The Competition Authority has agreed settlement terms with the Irish Medical Organisation (IMO) in relation to legal proceedings initiated in the High Court by the Competition Authority under the Competition Act 2002 (the 2002 Act). In February 2005, the Competition Authority began an investigation into allegations of price-fixing by the IMO in relation to the provision of private medical attendant reports (PMARs) to life assurance companies. It was further alleged that the IMO threatened to withdraw these services if the life assurance companies did not pay a proposed increase in fees.

The Competition Authority carried out an investigation into whether or not the IMO had acted in breach of section 4 of the 2002 Act, which prohibits 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 of competition in trade in any goods or services in the State or a in any part of the State. In July 2006, the Competition Authority initiated proceedings in the High Court against the IMO claiming that the IMO's conduct breached these provisions of Irish competition law.

The parties have agreed to settle the proceedings on the basis that the IMO agrees that it, its servants and agents (including its officers and constituent committees) shall refrain from doing any of the following:

• Issuing any communications to its members that directly or indirectly instruct, recommend, or express an opinion on fees to be charged for services provided to life insurance companies by GPs, including to PMARs and medical examinations, or otherwise facilitating coordinated behaviour with regards to fees for these services.
  
  
• Issuing any communications to its members that directly or indirectly instruct or recommend GPs to withhold services from life insurance companies in breach of competition law, or otherwise facilitating coordinated behaviour in breach of competition law regarding the response of GPs to particular proposals on fees to be charged for services provided to life insurance companies, including to PMARs and medical examinations.
  
  
• Directly or indirectly discouraging its members from individually negotiating with life insurance companies.
  
  
• Indicating to life insurance companies that its members will refuse to supply services to the life insurance companies if they do not accede to the fee levels and/or increases sought by the IMO.
  
  
• Encouraging, suggesting, advising or otherwise inducing or attempting to induce any third party from engaging in any action that would be prohibited if carried out by the defendant by the terms of this agreement.

In the Premier Foods/RHM case, the Competition Authority was notified under the merger provisions of the Competition Act 2002 of a proposal whereby Premier Foods Plc would acquire sole control of RHM Plc. The Competition Authority examined the relevant affected markets and concluded that one of those markets was the 'separate well-defined market for gravies'.

The authority pointed out that the target's Bisto brand was the market leader in the gravy market with a 50% to 60% market share, followed by the purchaser's market share of between 10% and 20% market share derived from its Erin brand of gravy. It pointed out that the proposed transaction would result in a combined Bisto/Erin brand accounting for over 70% to 80% of the gravy market, with its nearest competitor accounting for only 10% of the market.

The Competition Authority held that the proposed transaction would lead to competition concerns in the gravies market post-merger in that the merged entity would have 'the incentive and ability to raise prices unilaterally'. The purchaser submitted a number of proposals, one of which was accepted by the authority.

This case is significant in that it shows that a determination granting approval can be obtained after an initial one-month review, known as a phase 1 review, as opposed to having to go through a full four month investigation, even in difficult cases if the notifying parties cooperate with the Authority by providing as much information as possible in early course and the issues are highlighted to it from the outset - provided, of course, that the Authority is satisfied that the divestiture proposal is sufficient to allay its concerns.

It is interesting to note that the Authority market tested the two divestiture proposals put to the authority by sending a questionnaire to six prospective purchasers of the relevant business within the phase 1 review time constraints.

For further information please contact Marco Hickey.


Summer 2007.