttable presumptions in this area. There are a number of changes in the Bill from European or OECD practice, some of which we have skipped over and some of which we are coming to. If the Minister of State tells me it is the practice throughout the EU or OECD states that they operate on the basis of a rebuttable presumption such as is enshrined in section 6(2) then I will accept that. I did not know that was the case. There is widespread concern, which is by no means a lack of fervour for enforcing competition law, about reversing the burden of proof in the fashion here, which is a major step.
The Minister of State will have to explain again how the economic effect is at issue. The section states that in proceedings for an offence under subsection (1), it shall be presumed that it is an undertaking which (a) enters into, or implements, an agreement, or (b) makes or implements a decision, unless the defendant proves otherwise. In the Minister's amendment the phrase, "unless the defendant proves otherwise" is intact. Therefore, it seems to me the obligation is on the defendant to be able to clear himself. Perhaps the Minister will explain how he sees it only in terms of the economic effect. I am not sure what that means in the sense that the consequences for the defendant are the same.
Will the Minister of State be helpful in this regard?
I will be as helpful as possible and I appreciate the attention Deputy Rabbitte is paying to this aspect of the Bill.
Obviously there is a huge respect and value for the input of members of the Legislature, including this committee, the Dáil and Seanad. There is also a great respect for the various bodies who have made submissions. The base Bill would have been written based on what it was originally decided to proceed with. As a result of submissions and contributions, putting the intellectual capital together, a consensus would be arrived at as to what would be fair, practical and capable of being legally implemented, taking into account the law as it exists, both nationally and internationally, and the constitutional situation. Obviously officials have taken all that on board and, as a result of discussions which have taken place with the Tánaiste, they have come back with these proposals. The object of the exercise is that if an agreement has been reached, or if someone is party to an agreement, the purpose of which will be to distort competition on an anti-competitive basis, that would have a serious economic effect. On that basis there would be a presumption that this was the position and it would be possible to proceed to prosecute. Obviously the onus of proof is there. However, beyond a reasonable doubt the courts must decide whether the proof is sufficient and they will make a decision on the same basis as in all cases.
We are guided by European directives and European law much more so than American law. However, we live in a global situation so we must take into account what is happening elsewhere. We do our best in modern law to take that into account. Obviously one must look around the world at what is most suitable and applicable to an Irish economy which is very much globally based today. If we look at the situation in Europe - I want to repeat what I said earlier - the presumption is not necessary if we were to assume that our courts would follow European and American practice. The fact that the European Commission does not have to adduce evidence or argument about the anti-competitive effect of such hard-core practices before the European Court of Justice means we are mirroring our legislation on that situation. Consequently, we believe it reflects the European situation, it is suitable for a modern economy and, at the end of the day, it is fair to everyone.
Is the European regime a civil one?
Yes.
Does that not make a world of difference? It is not a criminal sanction in the case of the European regime. That makes a world of difference because it compares apples with oranges. It is a civil regime. I was not able to attend the conference organised by the Bar Association, which I regret. My understanding is that some speakers, including some members of the Judiciary, were very sceptical of aspects of the Bill, including raising the more major question of criminal sanctions in terms of their feasibility and workability, given the experience we now have.
On the question of reversal of the evidentiary burden, I understand a good deal of scepticism was expressed. I am not reassured by the European example given by the Minister of State. Deputy Flanagan's amendment was accepted but we did not amend section 4(1) in so far as it relates to (a), (b) and (c). I put to the Minister the view of the Incorporated Law Society. It says that this presumption is particularly objectionable given the vagueness of the wording of paragraphs (a) to (c) of section 4(1) which could be interpreted as covering a much wider range of arrangements than the hard core competition offences which section 6(2) is apparently intended to catch.
The wording of these paragraphs could clearly include vertical restraints which would often not be regarded as restricting competition. As well as specialisation or research and development agreements which would normally satisfy the conditions of section 4(5), the argument is being made there that to incorporate a presumption of guilt in legislation such as this is especially serious, given the vagueness of directly or indirectly fixed purchase or selling prices or any other trading conditions; limited or controlled production, markets, technical development or investment; and, shared markets or sources of supply.
Amendment No. 15 in its totality is designed to meet people's worries about the effect and we have encapsulated in this amendment proposals to take account of those. I trust that the amendment will allay the fears expressed by Deputy Rabbitte and other committee members about this matter.
Regarding the situation in both the European Union and the US, it is accepted that if an agreement is made which is anti-competitive in nature and people are party to it, they are guilty by the fact that they made the agreement. The onus is on them to prove that they have not made an agreement that is anti-competitive. With regard to the fact that they got together to make the agreement, the authority will have the right to say if that agreement is unsatisfactory or anti-competitive and to decide whether it will consequently proceed against the parties involved.
Does that seem to be cutting across the Minister's amendment? I thought we had removed the matter of effect. Could there not be such an agreement where that was not the object of the contracting parties? It may be the effect and it may be that it should be dealt with but that may not have been the object. It may be remote but surely it is a possibility.
It is accepted everywhere that hard-core agreements by their nature are anti-competitive and anti-consumer. There is an exception to every law but one cannot legislate for the exception.
I am not sure we can build a parliamentary jurisprudence on that proposition. What does the Minister say to the contention that the vagueness to which I referred could be interpreted——
In the amendment I tabled, the vagueness has been removed. We have tightened up the matter.
Not as it relates to section 4(1). What does the Minister say to the proposition that the vagueness in section 4(1) could be interpreted as covering a wider range of arrangements than is envisaged in section 6(2) which, as I understand it, proposes to deal with the hard-core offenders? If it is submitted that section 4(1) contemplates circumstances or arrangements that are wider than those hard-core offenders, does the Minister accept that is the case and that vertical restraints could find themselves included here?
Section 4(1) is the wider form and we have added to that and amended it with amendment No. 15 which deals with hard-core offenders. By doing that we have tightened the proposal in the legislation to clear up any doubts.
The Minister rejected my amendment No. 14 in favour of his amendment No. 15 and he was quite critical of the potential import of my amendment, were it to form part of the legislation. Yet his own amendment does not appear to be far from this in terms of its con-struction. Perhaps he would briefly contrast the two.
The most important aspect of the switch in the burden of proof lies in the workings of the legislation. Does the Minister accept that, as currently constructed, this basis of criminal sanction is not working and that much of the criminal sanction element of the Bill is mere window dressing? In practice, there has not been any great body of criminal sanction demonstrated in the courts due to a certain unworkability where economists tend to be pitted against one another and it has proved to be difficult for judges to apply the law. Yet in this reforming legislation and this consolidated instrument the Minister is again relying heavily on criminal sanctions which, in essence, have very little application.
How many concerns would have been convicted on the basis of sanctions under the 1991 and 1996 legislation? How does the Minister envisage that the criminal atmosphere will change to allow for an appropriate conviction to take place on the basis that a cartel is always harmful, if one takes that view, which is reasonable in the circumstance? While one could say that a cartel is always harmful, nevertheless the imposition of the criminal sanction to deal with that harm has been less than effective. Assuming that the Minister's amendment will gain favour in committee and in the House, how does he see the result of this new section 6 panning out in the application of criminal law, to improve or deal with the unsatisfactory situation that currently exists?
Minister, can you try to clear this up? We have spent 30 minutes on it and we are due to break in two minutes sharp.
All right. I want to be fair to both Deputies who have given much time and attention to this. Deputy Flanagan's amendment No. 14 proposes to amend section 6(1) in terms of the definition, compared with my amendment No. 15 to section 6(2) which deals with the presumption. There is a marked difference between them. I agree that a cartel is harmful - of that there is no doubt. Originally we tabled our first legislation in 1991, the second legislation in 1996 and in the intervening five years the law has evolved. The United States has had a century of this evolution of the law. We have come a long way and progress is being made with regard to how the criminal sanction measure is panning out in the courts. Good decisions are being made and I am confident that this Bill, when passed, will be of great assistance to the courts and the consumers. We have a very focused approach, we are narrowing the situation and I trust that this is the way forward. Criminal sanction has worked elsewhere in the world. There is no reason why it cannot work here. Our proposals are safe and will add to the corpus of legislation that will assist the courts to make adjudications on the difficulties that will be encountered and dealt with in the future.
We do not wish to delay this unreasonably and agree to a break now.
Sitting suspended at 1.30 p.m. and resumed at 2.10 p.m.
I welcome the Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Harney, and thank her for joining us. We are discussing amendment No. 15, on which we have had a little over a half hour's debate involving considerable interaction on relevant issues relating to sections 6(2) and 4(1). I hope the Tánaiste has been briefed by her officials in that regard and that she can assist the committee in moving forward at this stage.
The essence of what we are doing is that, where it has been proved beyond reasonable doubt that somebody is a party to price fixing, market sharing or limiting production of sales, it is to be presumed they have done so for anti-competitive reasons to restrict competition and one does not have to go on to prove the economic effects of their behaviour. As I am sure Deputy Treacy will have explained this morning, this is normal in the United States, for example, where subsequent proof of anti-competitive effects is not required. In addition, the European Commission does not have to adduce evidence or argument about the anti-competitive effect of such practices before the European Court of Justice. No doubt, the Minister of State will have said it is sufficient to state that such practices are restrictive by object. Perhaps it could be argued that the presumption is not necessary if we were to assume that our courts would follow the European or American practice. However, given the serious consequences of these hard-core practices for the economy generally and for consumers in particular, I am not in favour of accepting the proposed amendments. As the committee will be aware, we are ring-fencing this around the hard-core offences and we also debated the matter in the other House. If we are serious about dealing with anti-competitive behaviour and protecting consumers, we need a provision of this kind.
I do not wish to retrace the territory which has been covered already but the existing provision incorporates a presumption of guilt in legislation and one wonders if that is appropriate. This rebuttable presumption arises not only in section 6(2) but also in sections 6(7), 7(4), 8(7), 12(1) and 13(8). To many people, this seems an unwarranted abridgement of civil rights. I accept the gravity of the case the Tánaiste is trying to cope with in this regard but, in a strange way, it is the gravity which makes this reversal of the evidentiary burden so significant because, since it is aimed at the hard-core offences, it attracts a criminal sanction of considerable magnitude. For that reason, this is a very important issue. The Tánaiste has said it is clearly targeted on the hard-core competition offences. However, I drew attention earlier to the view of the Incorporated Law Society that subsections 4(1), (a) to (c), are so vague that it is probable that section could be interpreted as covering a much wider range of arrangements than the hard core competition offences to which the Tánaiste refers and, therefore, that it could clearly include vertical restraints as well as those encompassed by those subsections. The issue is that there is a civil rights dimension involved here. We are reversing the normal evidentiary burden of the criminal law and, more important perhaps, this could be shown to be infirm in constitutional terms. The constitutional validity of what the Bill seeks to do is disputed by at least some of the experts. If that were to be borne out in the courts, it would be a very serious blow to the legislation.
I believe the arguments have been adequately rehearsed. Since the Incorporated Law Society made its submission, which was based on the original Bill as passed by the Seanad, we have brought forward amendment No. 15 to ring-fence these provisions around the hard-core offences. However, unless somebody can suggest a genuine reason, which I cannot think of, that an individual would be a party to price fixing, market sharing or limiting production of sales, it would be wrong that such an individual could escape conviction for technical reasons. Clearly, it will have to be proved beyond reasonable doubt that an individual was a party to such behaviour but it should not be necessary, having proven that, to have to subsequently prove the economic effects of that behaviour. That would make it very difficult to get convictions and people could escape for technical reasons. That is why we are taking this approach in the Bill, which is common practice in the EU and the United States where anti-competitive behaviour is taken more seriously than, perhaps, it has been taken in this country.
Amendment agreed to.
Amendments Nos. 16 to 18, inclusive, not moved.
We move to amendment No. 19. Amendments Nos. 23 and 54 are cognate and amendments Nos. 19, 23 and 54 may be discussed together, by agreement.
I move amendment No. 19:
In page 10, subsection (6), line 18, to delete "decision of a statutory body" and substitute "determination made or a direction given by a statutory body".
It is important to be clear as to when the immunity arises and I consider that the term "decision" is too loose and capable of being misinterpreted. Accordingly, I propose these amendments to clarify the matter. It is only where a regulator has issued its determination, or a direction which must be complied with, that an undertaking can rely on this protection.
Amendment agreed to.
Amendment No. 20 not moved.
We move on to amendment No. 21. Amendment No. 24 is cognate and the two amendments by discussed together, by agreement.
I move amendment No. 21:
In page 10, lines 19 to 23, to delete subsection (7).
This is part of the discussion that we commenced this morning with the Minister of State at the Department of Enterprise, Trade and Employment, Deputy Treacy. It goes to the core of this Bill and that is why we discussed the issue for almost an hour. These amendments are material to changing the burden of proof. A submission to the committee from IBEC and the Competition Authority raised serious elements of concern as far as the presumption of guilt was concerned. I realise that the committee has just dealt with a ministerial amendment but the broad brush nature of these subsections are quite sweeping in their effect. It would be best to remove these subsections to allow for narrowing the presumption of guilt within certain parameters and confines.
It seems reasonable that undertakings can be made liable for the actions of their officers. The alternative is that if the company was involved, all of its officers would be liable. This is rebuttable but it would seem very easy to hang an officer out to dry while the company walks away from any responsibility. Officers of companies act in the name of the company and I do not propose to accept the amendment. It would make the Bill ineffective and greatly weaken its provisions.
Would it at all times be assumed that the officer was acting on behalf of the company?
Yes. We have seen examples of matters that have come into the public arena where individuals were used as scapegoats while the company got off scot-free. This is an effort to ensure that it is clear that when officers are acting, they do so as officers of a company and not in a personal capacity.
The actual words are "officer or an employee". One is reminded of hearing last weekend of a not particularly high-ranking employee of a company being committed to prison for three days because of an action that was entirely disowned by his employer. While one might arch an eyebrow at that, on the Tánaiste's principle the undertaking - which can have a personal meaning here also - would have to take the rap for the actions of the employee. Perhaps many people would applaud if that was the case but it raises the notion of vicarious liability and draws no distinctions. It does not say "an officer the equivalent of director" or a senior manager or otherwise. The automatic assumption is that even a relatively junior employee is doing what he or she is told, or is acting entirely on his or her initiative for his or her own purposes. However, there is no distinction and the effect is the same in that the company is liable.
Obviously, if somebody is told to do a thing then the undertaking is regarded as liable.
It is fair in that circumstance but this does not distinguish between actions.
Why would an employee agree off his or her own bat to fix prices, share markets or limit production? What benefit would there be to an employee? What is done in the name of a company is done for the benefit of the company. It is too difficult to start ring-fencing the different officers or the level at which people are responsible. Clearly, this can be rebutted but not to have a provision of this kind would make it very difficult to get convictions. What is said here is that if somebody participates in this kind of behaviour, he or she does so on behalf of the undertaking. An officer can rebut that or prove that it is not the case but to have the alternative - where somebody commits an act yet the company escapes on the basis that the individual was not acting on behalf of the undertaking - would lead to the kind of problems that Deputy Rabbitte referred to earlier. Individuals would be used as scapegoats for acting in a purely personal capacity while the undertaking escapes despite being the beneficiary of the behaviour of the individual.
Amendment, by leave, withdrawn.
I move amendment No. 22:
In page 10, between lines 23 and 24, to insert the following subsection:
"(8) In this section "competing undertakings" means undertakings that provide or are capable of providing goods or services to the same applicable market and, for the purposes of this definition, "applicable market" means a market comprising the provision of goods or services that are regarded by those to whom they are provided as interchangeable with, or substitutable for, each other by reason of the goods' or services' characteristics, prices and intended use or purpose.".
Amendment agreed to.
Section 6, as amended, agreed to.
SECTION 7.
I move amendment No. 23:
In page 10, subsection (3), line 34, to delete "decision of a statutory body" and substitute "determination made or a direction given by a statutory body".
Amendment agreed to.
Amendment No. 24 not moved.
Section 7, as amended, agreed to.
SECTION 8.
Amendment No. 26 is an alternative to amendment No. 25, and amendment No. 30 is related. Amendments Nos. 25, 26 and 30 may be discussed together, by agreement.
I move amendment No. 25:
In page 10, lines 40 to 44, to delete subsection (1) and substitute the following:
"8.-(1) An undertaking guilty of an offence under section 6 (being an offence involving an agreement, decision or concerted practice to which subsection (2) of that section applies) shall be liable-".
The amendment to section 8(1) is consequential on the amendment to section 6(2). Amendments Nos. 26 and 30 relate to vertical agreements. If the intention is to exclude such agreements from the definition of hard-core offences, it has already been done by the amendment to section 6(2). If the intention is to exclude them from the scope of competition law altogether, I could not accept this. Accordingly, I cannot accept amendments Nos. 26 and 30.
Amendment agreed to.
Amendment No. 26 not moved.
Amendments Nos. 27, 31, 33, 34, 36 and 37 are related and may be discussed together, by agreement.
I move amendment No. 27:
In page 10, subsection (1)(a)(i), line 47, to delete “€1,900” and substitute “€3,000”.
This Bill provides for fines for competition offences in section 8 - for a failure to comply with notification obligations in a merger or acquisition in section 17; for a failure to comply with a commitment, determination or order in section 25; and for a failure to co-operate with an investigation of the authority in section 29. A maximum penalty for all summary offences of €1,900, equivalent to £1,500, was determined by the Office of the Attorney General in 1994, but it has been recommended that it be increased to €3,000 and these amendments will facilitate that.
Amendments Nos. 33, 36, 64 and 95 increase the penalty for continuing offence, which is calculated by reference to the rate for the first offence. Basically, I propose to adjust the penalties for summary offences.
Amendment agreed to.
Amendments Nos. 28, 29, 32, 35 and 38, may be discussed together, by agreement.
I move amendment No. 28:
In page 11, subsection (1)(b)(i), line 7, to delete “€3,800,000” and substitute “€4,000,000”.
Can I discuss a major point in relation to section 8, to which Deputy Flanagan alluded before lunch?
Perhaps it would be helpful to deal with amendment No. 28 and the related amendments before we discuss section 8. Deputy Rabbitte's queries may be addressed when we discuss the section after we deal with amendment No. 43.
Amendment agreed to.
I move amendment No. 29:
In page 11, subsection (1)(b)(ii), line 13, to delete “€3,800,000” and substitute “€4,000,000”.
Amendment agreed to.
Amendment No. 30 not moved.
I move amendment No. 31:
In page 11, subsection (2)(a), line 23, to delete “€1,900” and substitute “€3,000”.
Amendment agreed to.
I move amendment No. 32:
In page 11, subsection (2)(b), line 26, to delete “€3,800,000” and substitute “€4,000,000”.
Amendment agreed to.
I move amendment No. 33:
In page 11, subsection (3)(a)(i), line 37, to delete “€190” and substitute “€300”.
Amendment agreed to.
I move amendment No. 34:
In page 11, subsection (3)(a)(i), line 38, to delete “€1,900” and substitute “€3,000”.
Amendment agreed to.
I move amendment No. 35:
In page 11, subsection (3)(a)(ii)(I), line 41, to delete “€38,000” and substitute “€40,000”.
Amendment agreed to.
I move amendment No. 36:
In page 12, subsection (3)(b)(i), line 1, to delete “€190” and substitute “€300”.
Amendment agreed to.
I move amendment No. 37:
In page 12, subsection (3)(b)(i), line 2, to delete “€1,900” and substitute “€3,000”.
Amendment agreed to.
I move amendment No. 38:
In page 12, subsection (3)(b)(ii), line 4, to delete “€38,000” and substitute “€40,000”.
Amendment agreed to.
Amendments Nos. 39 to 42, inclusive, and No. 53 are related and may be discussed together, by agreement.
I move amendment No. 39:
In page 12, subsection (6), lines 20 and 21, to delete ", manager,".
This amendment intends to introduce full certainty into the matter. It is a little unusual to enshrine the word "manager" in legislation and I am not sure if we can immediately pinpoint a legal definition of who is or is not a manager. A submission to this committee made a reasonable point on the penalties outlined in section 8. It is incumbent on us, where possible, to ensure absolute legislative certainty. We have dealt with terms like "director", "employee" and "persons involved in a company", but the word "manager" may mean different things to different people and it requires clarification.
My amendment No. 40 seeks to excise subsections (7) and (8). The minimum we require from the Minister is an agreement to accept Deputy Flanagan's amendment to remove the word "manager". We should be concerned about whether this section will withstand a test of the far-reaching rebuttable presumption it contains. The recommendation that we delete the word "manager" is eminently reasonable, as the subsection's meaning would change to allow a similar officer to be a manager at the level of director or someone else with a similar order of responsibility. The section would read "a person, being a director or other similar officer".
The principle which the Minister advocated in respect of an earlier matter is turned on its head in section 8(6) as it stands, as junior persons with no hand, act, part or knowledge of the undertaking, who are involved in it as long as they do what they are told, could be implicated as a result of the word "manager" being in the Act. I agree that those responsible for an offence should be targeted, but that may be not be the case in a private sector company where a relatively junior person is instructed to get on with the work despite having no knowledge of the origins of the case. The excision of the word "manager", as proposed by Deputy Flanagan, would at least make this section more manageable.
I am disposed to examining this matter with a view to returning to it on Report Stage, as reasonable arguments have been put forward.
Is that helpful? Does Deputy Flanagan propose to withdraw his amendment, given the suggestion that it may be reintroduced on Report Stage?
I think so. A warehouse manager, for example, would be seen as a manager and would, therefore, be covered by this section. The word "manager" covers too broad an area.
I think the argument has been made.
I accept the point which has been made about senior officers. I will not delete subsection (7), but I will return to the matter on Report Stage.
Before I withdraw my amendment, I wish to record my concern that we are making an individual precariously liable for a criminal offence. I have some doubts about the wisdom of such a provision. I do not wish to repeat my earlier remarks, but I wish to make clear to the Minister, Deputy Harney, who has just taken over this legislation, that if we permit this in one Bill it will appear in many others. My concerns in this regard may necessitate an examination of the Employment Equality Bill by officials from the Department of Enterprise, Trade and Employment to ascertain whether this Bill will withstand a similar test.
Deputy Rabbitte's amendment will not be moved, but perhaps his concerns will be discussed between the Minister, her officials and Deputy Rabbitte before Report Stage.
Amendment, by leave, withdrawn.
Amendments Nos. 40 to 42, inclusive, not moved.
I move amendment No. 43:
In page 12, subsection (10), line 41, after "action" to insert "shall be suspended having regard to the initiation of a prosecution for any such offence and".
I am anxious to ascertain the Minister's view on this amendment, which addresses the conflict which will arise between the civil and the criminal jurisdiction. There are potential human rights problems here and I propose that civil actions be suspended in cases where a criminal action is proceeding. In future that should be how the action is dealt with. There is an element of fair play involved. Perhaps the Tánaiste has teased out which one should be used in terms of frustration or delay. On the face of it, the amendment seems somewhat reasonable, however, those on the other side of the argument may have given the matter detailed consideration.
The purpose of the subsection is twofold. It is there to ensure that civil proceedings may be brought where there has been a prosecution and to ensure that civil proceedings will not prejudice a subsequent prosecution. Given the latter, there is no need to provide for the suspension of civil proceedings where a prosecution is pending or possible.
Amendment, by leave, withdrawn.
Question proposed: "That section 8, as amended, stand part of the Bill."
What is the Tánaiste's conviction regarding the major matter of criminal sanctions? Deputy Flanagan alluded to the matter when discussing an earlier amendment and I was persuaded in 1995 of the need to have a deterrent for this kind of hard-core offence. Confidence is a bit shaken because of what has happened since and I would like to hear the Tánaiste discuss the subject.
A number of cases have been prepared by the Competition Authority for the DPP and one can only speculate as to the amount of work that went into putting those files together. Some 100 dawn raids have been carried out and five years later there has not been a single prosecution. What is one to deduce from that? Is there a lack of conviction on the part of the authority or a lack of professionalism in putting the file together? I suggest that the answer is "No". Does the DPP require a standard of proof which is very difficult to meet in competition cases? It is still contended by organisations such as IBEC that the fact that we have not had a conviction is evidence that criminal sanctions are working against impeding this kind of activity in the economy and that if one could impose redress for damages and apply the civil regime effectively, it would be more effective. I do not know as I have not reflected on this as much as the Tánaiste will have, but I have read what the competition and mergers review group has said on the matter.
It has to be a matter of some concern that several files - and all of the skills, resources, time and money that went into preparing them - went to the DPP with no result or effective conviction after five years. Apart from some rebalancing here, what are we changing? The penalty in its size is quite a deterrent on paper, but if one cannot make it stick in court or if the DPP's office is accustomed to dealing with normal criminal cases and expects a standard of proof that simply cannot be met in competition cases, then the legislation is very much on trial. The Tánaiste will have considered these questions and I would like to hear her speak about them before we conclude discussion of this section.
There is much merit in what Deputy Rabbitte says. We in Ireland are good at passing laws, but implementation and enforcement is another issue, particularly in the area of corporate offences and corporate governance. There is a new regime in place and I hope a changed culture will emerge.
The view of some is that if one pursues company law vigorously one is anti-business or anti-enterprise, but the country that perhaps pursues these matters with the greatest vigour is the United States of America. Most people will accept that its economy is the most successful in the world. There is no conflict between the two.
There have been a number of difficulties, the first of which is the issue of resources within the authority. It did not have sufficient staff or the kind of staff needed to minimise the difficulties of gathering evidence. We have recently increased the number of staff after a review of the authority's requirement and members of the Garda are included in the provision, which will help enormously.
Essentially, this Bill is about making it easier to obtain convictions. There were major difficulties and loopholes and this Bill goes beyond the recommendations in the Competition and Mergers Review Group report, regarding the presumption issue as well as other areas, in order to make it easier to get convictions. The greatest deterrent of all is a conviction, but if the law cannot be enforced then people will not take this area seriously. I cannot speak for the office of the Director of Public Prosecutions and I do not see why it is the case that files sent there by the authority may not have been pursued, but I presume there was a lack of evidence or a projected difficulty in securing a conviction. That may have something to do with deficiencies in existing law. The law in this area is only ten or 12 years old - 1990 was the year of the first Act - and it was only in 1996 that enforcement powers were granted to the authority. The law is still in its infancy, but the authority and its chairman are very determined and have been of enormous help in framing much of this legislation. They have also been of enormous help to Deputies in the Opposition by briefing them, which is very important in helping us to produce the best possible legislation, notwithstanding the difficulties in time that we have as we come to the end of term.
It is regrettable that we do not have more time as this is a very important Bill, but there is a broad consensus about its main thrust, though we may differ on particular provisions or place a different emphasis here and there. The Opposition has accepted broadly the Bill's provisions which will go a long way towards improving the chances of obtaining convictions in the future. We need convictions for the very serious, hard-core offences.
I realise I am probably moving from the specific to the general, but it is very important to do so because this is the core of the Bill. I accept what the Tánaiste has said about the need to provide proper resources for the Competition Authority and there have been some improvements in that regard recently. However, that is only half of the story.
The other half of it she alluded to when referring to the Director of Public Prosecutions. The Tánaiste says she does not know why the files have not been pursued, but we should know why and we can know why without in any way interfering with the independence of the office of the DPP. Three example cases, all involving some form of drink, are the Dublin liquid milk cartel allegation, the beer cartel allegation and the soft drink bottlers cartel allegation. Some of the cases have been with the office of the DPP for some time and it is not unreasonable for us as Members of the Dáil to ask why there has been a delay in pursuing them. Is it a problem of evidence or of initiative? I do not know, but I do not accept that a politician saying he or she does not know is fair and reasonable in the circumstances. We should find out why there has been a delay. It is of great importance that we do, otherwise the Bill and our work is of considerably less value than we would like it to be.
The Competition Authority has been somewhat tardy in examining or pursuing complaints in a wide range of areas, for example, against utility monopolies such as the ESB, Aer Rianta, Eircom and Bus Éireann. If there is a problem with the Competition Authority pursuing these matters, other bodies might justifiably do it. It is important, therefore, that we extend the powers of the authority to the regulators.
I wonder if the Director of Public Prosecutions would comment publicly on frustrations or difficulties which may have arisen in his office while addressing this issue. While I am very conscious and most respectful of the independence of the office, asking these questions in the House does not mean we are interfering with it or being less than deferential towards it. Questions havearisen in the public domain which need to be answered.
Perhaps the Deputy's comments will elicit a spontaneous response from the DPP's office. However, as the Tánaiste has already commented on the matter, we will proceed.
Question put and agreed to.
Section 9 agreed to.
SECTION 10.
I have been advised that amendment No. 44 has been ruled out of order as it involves a potential charge on the Revenue.
Does it automatically presume that these cases will be transcribed?
I understand it does.
I wish to have this matter clarified. Her knowledge of the DPP's office aside, is the Tánaiste certain the Courts Commission and its officers are capable of providing transcription services for every competition case?
The officers are certainly capable of doing this.
It requires plenty of paper.
As stated in section 10(1), copies will be provided if the judge considers it appropriate. On amendments Nos. 45, 46 and 47——
While my question was only half serious, I wonder if the inclusion of section 10(1)(e) gives the defendant a reasonable expectation that the proceedings will be transcribed in all circumstances. I envisage lawyers making a fuss about the absence of transcription facilities given that this provision is enshrined in legislation. While the Tánaiste may be correct, my interpretation of the reference is that the judge may order that copies be given to the jury or not and that it does not state that the judge shall order that the case in question be transcribed or not.
The Deputy raises an interesting point.
May we leave the matter until Report Stage?
The purpose of making the transcript would be to give it to the members of the jury to help them consider the matters they have heard at trial. The decision would be at the discretion of the judge.
The matter should be re-examined before Report Stage.
Is the Deputy concerned that the defendant receives a copy of the transcript?
No.
It is not mandatory for the judge to require a transcript for the jury. The matter is at his or her discretion.
While I understand that, I fear that its inclusion in this list will create a reasonable expectation that provision for transcription would be made in all circumstances. This may not arise, however, and the Bill does not set out the circumstances in which it would, but states only that the judge may decide which documents ought to be given to the jury.
The Deputy is correct, the matter is completely at the discretion of the judge.
Although I will be happy with the provision if the parliamentary counsel is, the point ought to be clarified.
Amendment No. 44 not moved.
We might try to get clarification on Report Stage. Amendment No. 46 is related to amendment No. 45 and amendment No. 47 is an alternative to amendment No. 46. The amendments may be discussed together by agreement.
I move amendment No. 45:
In page 13, subsection (1), lines 33 to 41, to delete paragraph (g).
Amendment agreed to.
I move amendment No. 46:
In page 13, lines 42 to 47 and in page 14, lines 1 to 8, to delete subsections (2) and (3).
Amendment agreed to.
Amendment No. 47 not moved.
Section 10, as amended, agreed to.
NEW SECTION.
I move amendment No. 48:
In page 14, before section 11, to insert the following new section:
11.-A person indicted (whether as a principal or an accessory) for an offence under section 6 or 7 or the offence of attempting to commit such an offence or the offence of conspiracy to commit such an offence shall be tried by the Central Criminal Court.”.
As we received a raft of amendments this morning, I ask the Tánaiste to explain what exactly this amendment will change.
The competition and mergers review group recommended that any criminal indictment for a breach of the Competition Acts should be returnable before the Central Criminal Court. This amendment gives effect to the recommendation. In other words, it is a criminal matter for the High Court.
Amendment agreed to.
Section 11 agreed to.
SECTION 12.
Question proposed: "That section 12 stand part of the Bill."
This is a rather sweeping section which introduces a regulatory framework for the admissibility of statements. It gives rise to questions of due process, which have been raised with us and on which, I am sure, the Tánaiste has sought advice. I am very concerned about the section, as framed, on the basis of certain presumptions it contains. There appears to be no right of cross-examination or of challenging or pursuing matters which may be contained in admissible statements. I expected provision to be made for some form of cross-examination under oral evidence as to the content of statements.
I share those concerns. To some extent it brings us back to the territory of rebuttable presumptions and so forth which we discussed earlier. I do not know where the Tánaiste will be in five years time. If she is up in the park, I promise to visit her with a copy of this Bill under my arm because it will be quite extraordinary if it does not produce results. Despite the calm of this room and the urgency of the outside events pressing us to get on with enacting the legislation, which we want to do, it contains sweeping changes to the normal laws of evidence and other matters.
It is suggested here that one cannot cross-examine a statement. The statement is taken at face value as being evidence of what it says it is and one cannot cross-examine it. The laws of evidence have withstood the test of time, however lay people might want to view them. I tabled an amendment on 10(1)(g) - which I am glad the Tánaiste has agreed to excise - that was copied from the Companies Bill and appears here again. We agree to things like this but the Minister for Justice, Equality and Law Reform or the Tánaiste will come back to us with it enshrined in another Bill. It is a slippery slope.
In the Special Criminal Court one can take the word of the chief superintendent if he advises that something is a fact but, in a straightforward situation like this, one can present a statement but it cannot be cross-examined. That seems to me extraordinary and for that reason I am also proposing the excision of this provision.
I acknowledge that this is a substantial change which is intended to make the law more effective. Sections 11 and 12 are based on recommendations from the competitions and mergers review group. The presumptions provided for are reasonable and rebuttable. The purpose is to prevent prosecutions being thwarted by a reliance on technicalities and I believe they will play an important role in ensuring that competition law can be effectively enforced.
I am agreeable to having another look at the issue of statements and the power to cross-examine and will come back to this on Report Stage. I will consult on the matter without changing its substance.
Question put and agreed to.
As we have reached the time agreed to proceed to the Estimates, we will conclude our consideration of the Competition Bill at section 12 and will resume on Friday, 22 March at 1 p.m. Is that agreed? Agreed. I thank members for their co-operation.
Sitting suspended at 3.05 p.m. and resumed at 3.10 p.m.