Minister Bruton publishes Competition and Consumer Protection Bill 2014

Groundbreaking legislation will deliver on two Programme for Government commitments and introduce major reforms in consumer protection, grocery goods sector and media mergers

31st March 2014

The Minister for Jobs, Enterprise and Innovation, Richard Bruton TD, today [Monday] published the Competition and Consumer Protection Bill 2014 and introduced it to the Oireachtas, after he secured Government agreement on the text of the legislation last week.

The legislation has three main components:

1. Merge the National Consumer Agency and Competition Authority and deliver improvements in competition law to create a watchdog with real teeth. This forms part of a broader reform agenda within the Department of Jobs Enterprise and Innovation which will see the number of Agencies reduced by 41 over the coming months

2. Regulate certain practices in the grocery goods sector aimed at ensuring balance and fairness between the various players in the sector – suppliers, retailers and consumers

3. Update and modernise the law on media mergers to take account of international best practice and technological developments.

Publishing the legislation, Minister Bruton said:

“This is a major piece of reforming legislation with three main objectives. Firstly, as part of the programme of reform we are implementing across the Department of Jobs, it will merge the Consumer and Competition Agencies to create a powerful watchdog with real teeth acting to protect and vindicate consumers. New criminal investigation functions are being added to the significant powers that already exist to combat serious white-collar crime and ultimately combat higher prices and protect consumers.

“Secondly, we are introducing strong regulations and powerful new investigation and enforcement powers to ensure fairness between suppliers and retailers in the grocery goods sector. There is potentially a real inequality of arms between these players which can be abused in a manner that is not in the interests of jobs, consumers or sustainable safe food. Relationships will continue to be based on commerce and prices will continue to be set by hard negotiations – this is in the interests of consumers. However new legal requirements for record-keeping and the inclusion of certain terms in written contracts together with strong enforcement powers will ensure that these relationships are fair and sustainable.

“Thirdly, diversity of content and diversity of ownership across the media remains an important part of a healthy democratic society. We are retaining the basic model of current laws, based on the principle of avoiding intervention by Government in media ownership except in specific circumstances following procedures determined by law. This is in keeping with the recommendations of the Advisory Group established to examine this area. However it is important to modernise these laws to reflect with international best practice and in line with the latest technological developments, and that is why we are implementing in full the recommendations of that Advisory Group and making important changes to update laws in this area.

“I wish to pay tribute to my colleagues Ministers Coveney and Rabbitte, the Attorney General, and officials in my Department and Agencies for their contributions in bringing this major piece of legislation to fruition”.

The bill , explanatory memorandum and RIA can be found at:
Competition and Consumer Protection Bill 2014 (pdf, 818KB)

J:WEBSITEpublicationscommerce2014compconprotbill2014.pdf

Competition and Consumer Protection Bill 2014 Explanatory Memorandum (pdf, 69KB)

J:WEBSITEpublicationscommerce2014compconprotbill2014memo.pdf

Competition and Consumer Protection Bill 2014 Regulatory Impact Analysis (pdf, 240KB)

J:WEBSITEpublicationscommerce2014compconprotbill2014ria.pdf
For further information please contact:

Conor Quinn, Press Advisor to Minister Bruton, Tel: 087 3743783.

Press Office, Department of Jobs, Enterprise and Innovation, Tel: 01 631 2200, email: [email protected]/* */

NOTES FOR EDITORS

1. Competition and Consumer Protection Commission (CCPC)

The new merged body will comprise a Chairperson and between 2 and 6 Members, who will act in a collegiate manner. This structure is modelled on that of the Competition Authority and consequently there will be no Board. The initial members of the new merged body will be the Chairperson and members of the Competition Authority and the CEO of the National Consumer Agency. Savings of approximately €170,000 per annum will be achieved as there will be no fees for a Board or Chairperson to be paid (or associated costs such as travel and subsistence for Board members) while some minor savings might be realised in relation to public relations and audit activities.

A suite of additional enforcement powers have already been provided to the Authority in 2012 under the Competition (Amendment) Act 2012 and additional staff were also allocated to it to strengthen competition law enforcement. This Bill gives additional powers to the new CCPC by extending the provisions of the Criminal Justice Act 2011 and the Communications (Retention of Data) Act 2011 to serious competition law offences. In addition, some elements of the Criminal Justice Act 2007 related to the use of the taped-evidence at witness-interviews have been incorporated into the powers of the new Commission.

This means that a range of new powers will be available for the investigation of serious competition offences such as cartels and price-fixing which ultimately have a real impact on consumers in the form of higher prices. These powers will be of significant assistance in investigation and prosecution of serious competition offences – white collar crimes which are extremely complex and often require proving of various aspects including communications between parties. Among the new powers included are:

· A new power to apply to court for an order to require any person with relevant information to produce documents, answer questions and provide information for the purposes of the investigation of relevant offences. Failure to comply with such an order will be an offence. This is a central provision of the Act.
· A new system to make more effective use of detention periods where a person is being questioned about a relevant offence. This will allow persons arrested and detained for questioning to be released and their detention suspended so that further investigations can be conducted during the suspension period.
· Measures relating to how documents are to be produced. These measures are aimed at reducing the delays associated with the production of large volumes of poorly ordered and uncategorised documents in the course of their investigations.
· Measures to prevent unnecessary delays in investigations arising from claims of legal privilege.
· A new offence created by the Criminal Justice Act 2011 relating to failure to report information (section 19).

The Bill also extends the provisions of the Communications (Retention of Data) Act 2011 to serious competition offences. This means that telephone and internet service providers are required to retain details of internet and call data for up to 2 years, in order to ensure that the data is available for the purpose of the investigation, detection and prosecution of serious competition offences

In addition, some elements of the Criminal Justice Act 2007 relating to the use of the taped-evidence at witness-interviews have been incorporated into the powers of the new Commission (section 56 and 57 of the Act – which allow authorised taped witness interviews in Garda stations to be introduced as evidence in court in certain circumstances, including giving a copy to the accused if a Court directs it).

Other changes to the Competition Act 2002 mainly revolve around the procedures to be operated by the new CCPC surrounding merger notifications. Many of these emanated from a public consultation process held in 2007/8.

On the Consumer Protection Act 2007, a small series of technical amendments is being proposed on the basis of experience of the Act since 2007. It has been previously stated that a further Consumer Rights Bill will be brought forward in 2015 which will update sales law and also further build on the experience of the Consumer Protection Act 2007.

2. Grocery Goods

The Bill gives the Minister the power to make Regulations to specify certain procedures that must be followed in commercial relationships between undertakings in the grocery goods sector. It is aimed at preventing certain practices such as unilateral alteration of contracts by retailers, requiring ‘hello money’ for space on supermarket shelves, suppliers being required to bearing the cost of promotions by retailers or for wastage or shrinkage.

It was considered that Regulations would be more appropriate than a Code of Practice as these will have full Legislative force and be enforceable at law by the CCPC.

The powers of investigation and enforcement available to the CCPC in the event of breaches of the Regulations are substantial (see below).

The Minister’s intention is to draft Regulations to be in force as soon as practicable after the enactment of the Bill. It is the intention to liaise closely with the Department of Agriculture, Food and the Marine and to take into account the contributions to the Oireachtas during the passage of the legislation when drafting these Regulations. It is important to note that one option that is open to the Minister to introduce an initial series of Regulations reflecting some of the powers open to him and assess how these work in practice in the market after a period of time before amending or adding to them.

Among the matters which the Minister has the power to make Regulations are:

· the form of contract to be entered into (e.g. that they must be in writing) by a grocery goods undertaking for the supply of grocery goods to relevant grocery goods undertakings

· the circumstances in which a contract may be varied, terminated or renewed;

· the circumstances in which the arrangements of the contract for supply and delivery of grocery goods may be varied;

· the manner in which specific terms such as payment or sale of goods on promotion are to be incorporated into contracts for the sale or supply of grocery goods;

· the manner in which payment for the resolution of a customer complaint may be determined between grocery goods undertakings;

· the conditions under which retailers may or may not require suppliers to obtain any goods, services or property from a third party where the retailer obtains any payment for such an arrangement;

· provisions relating to delays and failures due to circumstances outside the reasonable control of a party;

· limitation on the circumstances in which payment may be sought from a grocery goods undertaking for shrinkage, wastage or marketing costs;

· the circumstances in which a relevant grocery goods undertaking may or may not charge a consideration for listing grocery goods;

· set out the manner in which forecasts for the supply of grocery goods are to be prepared and communicated;

· specify the circumstances in which a relevant grocery goods undertaking may or may not seek payment from a supplier to secure better positioning or an increase in the allocation of shelf space for that supplier’s goods;

· to prohibit a relevant grocery goods undertaking from directly or indirectly compelling a grocery goods undertaking to make any payment or consideration for the promotion or advertisement of grocery goods on that party’s premises;

· provide for further arrangements regarding promotions of grocery goods;

· specify limitations for compelling grocery goods undertakings by relevant grocery goods undertakings to participate in promotions or similar activities in support of grocery goods;

· specify the arrangements for the preparation of an annual compliance report with these regulations by the relevant grocery goods undertaking and for submission to the statutory authority;

· provide for the maintenance of records and the period for which those records are held relating to compliance activities by the relevant grocery goods undertaking;

· the manner and timeframe in which payments for grocery goods supplied to relevant grocery goods undertakings are to be made;

· designation and training arrangements for staff in relevant grocery goods undertakings;

· the nature and type of documents that must be retained by a relevant grocery goods undertaking and the length of time they should be kept.

Among the powers that the CCPC will have to investigate and enforce these Regulations are:

· to monitor compliance with any regulations (either on its own initiative or on foot of a complaint)

· Where the CCPC has reasonable grounds for believing that a relevant grocery goods undertaking has failed or is failing to comply with the regulations, it may investigate the potential breach or any complaints it receives in relation to any such alleged failure

· the CCPC can also make preliminary enquiries for the purposes of deciding whether the investigation of a complaint is justified and to request the complainant to provide further written particulars of the complaint within a specified time period

· the CCPC can decide to discontinue any such investigation if the complainant fails to supply the requested information and to notify the complainant in writing of any decision not to investigate or discontinue an investigation, together with the reasons for this decision

· the CCPC can issue a contravention notice where it is of the opinion that a relevant grocery goods undertaking is contravening or has contravened any provision of any regulations under this Section

Section 63E provides that failure to comply with a contravention notice constitutes an offence. The Section also makes it an offence to fail to comply with any regulations made under this Section. Sanctions for such offences may be pursued summarily or on indictment with fines as follows (set out in section 79 of the Consumer Protection Act 2007):

· A person guilty of an offence under this section is liable on summary conviction to the following fines and penalties:

o (a) on a first summary conviction for any such offence, to a fine not exceeding €3,000 or imprisonment for a term not exceeding 6 months or both;

o (b) on any subsequent summary conviction for the same offence to a fine not exceeding €5,000 or imprisonment for a term not exceeding 12 months or both.

· If, after being convicted of an offence, the person referred to in subsection (1) continues to contravene the requirement or prohibition to which the offence relates, the person is guilty of a further offence on each day that the contravention continues and for each such offence is liable on summary conviction to a fine not exceeding €500

· A person guilty of an offence is liable on conviction on indictment to the following fines and penalties:

o (a) on a first conviction on indictment for any such offence, to a fine not exceeding €60,000 or imprisonment for a term not exceeding 18 months or both;

o (b) on any subsequent conviction on indictment for the same offence to a fine not exceeding €100,000 or imprisonment for a term not exceeding 24 months or both.

Anyone who is aggrieved by the failure of a relevant grocery goods undertaking to comply with any regulations or with any compliance notice issued, will have the right of action for relief against that relevant grocery goods undertaking in the Circuit Court (any such relief, including exemplary damages, not being in excess of the limits of the jurisdiction of the Circuit Court in an action founded on tort).
The CCPC will have the power to publish a list of relevant grocery goods undertakings who have been found guilty of contravening the regulations or against which contravention notices have issued (in essence a “name and shame” provision).

It is important to note that the introduction of any regulations does not, and cannot, guarantee anything in relation to the prices received by any given link in the supply chain. Negotiations on price will remain an issue between the contracting parties as happens in any commercial relationship. What the new regulations are intended to achieve is to regulate certain practices, not set prices.

3. Media mergers

The legislation will implement, in full, with two changes (below) the 11 recommendations of the Advisory Group on Media Mergers, which published a report (‘the Sreenan Report’) during the lifetime of the previous Government. These recommendations are aimed at modernising the system for regulating media mergers to reflect international best practice and in line with the latest technological developments. However the broad three-step process that exists currently in respect of media mergers will continue in existence in future:

1. Firstly, determination by the Competition Authority/CCPC (as applicable) that a merger has taken place

2. Secondly, decision by the Competition Authority/CCPC on whether the merger should be permitted to go ahead on competition grounds

3. Thirdly (in the event that the Competition Authority/CCPC lets the merger go ahead on competition grounds), decision by the Minister on whether the merger should be permitted to go ahead on the grounds of the public interest

There is no provision for, and the Sreenan Report did not recommend, an ongoing regulatory function in respect of media ownership – the power only falls to be exercised in the event that a merger takes place as defined, and that merger is permitted to proceed on competition grounds. The key concept in relation to the definition of a merger remains the concept of ‘effective control’ – no changes are recommended or provided for in this respect.

The law makes two changes to the recommendations of the Sreenan Report:

1. The relevant joint Oireachtas Committee will become a notifiable body

2. The legislation will transfer responsibility for media mergers from the Minister for Jobs, Enterprise and Innovation to the Minister for Communications, Energy and Natural Resources. This was not a recommendation in the Advisory Group report and was not contained in the Programme for Government but Minister Bruton proposed and secured agreement for this administrative streamlining reform given the substantial expertise on media matters that exists within Department of Communications, Energy and Natural Resources.

The recommendations of the Sreenan Report are as follows:

1. There should be a statutory definition of media plurality (referring both to ownership and content);

2. The Competition Act 2002 should be amended to incorporate a statutory test to be applied by the Minister in the discharge of his or her function in relation to media mergers.

3. The current definition of the “relevant criteria” in Section 23(10) of the Competition Act should be replaced.

4. There should be an on-going collection and periodic publication of information and employment of concrete indicators in relation to media plurality in the State.

5. The Competition Authority should neither be required to form nor to furnish an opinion on the application of the “relevant criteria”.

6. There should be a separate system of notification of media mergers to the Minister for clearance.

7. There should be an obligation imposed by Statute on parties to a media merger to provide full information to the Minister on all circumstances that might impair media plurality in the State and to notify any changes in information provided to the Minister, with appropriate penalties for non-compliance.

8. The Minister should publish Guidelines to assist undertakings involved in media mergers in knowing how the Minister would in general apply the relevant criteria.

9. In the event of the Minister deciding to proceed to a detailed investigation of a proposed merger (other than a broadcaster to broadcaster merger), a three to five person Consultative Panel should be established on a statutory basis to provide advice to the Minister on the media merger.

10. The definition of “media business” should be amended to include publication of newspapers and periodicals over the Internet and broadcast of certain audiovisual material over the Internet.

11. The important role of the media in a democracy should be recognised by Statute, ideally in the Long Title of the Act containing the relevant provisions on media mergers.