The Gazette 1996

GAZETTE

4(ii) The Attitude of the Irish Courts to the Caselaw of the European Court It h as b e en s u g g e s t ed that the c a s e l aw of the E u r o p e an C o u rt is not as r e l e v a nt to the interpretation of the C o m p e t i t i on A ct as m a y h a ve p r e v i o u s ly b e en t h o u g h t, a nd that the A ct is " m i m i c k i ng a nd not i m p l e m e n t i ng Articles 85 a nd 8 6 " . H o w e v e r, a r e c e nt d e c i s i on of M u r p h y J. in the H i gh C o u rt s h o ws a greater reliance b e i ng p l a c ed by the Irish C o u r ts (as distinct f r o m the C o m p e t i t i on Au t h o r i t y) on E u r o p e an p r e c e d e n ts in their interpretation of S e c t i on 4 a nd a s u g g e s t i on that the E u r o p e an a nd c o m m o n l aw tests are virtually identical. RGDATA Ltd -v- Tara Publishing Co. Ltd i n v o l v ed a r e p r e s e n t a t i ve a s s o c i a t i on f or retailers w h i c h, in 1985, restrictive c o v e n a nt that t h o se m a g a z i n es w o u l d b e their o n ly official p u b l i c a t i o ns a nd they w o u ld not e n g a ge in a ny p u b l i s h i ng w i t h in the State f or a p e r i od of t w e n ty years. Later, they p u b l i s h ed a n e w m a g a z i n es w h i ch they d e s c r i b ed as " A n R G D A T A p u b l i c a t i o n ". W h e n the d e f e n d a n ts s u g g e s t ed that this c o n s t i t u t ed a b r e a ch of the 1985 a g r e e m e n t, R G D A T A s o u g ht a d e c l a r a t i on f r om the H i gh C o u rt that the restrictive c o v e n a n ts in that a g r e e m e nt h ad b e en r e n d e r ed v o id by S e c t i on 4 of the C o m p e t i t i on A ct as restricting c omp e t i t i on w i t h in the p u b l i s h i ng ma r k e t. M u r p h y J. cited the dicta of the European Court in Remia and Nutricia q u o t ed a b o ve a nd d e c i d ed that a tie p e r i od of t w e n ty y e a rs d u r i ng w h i ch the plaintiff c o u ld n ot e n g a ge in a ny p u b l i c a t i on w h a t s o e v er w a s " u n s u s t a i n a b l e" . S u ch a l e n g t hy p e r i od c o u ld o n ly be j u s t i f i ed w h e re n e c e s s a ry to protect the p u r c h a s e r 's p r o p r i e ty interest in the actual title or the n a t u re of the m a g a z i n es as an official R D G A T A p u b l i c a t i o n. T h e restrictive c o v e n a nt w h i ch p r e v e n t ed the plaintiff f r o m e n g a g i ng in a ny p u b l i c a t i on w a s s e v e r ed f r o m the 1985 a g r e e m e n t, but that part of the a g r e e m e nt w h i ch p r e v e n t ed t h em f r o m d e s c r i b i ng their m a g a z i n es as an official R D G A T A p u b l i c a t i on w a s left intact. sold their interest in t w o official p u b l i c a t i o ns a n d e n t e r ed into a

d e c i s i o ns by a s s o c i a t i o ns of u n d e r t a k i n gs a nd c o n c e r t ed p r a c t i c es w h i ch h a ve as their o b j e ct or e f f e ct the p r e v e n t i o n, restriction or distortion of c omp e t i t i on in t r a de or in a ny g o o ds or s e r v i c es ... are p r o h i b i t ed a n d v o i d ". A l t h o u gh t h e re h as b e en s o me d i s a g r e e m e nt a b o ut w h e t h er or not an e m p l o y ee or f o r m er e m p l o y ee c an c o n s t i t u te an u n d e r t a k i n g, it is g e n e r a l ly a c c e p t ed that section 4 c an a nd d o es a p p ly to certain e m p l o y m e nt c o n t r a c t s. e m p l o y ee h as g o n e to w o r k f o r a n o t h er e m p l o y er or h as set u p in b u s i n e ss on their o w n . T h e d e c i s i o ns of the C o m p e t i t i on Au t h o r i ty s u g g e st that the f o r m e r is not an u n d e r t a k i ng wh i l st the latter i s ." In relation to leases, p a r t i c u l a r ly t h o se b e t w e en a t e n a nt a nd a s h o p p i ng c e n t r e, a restrictive u s er c l a u se h as b e en identified by t he C o m p e t i t i on A u t h o r i ty as i n t e n d i ng to p r e v e nt or restrict the H o w e v e r the A u t h o r i ty h a ve m a d e it v e ry clear, b o th in their n o t i ce a n d s u b s e q u e nt r e l e v a nt d e c i s i o n s, that s u ch restrictive u s er c l a u s es d o n ot g e n e r a l ly distort c o m p e t i t i on as the t r a d er is f r ee to e s t a b l i sh a b u s i n e ss o u t s i de the s h o p p i ng c e n t r e, s u b j e ct to p l a n n i ng p e r m i s s i o n, w h i ch b r i n gs t h em into t he r e l e v a nt g e o g r a p h i c al m a r k et of t he c e n t re a n d a l l o ws t h e m to c o m p e te w i th the c e n t r e s' traders. T h i s a p p r o a ch is p a r t i c u l a r ly we ll illustrated by t he Authority's decision in Green Property plc/Tenants - Northside Shopping Centre in w h i c h t he A u t h o r i ty g r a n t ed a c e r t i f i c a te o n ly a f t er t he l e s s or r e m o v e d a restriction p r e v e n t i ng t he t e n a nt f r o m o p e r a t i ng in p r e m i s es o u t s i de the c e n t r e. T h e distinction w o u l d a p p e ar to d e p e n d on w h e t h er the f o r m er o p e r a t i on of a n o t h er outlet f r o m e n g a g i ng in c e r t a in b u s i n e s s e s.

C o m p e t i t i on Au t h o r i ty h as e n d o r s ed this a p p r o a ch by t e n d i ng to rely on s u ch s o u r c es in their d e c i s i o ns .

Restrictive c o v e n a n ts w e re dealt with by the C o mm i s s i on as f ar b a ck as 1976 w h e n, in Reuter , it w a s d e c i d ed that they m a y e s c a pe A r t i c le 85 if they w e re p r o p e r ly limited in t i me, s p a ce a nd s u b j e ct matter. T h e similarity w i th the n e ed f or r e a s o n a b l e n e ss in the c o m m o n l aw d o c t r i ne of restraint of t r a de is o b v i o u s. T h e C o mm i s s i o n 's d e c i s i on w a s f o l l o w ed by t he E u r o p e an C o u rt in Remia and Nutricia -v- Commission w h e r e t he C o u rt struck d o w n a c o v e n a nt n ot to c o m p e te in the r e l e v a nt D u t ch m a r k et f or a p e r i od of ten y e a rs a nd in the E u r o p e an m a r k et f or five y e a rs as m o r e restrictive than w a s n e c e s s a ry to protect the v a l ue of the b u s i n e ss t r a n s f e r r e d. T h e C o u rt h e ld that " s u ch c l a u s es m u s t b e n e c e s s a ry to B e r g e r on s u g g e s ts that the t w o d e c i s i o ns of Reuter and Nutricia represent the f u r t h e st the C o mm i s s i on or E u r o p e an C o u rt w o u ld be p r e p a r ed to g o in 20 u p h o l d i ng e m p l o y ee restraints . T h i s, h e says, is a l so the position in Irish law, e v i d e n c ed by the d i c ta of C o s t e l lo J. in John Orr Ltd and Vescom B. V. -v- John Orr-. " G r e a t er f r e e d om of c o n t r a ct is a l l o w a b le in a c o v e n a nt e n t e r ed into b e t w e en the seller a n d the b u y er of a T h e a p p r o a ch of d i s t i n g u i s h i ng e m p l o y m e nt c o n t r a c ts a p p e a rs to h a ve b e en a d o p t ed by the Irish C o m p e t i t i on Au t h o r i t y. In its d e c i s i on in Apex/Murtagh a p e r i od of o n e y e ar w a s s e en as the m a x i m um a p p r o p r i a te f or a n o n - s o l i c i t a t i on c l a u se in an e m p l o y m e nt c o n t r a ct wh i l st in Gl Corporation/General Semiconductor Industries Inc it w a s r e c o g n i s ed that a t w o y e ar restriction on t r a de w o u ld b e the n o r m in a sale of b u s i n e ss situation b ut u p to five y e a rs c o u ld be p e r m i s s i b le w h e re the t r a n s f er of k n o w - h o w is i n v o l v e d. b u s i n e ss than in the c a se of o n e e n t e r ed into b e t w e en an e m p l o y er a nd e m p l o y e e ." the t r a n s f er of the u n d e r t a k i ng c o n c e r n ed a nd their d u r a t i on a nd s c o pe m u s t be strictly limited to , „19 that p u r p o se

3(i) The Relevance of European Caselaw to Section 4

T h e l o ng title of the C o m p e t i t i on A ct d e s c r i b es its o b j e ct as p r o h i b i t i ng restrictions on c omp e t i t i on by a n a l o gy w i th A r t i c l es 85 a n d 8 6 of the T r e a ty of R o m e . T h u s, in i n t e r p r e t i ng S e c t i on 4 it is i n s t r u c t i ve to e x a m i ne the attitudes of the C o mm i s s i on a n d the E u r o p e an C o u rt t o w a r ds A r t i c l es 85 a nd 8 6 . T h e Irish

T h e d e c i s i on is s i g n i f i c a nt as it s h o w s

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