A tough competitor

He was one of the first competition lawyers in Ireland and now, as adviser to the Irish Competition Authority, Gerald FitzGerald is getting tough with cartels. Helen Power reports

In 1972, Gerald FitzGerald received a phone call from Alexis FitzGerald, his uncle and a founding partner of McCann FitzGerald. At the time, Gerald was a solicitor with Matheson Ormsby Prentice (MOP), a firm that in the early 1970s was a relative upstart compared with the blue-blooded McCanns. Uncle Alexis asked: “So, have you ever thought of coming to work for us?” to which Gerald replied that he was perfectly happy where he was. Undeterred, Alexis FitzGerald took his young nephew out to lunch and talked him round.
FitzGerald the younger joined the family firm that year and went on to become one of the first generation of Irish competition law practitioners and a pioneer in his field. Along the way he founded the firm's Brussels office in response to Ireland's accession to the European Community, doing a three-year stint out there himself. In the 1970s it was a revolutionary move and even today McCanns is one of the few Irish firm with a competition practice serious enough to merit a Brussels presence.
The competition department has reaped rewards from this far-sighted investment and now has a stable of top clients, including Guinness and EirGrid, Ireland's national grid. The firm has also acted on four of the last six mergers called in by the Irish competition authorities. Last year, FitzGerald capped his career with an appointment to the advisory panel of the Irish Competition Authority. FitzGerald is one of just four advisers and the only solicitor. He can expect an eventful two years with the panel as it aims to implement Ireland's far-reaching 2002 Competition Act.
Fortunately for McCanns, the panel will advise on only policy and strategic issues, so there should be no conflicts if the Competition Authority comes down hard on FitzGerald's clients. “The reaction from clients has been very positive,” says FitzGerald. “I knew people might question whether there might be a conflict or privacy issues for clients, but the situation is fully understood by the panel – they have to respect that my primary obligation is to my clients.”
Like Tony Blair and Gordon Brown, FitzGerald is almost evangelical about the role of competition law in a productive economy. “Cartels are dangerous,” he says. “Not just to consumers, but also to business. They can operate at any level of the supply chain.”
Competition law in the Republic of Ireland has followed a similar path to that of the UK; neither country bothered much with it until the 1980s, when European Community competition law started to have an impact on domestic business.
Things changed for the Republic of Ireland in 1988 when the European Commission first blocked an Irish merger. Using cobbled together bits of EU law, it blocked a joint bid by Guinness and Grand Metropolitan to buy some Irish distillers. The two companies walked away with nothing, while Pernod Ricard snapped up the target. According to FitzGerald, the consensus in Ireland was that the country might as well get on and introduce the EU merger legislation and then at least there would be a framework for competition law.
The introduction of the Competition Act in 1991 was a turning point for FitzGerald and McCanns' competition practice. Until then, FitzGerald had done general commercial work and competition law had barely existed as a separate discipline. The first year of the legislation saw Irish companies make more than 1,200 merger notifications. FitzGerald found himself in a very sexy area of law, one that is now probably the UK's most oversubscribed in terms of interested trainees and associates.
Europe may have been the driver for reform, but like the UK, Ireland has now rushed ahead of the European Commission, introducing a series of increasingly tough competition acts. Although theoretically there have been criminal sanctions for all infringements of competition law in Ireland since 1996, FitzGerald calls this a “blunderbuss approach”. The decision to prosecute lies with the Director of Public Prosecutions (DPP), but despite receiving five dossiers from the Competition Authority, no prosecution has ever been brought by the DPP.
The Competition Act just approved by the Irish parliament has isolated hardline cartels and allows much more serious penalties for individual executives – up to five years in jail. The hope is that the DPP will now be willing to prosecute. Despite opposition from Ireland's business community, FitzGerald is firmly in favour of criminalisation. “Only tough criminal sanctions will work,” he says. “The EU has been imposing fines for years and the same names just keep coming up. One argument is that cartel participants can simply factor the financial penalties of a fine into their operating costs. It's quite a different matter if you're thinking about jail.”
FitzGerald has already attended the Competition Authority's first two quarterly meetings and has firm ideas as to what his role will involve. “My contribution will be on three levels,” he says. “Firstly to give feedback on the perspective of business and its legal advisers who are dealing with competition issues on a day-to-day basis. Secondly, to advise on broader policy issues, particularly on how the EU's modernisation programme will affect Ireland – this is an area where we need to lobby to make sure the regulation fits in with our law and constitution. Thirdly, I'll advise on enforcement issues.”
On enforcement, FitzGerald believes that the first priority of the Competition Authority must be to prove itself in its new role as the sole arbiter of non-media sector Irish mergers. He says: “If they can't do that, they won't get the chance to do anything else, but the authority does need time to gear up and sort out issues such as staffing.”
However, he admits that the regulator will ultimately be judged on successful prosecutions. “The real challenge is to get criminal convictions or institute successful civil proceedings,” he says. “Recently, the authority has carried out some dawn raids, particularly in the construction industry, but it is certainly true that there aren't many scalps to hang on the wall yet.”
So, any executives tempted by the financial rewards of unfair collusion should take note – one of the grandfathers of Irish competition law is helping the Competition Authority to sharpen its knives and hunt down trophies.