Ruling ‘may impact on enforcement of Irish competition law’
The Supreme Court's dismissal of the Competition Authority's case against the Irish League of Credit Unions (ILCU) may have a major impact on the enforcement of Irish competition law, according to solicitors McCann FitzGerald.
In its ruling of May 8 2007, the Supreme Court overturned a High Court finding that the ILCU had abused a dominant position and thereby foreclosed the purported market for "credit union representation services" because credit unions were discouraged as a result from joining rival associations.
This case was the first time that the Supreme Court has been called upon to adjudicate on substantive competition law issues. McCann FitzGerald represented the ILCU in the Supreme Court case.
According to Philip Andrews, partner in McCann FitzGerald's competition, regulated markets & EU law group, the Supreme Court ruling means that the Competition Authority will now have to undertake a thorough economic analysis of the effects of any purported anti-competitive restrictions and support its findings with empirical data before taking such actions in the future.
"The Supreme Court made it clear that future assertions by the Competition Authority regarding novel market definitions of this type would have to be supported by 'effects-based' economic analysis and cogent factual evidence, rather than a theoretical approach," said Andrews.
"This means that the Authority would be wise to pursue such novel cases in the future only if it can show that the behaviour it challenges is having actual anti-competitive effects in the relevant market."
Sheila Gibbons, Partner in McCann FitzGerald's Litigation Department, added that the Court's ruling also brings some clarity as to the extent to which the actions of trade associations, including representative associations, may be regulated by competition law.
In the case, the Competition Authority had argued that the ILCU had breached competition law because it denied access by disaffiliated credit unions to a Savings Protection Scheme (SPS), which allowed the ILCU to assist credit unions in financial difficulties.
The Competition Authority argued that the ILCU was engaged in the "tying" of core services (SPS and credit union representation services) that discouraged credit unions from joining rival associations and was, therefore, a barrier to competition.
As such, the Competition Authority argued that the ILCU should be required to provide mandatory access to the SPS fund even to disaffiliated or unaffiliated credit unions.
However, in rejecting those claims, the Supreme Court held that the SPS did not constitute a distinct product from "the bundle of services that ILCU has provided to its own members" and, therefore, that no unlawful "tying" (which, by definition, necessitates the existence of two separate services) had occurred.
That being the case, the Court found that competition law could not be used to compel the ILCU to share its facilities.
Further, while it was not ultimately required to decide on the matter, the Supreme Court did go on to state that it found the Competition Authority's assertion that the ILCU was dominant, and therefore had a "special responsibility" under Irish competition rules as to how it behaved, in the market for credit union representation services "troubling".
"If the ILCU had been found dominant in respect of the services it provides to its members, then similar-type trade and professional associations could equally have been subject to intrusive competition law scrutiny and mandatory access obligations," said Gibbons.
