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GAZETTE
JANUARY/FEBRUARY 1992
The product market is generally
defined as those products which
may reasonably be substituted for
each other. In determining this it is
particularly important to review
market trends and consumer pre-
ferences. For example, if the con-
sumer would readily purchase
product X when there are shortages
of product Y then products X and
Y may be deemed to be part of the
same product market.
The geographical market is referred
to in Section 5 as the "State or a
substantial part of the State". At
EC level the equivalent term in
Article 86 has been defined as a
substantial part of the European
Community in economic terms; in
other words, for the purposes of
Article 86, an area may constitute
a substantial part of the EC
because, although geographically
small, it is economically significant
in the context of the relevant
p r oduct market. If a similar
approach is taken by the Irish
authorities then, for example,
Dublin is likely to be a substantial
part of the State for many issues
under Section 5.
Once the relevant market is
defined, a party's position in that
market must be assessed. A
market share of 50% or more may
be prima facie evidence of
dominance. However, it is im-
portant to review not only market
share but other issues which affect
the company's position in the
market, for example, its financial
and technical resources, its ability
to survive downturns in the market,
brand loyalty, consumer trends, the
relative position of its competitors
and, in particular, barriers to entry
to the market.
If a company is dominant any
abuse of that dominant position is
prohibited - there are no approval
procedures in relation to Section 5.
For example, predatory pricing may
infringe Section 5. A refusal to
supply a long standing customer
with the intent to undermine the
competitive threat that company
poses may also constitute an abuse
of a dominant position. Similarly,
any discrimination in the terms of
business offered by a dominant
company, whether it be in relation
to discounts, payment periods, or
whatever, may be unacceptable
under Section 5 unless objectively
justified, i.e., perhaps, because the
company receiving the best terms
buys in bulk.
As a general comment, it is often
helpful to consider why a dominant
company chose to act in a certain
way and the effect that had on
competition. If the company's
intention appears "malicious" from
a competition perspective, and
the impact upon competition detri-
mental, the company is likely to
have abused its dominant position.
Enforcement of the
competition rules
The Competition Authority's pri-
mary role is to review notifications
under Section 4 of the Act. The
Competition Authority does not
have powers of enforcement as
such. The competition rules are to
be enforced primarily through the
courts.
The Competition Authority has
published a Form CA which must
be completed on notification.
Parties provide basic details on the
Form CA, i.e., details on the parties
and a general explanation of the
agreement that is being notified.
An annex should be attached to the
Form CA which will contain the
substance of the notification. The
Authority has published a docu-
ment outlining the information
which must be included in the
annex. In particular, the parties
must provide arguments to justify
the grant of a certificate or licence.
These procedures are based upon
those applied at the EC Level. There
is also a notification fee of IRE100.
Parties to an agreement which was
in place prior to 1 October, 1991
have until 1 October, 1992 to notify
their agreement to the Competition
Authority if they wish to seek a
licence or certificate. If such an
agreement is notified by 1 October,
1992 court proceedings may not be
taken in respect of the agreement
until the notification has been
determined, on appeal to the courts
if necessary. It is not entirely clear
from the Act whether this principle
applies where an agreement is
notified before 1 October, 1992 but
after proceedings have been
instituted, but the general con-
sensus of opinion is that it does.
In addition to its power to review
notified agreements, the Com-
petition Authority may undertake
an investigation into a dominant
position on the request of the
Minister. To this end, the Authority
has power to enter and search
company premises. The Authority
wi ll report to the Minister.
Ultimately, the Minister may
regulate the s t r uc t u re of a
domi nant company. However,
indications are that this procedure
will not be used very often.
As noted, the competition rules are
to be enforced primarily through
private litigation. In general, actions
based upon Sections 4 and 5 must
be taken in the High Court, pending
the introduction of Section 6 (2)
(b). Parties may seek a declaration
that a particular agreement or
practice is unlawful and damages,
including exemplary damages,
where appropriate. Parties may also
seek injunctive relief.
Proceedings may be taken by "ag-
grieved" persons. It remains to be
seen how this term will be inter-
preted. There is also provision for
proceedings to be taken by the
Minister, though the Minister cannot
seek damages. Proceedings can be
taken against any undertaking
which is, or has been, a party to an
unlawful agreement or practice.
For example, a company denied
supplies by a dominant company,
might seek a declaration that the
refusal to supply constitutes an
abuse of a dominant position and
an order that the dominant com-
pany resume supplies. The buyer
might also seek damages.
The Mergers Act
The Competition Act introduces a
number of important amendments
to the 1978 Mergers, Take-overs
and Monopolies (Control) Act. For
example, an acquisition of shares