Competition Authority -v- Licensed Vintners Association Ors
High Court
Judgment was delivered on July 24th by Mr Justice Liam McKechnie.
Judgment
The Licensed Vintners Association was in contempt of court because of the issuing of a press release stating there would be no increase in drink prices in 2009, which was in breach of an undertaking given by the LVA and the Vintners Federation of Ireland, following an earlier case, that it would not recommend prices or margins to their members.
Background
In 1998, the Competition Authority instituted proceedings against both the LVA and the VFI and some of their officers, claiming that certain of their practices were anti-competitive.
The case was settled with undertakings given by both associations. These included “not to recommend [to their members] the prices, margins, increases in prices and increases in margins earned on the sale to the public of alcoholic beverages . . .”
This is the undertaking the Competition Authority alleged the LVA broke in a joint press release with the VFI issued on December 1st, 2008.
It stated that the two representative bodies for Irish publicans had “announced a one-year price freeze in drink prices in pubs with immediate effect” in the light of the deteriorating economic situation.
The two organisations said that this initiative had come from the members themselves and they believed the freeze would be honoured by the bulk of their members.
They also said they had consulted their lawyers and stressed that they were not advocating that their members sell at any particular price. “We fully appreciate that it is a matter for each and every publican to decide upon their own respective resale prices.”
They added that individual members were free to compete at prices below what they were currently charging.
The press release was forwarded to the Competition Authority. The body indicated that the press release had been in breach of section 4 of the Competition Act 2002, in particular that the fact that the announcement purported simply to freeze as opposed to raise prices, did not exclude it in competition law terms.
“Any agreement or concerted practice among competitors or decision of a trade association which sets the price to be charged for a product has the potential to distort competition,” it said.
“By removing the element of uncertainty in relation to prices, the price freeze removes a vital element of the competitive process, leading to less vigorous competition.”
This view was vigorously contested by lawyers for the two associations, Mason Hayes and Curran for the Vintners Federation and Arthur Cox for the Licensed Vintners Association.
Mason Hayes and Curran said a commitment not to raise prices was fundamentally different to an agreement to fix prices, especially as members were free to lower their prices at any time.
Arthur Cox said that the LVA had only proceeded with the initiative after taking legal advice from the firm.
Discussions between the parties took place, but no agreement was reached and the Competition Authority proceeded to draft an enforcement order calling on the LVA to cease the implementation of the price freeze and inform its members.
A notice of motion was issued in March, but it was agreed that the court would first consider whether or not the association was in breach of the undertaking.
Mr Justice McKechnie said that a party who was the subject of an undertaking must comply strictly with its terms, irrespective of intention or motive. He said this was not in dispute between the parties, but the standard of proof was.
Both sides agreed that, given the criminal nature of contempt proceedings and the penalty, the standard of proof should be beyond reasonable doubt. However, the authority argued that, once the facts were established beyond reasonable doubt, the question, as a matter of law, as to whether there had been a contempt could be determined on the balance of probabilities.
The LVA argued that there were several cases that made it clear that the relevant standard was beyond reasonable doubt in relation to all matters, factual and legal, in the case.
Counsel for the LVA also raised the issue of the content of the undertaking, which they agreed should be construed narrowly. However, they disagreed as to the interpretation to be given to the words “the prices”.
The publicans argued that this related only to the actual prices charged and that they had not sought to influence these in any way; they only recommended a price ceiling.
The authority argued that the undertaking was clear and unambiguous in its meaning and there was no room to read implied terms into it.
Decision
Mr Justice McKechnie said, in relation to the standard of proof, that the standard must be beyond reasonable doubt, as a person could be deprived of his liberty in contempt proceedings. He rejected the arguments of the authority that the court could sever issues of fact and law, and accept a lower standard of proof for matters of law.
Turning to the content of the undertaking, he said it was clear that its terms captured more than an increase in prices. It did not cover every communication where there was mention of the word “price” or “prices”, as this would be too broad, but he said he was not satisfied that the phrase only covered the actual price charged; this would be too narrow a reading.
“In my opinion, it is not possible to give to the press release its ordinary or natural meaning otherwise than to construe it as being a recommendation as to the prices charged by publicans for the sale of alcohol on their premises,” Mr Justice McKechnie said.
Once he had come to this conclusion, it was difficult to see how the press release could avoid being captured by the undertaking.
He therefore found the defendants had breached this undertaking and were guilty on contempt of court in this regard. He made no findings on other issues raised by the Competition Authority. On the request of the authority, he deferred any consideration of what consequences might follow.
The full judgment is on www.courts.ie
Anthony Collins SC and Niamh Hyland BL, instructed by the Competition Authority, for the plaintiff; Michael Collins SC and Rossa Fanning BL, instructed by Mason, Hayes and Curran, for the defendants.