Irish competition authority proposes new settlement procedure

The CCPC has launched a public consultation with stakeholders and industry on the content of the proposed settlement procedure. The draft rules set out specific proposals in relation to the timeline and structure of the settlement process, which would commence when the CCPC and an undertaking under investigation enter formal “settlement discussions”. A successful settlement process would result in the CCPC and the undertaking entering into a settlement agreement, which will include the imposition of a financial sanction and potentially other behavioural or structural remedies. Notably, entering into a settlement agreement will require the undertaking to acknowledge that it has infringed competition law.

The proposed settlement procedure will be discretionary and voluntary and would allow the CCPC to enter into settlement discussions and reach a settlement agreement with undertakings under investigation for suspected breaches of competition law. The settlement procedure is part of the CCPC’s new suite of civil enforcement powers which were introduced under the Competition (Amendment) Act 2022, and entered into force in September 2023. The settlement procedure will be an attractive option in certain cases because it provides procedural efficiencies and resource savings for the CCPC, while in turn offering a reduction in the ultimate financial sanction for undertakings which co-operate with this streamlined procedure.

Competition law expert Lisa Carty of Pinsent Masons said that the draft settlement procedure provides industry with a valuable insight into how the CCPC will approach administrative investigations and enforcement actions for suspected infringements of competition law using its new powers.

“The proposals indicate the CCPC’s desire to proactively manage the potential discussions to reach an efficient conclusion. The settlement procedure will be an important instrument in the CCPC’s regulatory toolkit. It may incentivise firms to cooperate with investigations while providing efficiencies and resource savings for the CCPC. Undertakings will, however, need to carefully consider the implications of reaching a settlement with the CCPC and the consequences of any admissions made,” she said.

According to the consultation, aspects of the settlement procedure will differ depending on whether settlement discussions begin before or after the CCPC issues its Statement of Objections (SO), which is a notice setting out the CCPC’s preliminary view that the undertaking has breached competition law.

Undertakings will be rewarded for engaging early and entering into a settlement discussion promptly with the CCPC. It is proposed that the settling party will be able to obtain a reduction of up to 30% of an administrative fine where the settlement discussions commenced before the CCPC issued its SO. The discount will be up to 10% where the settlement discussions commenced after the SO was issued. The proposed pre-SO discount is higher than that offered under the equivalent procedure at EU level by the European Commission (10%) and in the UK by the Competition and Markets Authority (up to 20%). If a party has already secured a discount for leniency (for example 50%), the settlement discount would still be available but would be applied only with respect to the remaining amount of penalty. 

Alan Davis, competition law expert at Pinsent Masons, said that there are some important strategic considerations for parties that are contemplating settlements. “When looking at the settlement option, companies need to understand that whilst there is a considerable benefit in securing a sizeable discount in penalty and bringing closure to the investigation process more swiftly, settlement does not offer immunity against follow-on damages actions. The fact there is a requirement to admit liability for the breach of competition law can therefore be relied on by claimants. In addition, there is the perennial issue of whether the authority is willing to agree hybrid settlements in multi-party cases which may create uncertainty as to whether settlement is ultimately available. The CCPC appears to leave open the possibility of hybrid settlements whilst emphasising that it will wish to ensure that any efficiency gains can be maximised through potentially concluding settlement agreements with all of the undertakings involved. Parties should also bear in mind that the settlement process will only be available where the alleged breach is not to be treated as a criminal matter,” he said.

In its proposals, the CCPC has also provided conduct guidelines for undertakings entering settlement discussions. For example, it warns undertakings that the settlement procedure will not be a forum for debate and that the CCPC will not accept “plea-bargaining” or negotiation during the discussions.

The consultation is currently open and will run until 20 September 2024.