Ireland's Competition Act: The First Year

• Published date: 01 December 1993
• Date: 01 December 1993
• DOI: 10.1177/0003603X9303800407
• Author: Patrick Massey
• Subject Matter: Article

TheAntitrustBulletin/Winter 1993

Ireland's Competition Act:

the first year

BY PAlRICKMASSEY·

1. Introduction

969

October 1, 1992 marked the first anniversary

of

the coming into

force of Ireland's Competition Act. The Act represented a major

change in competition policy in Ireland.

It

replaced a regime

based on the control of abuse principle that had operated for 40

years with a more modem system of competition legislation con-

taining prohibition elements. The key elements in the legislation

mirror those contained in articles 85 and 86

of

the Treaty

of

Rome-the

EC competition rules. The shift toward a prohibition-

based system reflects a growing trend, both within the EC and

among OECD countries generally. The EC rules themselves have

much of their origins in the much older U.S antitrust statutes. The

international trend toward prohibition-based systems indicates a

growing harmonization of competition rules across countries.

While the basic principles underlying competition legislation may

*

Member

of the Irish Competition Authority.

AUTHOR'S

NOTE: 1am grateful to my colleague Patrick Lyonsfor his help-

ful comments on an earlierdraft

of

this

paper.

e1994by FederalLegal Publications,Inc.

970 : The antitrust bulletin

be similar in many countries. differences in approach and interpre-

tation remain. Experience to date indicates that the Irish authori-

ties and courts have been influenced by EC and U.S. antitrust

thinking. The present article outlines the principal features

of

the

Act and reviews its implementation to date.

II.

The

rationale

for competition

policy

The rationale for pursuing an active competition policy rests

on the belief that, ultimately, the interests

of

both the economy

and the individual are best served by the fullest possible operation

of

competitive forces. It is also widely believed that a competitive

economy

will be more

successful

in

generating

growth

and

employment opportunities and that such economies adjust faster

and better in response to macroeconomic shocks.

Traditionally

competition

policy

has

been

influenced

by

oligopolistic

models

of

industrial

structure

and

behavior.

Oligopolistic markets are ones having a relatively small number

of

interdependent firms. The recognition by firms

of

their interde-

pendence means that collusion represents aconstant actual

or

potential threat.' Collusive arrangements between firms are gener-

ally believed to result in higher prices and lower levels

of

output

than would arise in a competitive market. Cartels involve dead-

weight losses as they divert resources to less valued uses so that

the gain to producers in the form

of

increased profits is less than

the loss suffered by consumers.

It

is also believed that restrictions

on competition lessen the pressure on firms to operate efficiently

leading to what the literature calls X-inefficiency. The argument

that

competition forces firms to increase efficiency has been

restated in more recent work by Porter- who argues that competi-

tive domestic markets are necessary to prepare firms for interna-

tional competition. Competition also enhances consumer welfare

by providing consumers with greater choice.

1R.

CLARKE,

INDUSTRIAL

ECONOMICS

(1985).

ZM. PORTER,

THE

CoMPE'IlTIVE

ADVANTAGE

OF NATIONS (1990).