Even a casual conversation on a golf course between rival executives could lead to issues with competition law, writes FRANK DILLON.

MEMBERS OF trade and professional associations need to be very careful when exchanging information or they could risk the possibility of jail under Ireland’s increasingly tough competition law regime.

The issue is particularly relevant in today’s tough economic climate where executives within troubled sectors may be more inclined to talk to each other about how best to survive.

Competition lawyer Vincent Power, of AL Goodbody, says recent comments from the bench in anti-competition cases suggested that judges would be prepared to impose custodial sentences in the future. To date, only suspended sentences have been handed down for breaches of law in this area.

According to Power, Ireland has seen two dozen court convictions for anti-competitive behaviour. The most recent involved a suspended jail sentence and a fine of €100,000 imposed last month in a case involving a member of the Citroën Dealers’ Association.

“Executives risk breaching competition law when they swap stories with executives in competing companies about what jobs they are shedding or will shed, what prices they have or will charge and what cutbacks they will undertake. This can be seen as giving information which distorts competition,” he said.

Power added that for true competition to exist in a marketplace, there needed to be an element of surprise or rivalry in a market. If that is removed by information being exchanged, consumers and competition suffer, he said.

While trade associations were free to survey their members, there was “a very thin line” between what was legal and illegal in regard to sharing the details of market information.

Clandestine trade meetings should be avoided. “Alarms bells should ring if you hear phrases such as ‘nobody write this down’. You should ask yourself whether any conversations taking place could be repeated openly in public,” Power said.

Even a casual conversation on a golf course, for example, can potentially lead to problems. Power suggests that two rival business executives should be wary about discussing the details of business and should avoid “swapping recession war stories”.

Even details of an upcoming sale or business promotion that have not been made public could cause difficulty, he suggests. “Meeting the competitor is fine, agreeing things are tough in the market is fine, but telling them about price cuts or two-for-one offers you are planning next month could put you into dangerous territory,” he says.

Another related problem is bid-rigging, a form of cartel that destroys a competitive contracting process. A recent AL Goodbody seminar heard there are currently 11 criminal cases pending in Ireland regarding this practice.

Power advises businesses to put competition compliance programmes in place to avoid such exposure. Those who feel they may have committed an offence and who wish to come clean, mitigate their liabilities through a Cartel Immunity Programme run by the Competition Authority.

Applicants to this can present their case initially through their legal adviser in hypothetical terms to protect their anonymity.

Ireland has one of the most rigorous anti-competition laws in the world on its statute books. The Competition Act 2002 provides for fines of up to five years in prison and the greater of €4 million in fines or 10 per cent of worldwide turnover of a firm.

The Competition Authority also has the power to organise dawn raids on offices or executives’ homes and seize or acquire records including logs of phone conversations in the process of collecting evidence. A log of a couple of phone conversations between rivals just before an unusual market development, such as a co-ordinated price increase, could be used to contribute to the building of a prosecution case, Power explains.

Internationally, anti-trust legislation has resulted in the handing down of some of the biggest corporate fines in history. A simple phone call from a British Airways executive to an executive at rival airline Virgin disclosing the imminent plan to impose fuel surcharges is a case in point. The conversation, which cost the British flag-carrier £350 million, has been described as the most expensive telephone call of all time.