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Irish appeal of ‘lenient’ bid-rigging sentences could clarify criminal cartel penalties

Thursday, October 19, 2017

As published in the PaRR, October 19th 2017.

Ireland’s Director of Public Prosecutions’ (DPP) decision to appeal sentences imposed on Aston Carpets & Flooring and its former director as being “unduly lenient” could provide a welcome judicial precedent for future criminal cartel cases, Irish lawyers have told PaRR.

But one lawyer warned that the “unsatisfactory return” on the resources invested in the Aston Carpets case could discourage Ireland’s Competition and Consumer Protection Commission (CCPC) from pursuing criminal cartel prosecutions in the future.

In May, Aston Carpets and its former director Brendan Smith were fined EUR 10,000 and EUR 7,500 respectively after pleading guilty to engaging in and implementing an anti-competitive agreement.

Smith was also disqualified from acting as a company director for five years and given a three-month suspended sentence for impeding a criminal prosecution in relation to the investigation.

The CCPC found that Aston Carpets and rival Carpet Centre agreed to set prices for certain tenders for major international firms between 2011 and 2013.

A DPP spokesperson confirmed to PaRR that the DPP will appeal the sentences on the grounds of “undue leniency”, provided for under section 2 of the Criminal Justice Act 1993. The appeal will be heard at Ireland’s Court of Appeal at a date to be fixed.

Philip Andrews, head of McCann Fitzgerald’s competition group, said the general reaction to the Alston Carpets sentences was one of “disappointment” and noted that they represented a “fairly unsatisfactory return” on the time and resources put in to the investigation.

He added that there had been “a lot of anticipation” leading up to the case after the two previous criminal cartel prosecutions, against the heating oil cartel from 2006 and against the Citroen Dealers Association cartel in 2009, and said the Aston Carpets case was seen as “a big chance for the CCPC to put down a marker”.

Ronan Dunne, a partner at Philip Lee, noted that, while the last criminal sentence was that of heating oil cartelist Pat Hegarty in 2012, the sentencing of Patrick Duffy by Judge William McKechnie in 2009 had “laid down a marker that future cartelists should see the inside of a jail cell”, which Dunne described as “reflecting a global trend…towards jailing cartelists”.

Dunne added that it in the light of that previous judgment that the Aston Carpets sentences were seen as “arguably out of sync with what has gone before”.

Cormac Little, who heads William Fry’s competition and regulation department, said the judgment in Duffy, which was “the only written Irish precedent that we have in the area of cartels”, had seemed to suggest that while Duffy would escape jail, “the next generation might not be so fortunate”.

But Little said he was not surprised with the sentences as they were not “out of kilter” with the previous convictions.

Both Andrews and Dunne highlighted the 2012 increase in the maximum sentence for hardcore cartel activity from five to ten years: Andrews said the changes were intended to send “a strong message to the judges that this was a serious crime”, while Dunne contended the targets of the message were “would-be cartelists”.

Andrews said that, had the CCPC achieved a “big result” in the Aston Carpets case, it was thought that the regulator might continue to prioritise criminal prosecutions. But he warned that there was an understandable “risk” that the CCPC could prioritise other types of cases.

He also suggested that the 2014 merger of Ireland’s Competition Authority and National Consumer Agency could also contribute as cartel enforcement was now “just one” of its priorities.

Little disagreed, saying he thought that the CCPC would “continue to investigate” similar cases as long as it continued to receive immunity applications, which it did in the Aston Carpets case. He added that he thought it was “surprising” that the DPP had lodged an appeal.

Dunne added that, while the CCPC would have to decide “where best to invest their…ultimately limited resources”, it was “ultimately for the DPP to decide” whether or not to bring a prosecution.

He also said the “novel nature” of the DPP’s appeal made it difficult to predict the outcome of the case, but said that any ruling of a superior court on the matter would have “precedential value”.


Ronan Dunne