In December 2017 the Restaurants Association of Ireland (RAI) ran a campaign to establish a booking deposit policy among its members to discourage late cancellations during the Christmas season.
The Competition and Consumer Protection Commission (CCPC) viewed this as an attempt to coordinate the actions of competing restaurants and has launched an investigation.
Trade associations found to infringe competition law can face significant penalties in Ireland (as can their members) of up to €5 million or 10% of their annual turnover, whichever is greater; an individual found guilty of a 'hardcore' offence can face a prison sentence of up to 10 years.
Compliance training is an essential tool to prevent unwanted scrutiny from the CCPC and other authorities.
Trade associations and competition law
Businesses with common interests in trade regularly establish or join trade associations, which provide valuable opportunities for businesses to:
- network and form mutually beneficial partnerships;
- regularise standards and best practices; and
- influence legislation and regulation.
However, such cooperation and collaboration between businesses within a trade association can quickly overstep the mark and result in anti-competitive behaviour (most often the inadvertent sharing of commercially sensitive information).
In December 2017 the RAI ran a campaign to establish booking deposits as standard across the industry in an effort to prevent no-shows, which were causing significant losses to restaurants. The RAI allegedly distributed sample policies to its members and its chief executive suggested that a €20 deposit might be an appropriate amount to charge customers when booking.
As reported by the Irish press in July 2018, the CCPC was concerned that the RAI was directing its members to impose a charge on consumers which, under normal competitive conditions, some (or all) restaurants might not otherwise charge.
The CCPC notified the RAI to cease its campaign and has launched an investigation.
The CCPC's intervention is the latest in a number of recent investigations of trade associations:
- In 2016 the CCPC investigated the Irish Property Owners' Association (IPOA) following the release of a press statement in which the IPOA noted that, as a result of a meeting of its members, property owners were considering a range of potential measures to counteract the government's new rent control legislation, including the introduction of a number of new charges to tenants.
- In 2017 the CCPC investigated Nursing Homes Ireland following a meeting of its members at which it discussed collective action to potentially increase the contributions required from nursing home members.
In both cases, the CCPC obtained binding commitments from the trade associations, including a commitment to introduce a competition law compliance training programme to their members and to report back to the CCPC on the implementation of this programme.
As competition authorities across the European Union have taken a zero-tolerance approach to similar activity, it is possible that the CCPC will take a more hardline approach in this and future cases.
Meetings and discussions between members can easily stray into discussion of competitively sensitive information. Trade associations and their member companies should always agree an agenda upfront and seek legal advice regarding the appropriate scope of any such meetings, especially if the trade association introduces new objectives. Trade associations should always take steps to ensure that discussions stay on topic and members know what to do to minimise their risk of antitrust scrutiny.
Competition law compliance training can help to ensure that trade associations understand the key dos and don'ts, thereby reducing the risk of any breach of competition law.
For further information please contact Ronan Scanlan or Chloe McLoughlin at Matheson by telephone (+353 1 232 2000) or email ([email protected] or [email protected]). The Matheson website can be accessed at www.matheson.com.
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