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Competition
Law
There
are no special Irish or EU competition law rules relating to e-business.
Existing EU and Irish law applies, principally the EU Treaty, the
EU Mergers Regulation (Regulation 4064/89 as amended by Regulation
1310/97) and the Competition Act 2002.
In
assessing the impact of competition law on any given e-business
activity, the first issue to be addressed is the identification
of the relevant market. Existing relevant market definitions applicable
to e-business activities include top-level connectivity, dial-up
Internet access, Internet advertising, paid-for content, and IT
consultancy. It is important to state that these market definitions
are not immutable and will change over time.
Anti-competitive
agreements are prohibited and are defined as agreements that have
as their object, or effect, the prevention, restriction or distortion
of competition. Exemptions from this blanket prohibition include
de minimis agreements in the case of EU competition rules and agreements
for which an individual exemption or licence has been obtained from
either the EU Commission or the Irish Competition Authority, as
appropriate. Some block exemptions apply to defined classes of agreements.
In
the case of complaints, orders can be obtained to modify or terminate
the offending agreement, and the restrictive provisions in the agreements
are void in law and unenforceable. Fines of up to 10% of turnover
can be imposed for anti-competitive agreements. In addition, third
party actions for injunctive relief and/or damages can be maintained.
Anti-competitive conduct is also prohibited.
Undertakings
with a dominant position are prohibited from abusing that position.
No exemptions are permitted, and courts can impose fines of up to
10% of turnover, make orders to modify or terminate the anti-competitive
conduct, and third party actions for injunctive relief and/or damages
can be maintained.
What
are the probable competition law issues for e-business?
First
mover advantage may lead to the creation of a dominant position
in the relevant market. This of itself is not objectionable. It
is the abuse of a dominant position that is unlawful. First movers
achieving a dominant position in a market must be careful not to
expose themselves to allegations of abuse of their dominant position.
Another
issue is that of the network effect. The more customers in any particular
market, the greater the risk that growth in the customer base could
translate into a dominant position in that market which, if abused,
would fall foul of competition law. Collusion is a big issue, whether
by price fixing, market sharing, information sharing, or access
control, as is predatory pricing i.e. loss-leading pricing and vertical
restraints such as exclusivity arrangements.
The
enactment of the Competition Act 2002 represents a significant strengthening
of the competition law regime within Ireland. On the full entry
into force of the Act, it will be possible for the investigatary
authorities to prosecute breaches of the Competition Act under the
criminal law with the attendant criminal sanctions. The Act introduces
powers of entry into premises with the appropriate search warrant,
the power to search for and seize documentation, the power to interrogate,
arrest and prosecute suspects for breaches of competition law.
For further information or general enquiries contact: -
Anthony Layng
Email: alayng@kilroys.ie or
Joanne Griffin
E-mail: jgriffin@kilroys.ie
Telephone: +3531-439 5600
Fax: +3531-439 5601/439 5602
© Kilroys Solicitors 2002 - 2003
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