Last summer, the Irish Supreme Court ruled on whether an employee may be prosecuted for a cartel offence where his/her employer has not previously been charged or convicted regarding the same conspiracy.
Cartels in Ireland: Cartels were first criminalised in Ireland in 1996 but enforcement activities were initially slow to gain traction. Indeed, the first major Irish cartel case did not begin until 2004 when following an application under the Irish Cartel Immunity Programme and a subsequent investigation by the Competition Authority, criminal proceedings were brought by the Director of Public Prosecutions (the “DPP”) against various individuals and companies for fixing the retail price of home heating oil. Over time, these prosecutions led to a series of convictions under the Competition (Amendment) Act 1996 (since the relevant acts took place prior to the enactment of the current legislation, the Competition Act 2002).
Prosecution of alleged participants in the cartel: The heating oil cartel involved various oil resellers based in the west of Ireland who established a trade association called the Connaught (sic) Oil Promotion Federation. Although the ostensible aim of the association was to discuss general industry concerns such as health and safety, price fixing of gas oil and kerosene also took place at its meetings which were generally held on a monthly basis. In 2004, the DPP proceeded against twenty-four defendants, both companies and individuals, one of whom, Michael Flanagan, trading as Flanagan Oil, contested the charge before Galway Circuit Criminal Court. After a three-day jury trial, Mr. Flanagan was found guilty and was fined €3,500. This was the first European criminal law conviction by a jury following a trial for competition offences. The bulk of the other defendants in the heating oil cartel subsequently entered guilty pleas. The DPP has thus far secured a total of 17 convictions. In some cases, a nolle prosequi was entered.
Hegarty case: The case against the last outstanding defendant in the home heating oil cartel, Pat Hegarty, was stalled by the accused’s challenge to the legality of the case against him. The now-repealed 1996 Act (and, indeed, the 2002 Act) provided that where an offence has been committed by an undertaking, and the offence has been authorised or consented to by a director, manager or other person with a high-level responsibility for decision-making, that person as well as the undertaking shall be guilty of an offence. Mr. Hegarty was charged with authorising or consenting to his employer, Fate Park Limited, entering into an agreement to fix the price of heating oil.
However, Fate Park Limited had not been prosecuted for its role in the cartel and consequently, Mr. Hegarty argued that the indictment against him should be quashed. This application was resisted by the DPP. In May 2008, the Galway Circuit Criminal Court agreed to the prosecution’s request to refer the matter as a “case stated” to the Supreme Court. The key issue was whether the prior prosecution and conviction of the employer undertaking for anti-competitive practices was required before an officer/senior employee of that undertaking could be convicted.
Supreme Court decision: In DPP v Pat Hegarty IESC 32, Judge McKechnie of the Supreme Court stated that there is nothing surprising in the concept of both an employer undertaking and its senior staff being potentially liable for the same conduct. The Court noted that if the law criminalised one and not the other, it would make effective enforcement even more problematic. The Court went on to give various examples of both statutory and common law offences where a person’s conviction is predicated upon the commission of an offence by another who has neither been charged or previously convicted (referring to UK case law such as R v Donald 83 Cr. App. R. 49). McKechnie J. noted that since the 1996 Act creates a criminal offence, its content must be strictly construed. Examining the wording of this legislation, the Court noted that this provision refers to an offence having been committed by the undertaking. The Court stipulated that the legislature could have expressly provided that a conviction was required but did not do so. McKechnie J. also noted that the employer undertaking itself would, if subsequently tried, be entitled to all appropriate rights and safeguards and could challenge any evidence, including that relied upon to support any finding in the earlier proceedings.
Accordingly, the Court held that the 1996 Act (and by analogy, the 2002 Act) does not require the prior criminal conviction of the undertaking involved in order for its officer or senior employee to be found guilty. However, the Court did state that the undertaking must have committed an offence in order for the defendant to be convicted. The relevant provision thus requires a finding of fact by the jury, after considering the evidence put before it during the trial of the officer/employee, that an offence has been committed by the employer undertaking.
Conclusion: On the basis of this decision, officers/key employees of undertakings involved in anti-competitive practices in Ireland may be prosecuted and convicted for their involvement, regardless of whether the undertaking itself has been prosecuted. Subsequently, the DPP’s case against Mr. Hegarty has proceeded and, at the time of writing, it was listed for mention before Galway Circuit Criminal Court in late February this year.
Contributed by Cormac Little & Sarah Lynam.
This article appeared in CLi Volume 11, inBrief 2 .
