Water and Competition—Consultation on the Establishment of a Public Water Utility Why is this in the news?
In February 2012 the Competition Authority made a submission in response to the Minister for the Environment, Community and Local Government's consultation on the reform of the water sector. The Competition Authority believes that competition can play a key role in achieving the most effective assignment of functions and structural arrangements for delivering high quality competitively priced water services to customers (domestic and non-domestic) and for infrastructure provision. It makes a number of main submissions.
Why is it important?
The Competition Authority agrees that the establishment of a public water utility monopoly, Irish Water, though not an ideal outcome from a competition perspective, is the most feasible option in the short term. It submits that a public utility is likely to be the best way to put in place all that is required so that a functioning water market exists, (i.e. installing water meters, transfer of staff from local authorities, investment in water infrastructure). Once this new structure is in place, it believes that the introduction of competition where possible could further improve the delivery and efficiency of water services.
The Authority believes that it is important that the new monopoly water company is not created with expectations that such a model may continue indefinitely. It believes that setting out medium and long-term goals involving increased competition would help to manage any such expectations and would also reassure households and businesses. It submits that the Department, when setting up Irish Water, should avoid putting anything in place that could prevent the emergence of competition in the future (e.g. tying the pensions of Irish Water employees to the assets of the company could make it excessively costly to separate out more contestable assets in the future).
The Authority submits that competition has the potential to bring many benefits to the Irish water sector including:
- the efficient use of water;
- value for money;
- effective regulation;
- the avoidance of over-spending and inappropriate assets,
and;
- cost competitiveness for all businesses in Ireland.
How is it relevant?
The Competition Authority's submission provides more support in favour of the establishment of a public water utility monopoly, Irish Water. This option envisages the use of competition solely by means of outsourcing and competitive tendering for the design, build and operation of new water facilities, as already currently occurs in Ireland. The submission also provides support for the opinion that introducing competing water companies is not feasible or desirable at this 'early stage' (in the short term).
Submission on behalf of Trade Unions seeking Amendment of the Competition (Amendment) Bill 2011 Why is this in the news?
In January 2011 a submission on behalf of the Irish Congress of Trade Unions (ICTU) was issued to several Dáil deputies in the select committee debate of the Competition (Amendment) Bill 2011, seeking amendment of the Bill. The submission requested an amendment of the Bill to address restrictions on particular trade unions rights imposed by the interpretation of the Competition Act 2002.
Why is it important?
The submission made reference to a ruling of the Competition Authority in 2004 that a collective agreement made between SIPTU/EQUITY and the Institute of Advertising Practitioners of Ireland – was an unlawful agreement in the nature of a cartel. The submission said that the agreement in question was concluded between unions on the one hand and employers on the other. It claimed that it applied to a vulnerable group of workers (voice over actors) and dealt with matters applicable to employees, such as hourly, daily and half daily rates of pay including the payment of overtime, along with the length and frequency of the breaks to be provided. The submission said that this restriction had exposed atypical workers (who are dependant workers with the characteristics of employees) to exploitation.
The ICTU had brought this issue to the attention of previous Ministers for Labour, outlining how the restriction on the practice of human/trade union rights represents a violation of Article 11 of the European Convention on Human Rights. Article 11 states that: 'Everyone has the right to freedom of peaceful assembly and to freedom of association with others, including the right to form and join trade unions for the protection of his interests.'
The ICTU had also previously notified a breach of the International Labour Organisation (ILO) Freedom of Association and Protection of the Right to Organise Convention No. 87, in 2008. This Convention (to which Ireland is a party) recognises the right of all workers to form and join organisations, without prior authorisation, and lays down a series of guarantees for the free functioning of organisations without any interference by public authorities.
In 2009 the ICTU reported to the ILO that it had received a commitment to address the breach of the ILO Convention 87, in the "Towards 2016 Review and Transition Agreement" issued by the Department of the Taoiseach in September 2008. The specific commitment was to introduce amending legislation, in 2009, to "exclude voice-over actors, freelance journalists and session musicians, being categories of workers formerly or currently covered by collective agreements, when engaging in collective bargaining, from the provisions of Section 4 of the Competition Act, 2002." On foot of this commitment substantial work was undertaken on preparing an amendment, which it is believed, is already drafted.
The ICTU asked that the Committee request the Minister to bring forward this amendment and include it in the Bill.
How is it relevant?
The submission by the ICTU will be of relevance to those associations affected by competition law restrictions on collective negotiation. Given the recent focus and commentary on this issue across a number of different sectors, those associations will undoubtedly be keenly watching to see whether the Bill will be amended to include a provision for amending the primary act in the manner proposed.
Dawn Raids on Bakeries serves as a reminder of the Competition Authority's broad investigative powers Why is this in the news?
Newspaper reports last weekend of dawn raids on a number of Ireland's largest bakeries, may serve as a reminder to many of the broad investigative powers held by the Competition Authority. The raids which occurred as part of an investigation into alleged price-fixing, were carried out by officials from the Competition Authority supported by Gardaí. Computers and paperwork were seized. So what is the full extent of the Competition Authority's investigative powers?
Why is it important?
The Competition Authority has a number of key investigative powers:
- Authorised officers can enter or search premises or dwellings
with a warrant issued by the District Court.
- The Authority also has powers to seize documents and records on
foot of a warrant issued by the District Court.
- The Authority has powers to summon witnesses to be examined
under oath. Witnesses have the same immunities and privileges as a
witness before the High Court. Failure to appear before the
Competition Authority on foot of a witness summons is a criminal
offence.
- The Authority has the power to require production of records
and information. Non-compliance is a criminal offence.
- The Authority can obtain information from third parties,
including professional advisors and financial institutions.
How is it relevant?
How should organisations which are the subject of Dawn Raids handle them? The best way of 'handling' Dawn Raids is by being prepared in advance. At an absolute minimum:
- Employees should be designated to take detailed notes and
recordings of the activities of the inspectors at all stages of the
Dawn Raid.
- Employees should be made fully aware of their constitutional
right to remain silent, and all that that right entails.
- Inspectors should be asked for their identification and for the
document/warrant authorizing the Dawn Raid, and copies should be
sent to the organisation's lawyers.
- Employees should be mindful that inspectors are generally not
permitted to see/copy/seize legally privileged material. Documents
are privileged if they are either legal advice privilege
(communications between a lawyer and his/her client) or litigation
privilege (documents prepared in contemplation of legal
proceedings).
Publication of the Competition Authority 2011 Annual Report Why is this in the news?
On 28 February 2012 the Competition Authority published its Annual Report for 2011. The Annual Report gives an overview of the work and powers of the Competition Authority and gives a record of work carried out in 2011 (with restricted information relating active investigations).
How is it important?
Interestingly, the Annual Report shows that the Competition Authority intervened on a number of occasions in December 2011 where trade associations and professional representative bodies appeared to be co-ordinating the commercial conduct of their members.
At the beginning of December 2011, the Authority wrote to the Criminal Law Practitioners Organisation in relation to alleged threatened strike action by its members. The Criminal Law Practitioners Organisation represents barristers and solicitors who practice criminal law. The Authority took the view that such self-employed solicitors, solicitor partnerships and barristers are subject to competition law. The Authority believed that the alleged threatened strike action, in response to changes in the Criminal Legal Aid Scheme, could be considered a decision or concerted practice by an association of undertakings and as such, could have amounted to an infringement of competition law. The Annual Report states that the Authority received a response indicating that the threatened strike action did not relate to fees; however it continues to monitor the situation in conjunction with the Department of Justice.
Later in December 2011 the Authority contacted the Irish Property Owners Association (IPOA) in relation to its recommendation to its members that they should pass on the Household and Non Principal Private Residence (NPPR) Charges to tenants. The Authority informed the IPOA that this type of concerted action by their members in relation to pricing may be in breach of competition law. In response, the IPOA produced a clarification stating that pricing is a matter for individual landlords and their tenants, withdrawing their earlier recommendation to their members. The Annual Report states that tenants must be allowed to negotiate their arrangements with landlords individually without interference from a landlords' trade association.
The Annual Report also states that in December 2011, the Authority contacted the Restaurant Association of Ireland (RAI) concerning their apparent recommendation that all restaurants charge a €10 deposit per head for bookings to reduce the number and impact of 'no-shows'. Although the Authority conceded that no-shows can have a detrimental impact on restaurants, the stipulation of a particular fee for a deposit raised concerns. The Annual Report states that competing businesses should not coordinate on any aspect of pricing, either directly or through a trade association. In response to the Authority's concerns the RAI clarified with its members that it was up to all restaurants to make all commercial decisions independently.
How is it relevant?
Trade Associations need to be aware that any suggestions of a concerted practice or coordination by an association of undertakings can create an appearance of an infringement of competition law. This is the case across all business sectors. Going forward it is important that trade associations are aware of how directions given by them to their members may be perceived. This will reduce the possibility of breaches of competition law occurring which were not intended.
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