Commercial Agreements Starting a Business

Competition Law in Ireland-What SMEs and Entrepreneurs Need to Know

Competition law in ireland

Have you been the victim of unfair competition or anti competitive practices in your industry?

Perhaps you have encountered an abuse of dominance by one or more competitors? There is strong competition law on the statute books to protect you, you know.

The principal piece of legislation deal with with competition law in Ireland is the Competition Act, 2002 and Competition and Consumer Protection Act 2014. Part 2 of the Competition Act, 2002  deals with the two main prohibitions:

  1. The prohibition on anti competitive arrangements
  2. The prohibition on abuse of dominance

Anti Competitive Arrangements

Section 4(1) Competition Act 2002 states:

4.—(1) Subject to the provisions of this section, all agreements between undertakings, decisions by associations of undertakings and concerted practices which have as their object or effect the prevention, restriction or distortion of competition in trade in any goods or services in the State or in any part of the State are prohibited and void, including in particular, without prejudice to the generality of this subsection, those which—

( a) directly or indirectly fix purchase or selling prices or any other trading conditions,

( b) limit or control production, markets, technical development or investment,

( c) share markets or sources of supply,

( d) apply dissimilar conditions to equivalent transactions with other trading parties thereby placing them at a competitive disadvantage,

( e) make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which by their nature or according to commercial usage have no connection with the subject of such contracts.

Sections 4(2) and 4(5) set out the exceptions to section 4(1).

The prohibition only applies to separate undertakings, which is defined as

‘ undertaking ’ means a person being an individual, a body corporate or an unincorporated body of persons engaged for gain in the production, supply or distribution of goods or the provision of a service and, where the context so admits, shall include an association of undertakings.

The prohibition does not apply to intra-group transactions as there is only one undertaking, from a competition law perspective. An agreement between employer and employee will not be covered, either, as an employee is not an undertaking. Therefore employment contracts will not fall under the remit of the Competition Act, 2002 and any issues in relation to restrictive covenants in contracts of employment should be looked at under common law restraint of trade principles.

The prohibition includes

  • Anti-competitive agreements
  • Concerted practices

An agreement will be seen to exist where one undertaking agrees with another undertaking to limit its freedom of action so as to restrict competition in the marketplace. A concerted practice is a form of coordination between undertakings.

The intention of the parties is irrelevant, it is the object or effect of the agreement that needs to be reviewed.

If the agreement ultimately benefits consumers it will fall within the exceptions found in section 4(5) and will be exempt from the prohibition.

The Competition Authority, established by the Competition Act, 2002 was dissolved and replaced by the Competition and Consumer Protection Commission in the Competition and Consumer Protection Act 2014. It has the power to issue declarations that agreements or concerted practices are covered by section 4(5) and does not fall foul of section 4(1).

Horizontal and Vertical Agreements

A horizontal agreement is an agreement between undertakings between competitors-that is, at the same end of the supply chain.

Vertical agreements are agreements between undertakings at different ends of the supply chain-for example, manufacturers and distributors.

Horizonatl agreements are hard core offences and subject to severe penalties as they are agreements between competitors and are more likely to be anti-competitive. Vertical agreements, by contrast, are generally exempt  as they have a lower risk of anti competitive effect.

Abuse of Dominance

Section 5 Competition Act, 2002 deals with the abuse of dominance prohibition:

5.—(1) Any abuse by one or more undertakings of a dominant position in trade for any goods or services in the State or in any part of the State is prohibited.

No exemption is possible from this prohibition, it is an absolute prohibition and dominant companies have a particular responsibility to avoid abuse of that dominance.

What is a dominant position? There is no widely accepted definition but any company with in excess of 40% of the market is going to raise concerns. The test is whether the concern can act independently of others in the marketplace.

Other factors which will be looked at in determining dominance will include:

  • Barriers to entry to the market
  • Customer switching costs
  • Barriers to expansion
  • Market share of the entity being looked at-a consistent market share of over 40% will cause concern

The prohibition in section 5 above refers to ‘one or more undertakings’, therefore a situation of collective dominance could arise if more than one undertaking acts in concert with another.

When looking at a breach of section 5 consideration will be given to

  1. Is the undertaking ‘dominant’
  2. Has its conduce been an abuse of its dominance-te conduct is not abusive if it can be objectively justified and proportionate to a legitimate aim.

Examples of abuse of dominance

Examples would include:

  • Abusive pricing
  • Exclusionary abuse-for example, predatory pricing, single branding, loyalty rebates, refusal to supply, tying and bundling


Penalties for hard core offences-that is, breaches of section 4(1) above can be

A breach of the Competition Act, 2002 can also lead to personal liability for an officer or employee of eh company.

Enforcement of the Competition act, 2002 is through both civil and criminal means.

Any aggrieved person can make a complaint to the Competition and Consumer Protection Commission, formerly the Competition Authority. This body and the DPP can institute criminal proceedings to enforce the Competition Act, 2002 and the Competition and Consumer Protection Commission has extensive powers to carry out raids to obtain records relating to competition law. This allows them to search both business premises and private homes of executives or officers of the company.

They can also summons witnesses to attend before the Commission.

Moreover, an aggrieved person can institute legal proceedings in the Circuit or High Court for breach of section 4 or 5 of the Competition Act, 2002. The aggrieved person, if successful, may obtain an injunction and/or damages and/or a declaration from the Court.

An important thing to consider is that the Competition Act, 2002 shifts the burden of proof from the prosecutor to the defendant in a criminal prosecution and criminal prosecutions can be carried out by the Commission for summary offences and the DPP can prosecute on indictment.

Section 50 of the Act also provides protection for whistleblowers who act in good faith.


If you are a small business owner and you have been the victim of abuse of dominance or anti-competitive arrangements the Competition act, 2002 provides strong remedies to put a stop to it and make competition in your market fairer.

Commercial Agreements

21 Questions and 4 Definitions You Need to Be Clear About in a Commercial Distribution Agreement


Are you a supplier or distributor needing a few pointers about distribution agreements?

In this piece I will look at some key areas to consider when having a distribution agreement drafted as supplier, or when you are a distributor thinking about taking on a new product line for distribution.


The first essential part of your distribution agreement, or any well drafted agreement, is the definitions. Getting the necessary definitions correct from the outset will make the agreement easier to draft, and understand for both parties.

Critical definitions will be:
1. The products which will be the central focus of the distribution arrangement
2. The prices of those products
3. The term of the agreement
4. The territory to be covered by the agreement.

Questions/Issues to consider

Important questions to consider include:

  • Is the distributor to be appointed as an exclusive or non exclusive distributor in the territory?
  • You will need a clause setting out clearly that there will be no activities carried on outside the territory, if that is the agreement
  • It should be clearly stated that the distributor will carry on the business in his own name and not as an agent of the supplier
  • Will there be minimum orders to be placed? Will there be minimum orders for each product or range of products?
  • Will there be an exclusive purchase requirement, that is, is the distributor bound to buy all his products from you as supplier or is he free to shop around?
  • The conditions of sale from supplier to distributor will need to be clearly set out
  • Will sales be on no less favourable terms than sales to other distributors or will this be at the discretion of the supplier?
  • What are the terms in relation to price and payment, specifically will there be a discount for, say, early payment?
  • What are the methods of payment?
  • What are the payment/credit terms?
  • When will invoices issue?
  • There should be a “no deductions” clause also which will set out that no deductions or set off are permissible by the distributor
  • What liabilities has the supplier after sale to the distributor, if any?
  • There should be a clause dealing with trademarks and intellectual property of the supplier
  • How can the agreement be terminated? In what circumstances?
  • What are the consequences of termination?
  • A Force Majeure clause will also be required in any effective agreement
  • Who are notices to be addressed to and in what language?

Like any agreement, commercial or otherwise, its value will only be apparent when there is a dispute or threatened dispute.

So don’t cut corners when you need one drafted as supplier or need advice as a distributor before binding yourself legally.

Considering the above questions and definitions will set you on the right track, but this is not an exhaustive list.