Publications & Insights SMEs Beware: Upturn in Criminal Investigations and Convictions for Breaching Competition and Consumer Law
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SMEs Beware: Upturn in Criminal Investigations and Convictions for Breaching Competition and Consumer Law

Tuesday, 03 October 2017

In a recent article published by the Dublin Chamber of Commerce, Partner and Head of the EU, Competition and Regulated Markets Group, Joanne Finn, outlines convictions imposed as a result of inspections by the Competition and Consumer Protection Commission (“CCPC”).

The CCPC has carried out a number of unannounced inspections and investigations in Ireland over the last 12 months. Several of these have resulted in convictions in the motor trade and flooring sectors, and are detailed below. The latest bout of unannounced inspections and dawn raids has seen the CCPC again target the motor trade and the Irish motor insurance sector, the latter dawn raids being carried out jointly with the European Commission on 4 July 2017.

The aim of these unannounced inspections and dawn raids is to uncover decision-makers who act to the detriment of consumers or competition in the market. SMEs should be aware of the risk of convictions arising under competition and consumer law from seemingly innocuous situations, such as misleading consumers, providing false information, or indicating pricing intentions to your competitors. 

Motor trade - Consumer Law Convictions

On 12 June 2017, the Dublin District Court imposed a six month suspended sentence on a car trader, Mr. Timmy Keane, for providing a consumer with false information in relation to the mileage history of a car. This is an offence under the Consumer Protection Act, and the onus is on the trader to ensure they are giving accurate information on the car’s history. 

Mr. Keane was found guilty of providing a falsified odometer reading, resulting in a 12 month suspended sentence and €5,000 compensation, following an application by the CCPC on the consumer’s behalf for a compensation order. Mr Keane was previously convicted of the same offence and was required to pay the misled customer €7,000 in April 2014.

This investigation led to the first custodial sentence arising from a CCPC investigation based on a breach of the Consumer Protection Act in February 2017. There, Mr. Jonathan McSherry was sentenced to three months in prison for providing a false mileage reading to a consumer.

The upturn in investigation activities by the CCPC will certainly lead to further convictions, with the motor sector earmarked as one of the CCPC’s enforcement priorities for 2017 by Chairperson Isolde Goggin, who announced the opening of a study of car financing arrangements as recently as 17 July 2017.

Carpet Cartels – Competition Law Convictions

On 31 May 2017, the Central Criminal Court in Ireland convicted both Mr Brendan Smith and Aston Carpets and Flooring ("Aston Carpets") for bid-rigging in the procurement of flooring contracts for international companies between 2012 and 2013. On foot of its investigation, the CCPC argued that an agreement had been made between Aston Carpets and a competitor to fix prices for particular tenders. The indirect intention of this agreement was to restrict the price of the supply and fitting of floor finishes as well as the intention to share the market by over-bidding on alternating tenders. The CCPC found there was collusion in 16 contracts, varying in value from €17,000 to €477,000. 

The parties pleaded guilty to the offence of engaging in and implementing an anti-competitive agreement. A fine of €10,000 was imposed on Aston Carpets by Judge McCarthy. Mr Smith, a Director of Aston Carpets, was separately convicted for impeding a criminal prosecution. The Judge imposed a three-month suspended sentence and a €7,500 fine. Furthermore, Mr Smith is disqualified from acting as a company director for a period of five years.

This follows an application made under the CCPC's Cartel Immunity Programme and information from a complainant. The Cartel Immunity Programme awards immunity to the first member of a cartel who comes forward revealing their involvement, on the condition that they fully co-operate with the CCPC during their investigation. As cartels hinder competition and damage the economy, this, along with the CCPC’s consumer law mandate, is an indication that the CCPC is very willing to pursue consumer facing industries for causing consumer harm. 

Accordingly, SMEs and their key decision-makers should ensure that their business practices are compliant with competition and consumer law, or face criminal consequences. 

For further information and advice on competition or consumer law, and how to ensure your business is compliant, contact the ByrneWallace EU, Competition and Regulated Markets Team.