The Process Of Competition In Free Market Law Commercial Essay

Published Date: 02 Nov 2017

‘Competition law exists to protect the process of competition in a free market economy’ [1] 

The main purpose of competition law is to keep free competition in the market place and the protection of its consumers. We have in Ireland a National Agency whose purpose is to enforce Irish and European competition law. These laws are in place to stop any anti-competitive deals in the market place,with the aim of fair and just competitive rules for all to abide by.

As a newly formed joint venture is likely to participate in commercial or economic activities, this is seen as an ‘undertaking’ and is therefore, subject to EU and Irish competition law. Anti competitive arrangements are dealt with in section 4 & 5 of the Competition [amendment] act 2012.

Section 4 prohibits agreements, which involve:

fix prices [cartels]

limit or control production or markets

share markets or sources of supply

apply dissimilar conditions to equivalent transactions with other trading parties or 

attach supplementary obligations to a commercial contract which have nothing to do with the subject of the contract (e.g. tying).

The Competition Authority would view any arrangement between two or more operators in the market, where the object of the arrangement is to thwart, retrict or misrepresent competition in Ireland as illegal. Cartels would be viewed by the Competition Authority as the worse form of anti-competitive activities.

If the joint ventures is between member states EU law will apply. If the joint venture is within Ireland, Irish law will apply.

In Ireland the Competition Act, 2002 had replaced the Merger

Takeovers (Control) Acts 1978-1996 and the Competition Acts 1991-1996. [now replaced by the Competition [amendment] act 2012]

B-joint venture

When a joint venture is formed between two architectural firms or more, management of different aspects of the project responsibilities is needed, this type of shared workload may result in the following format :

A- a joint venture between two practises equal sharing of works

B- a joint venture between two practises, one designs the other supervision and certifies

C- a joint venture between two or more practises – a group venture or,

D-Another important time where Joint Venture would be used is for international Work. I.e. an Irish architectural company would joint venture with a polish architect if working on a project in Poland [in the first instance and then

might develop a permanent presence if they won more projects there]- EU law

In tandem with researching on competition law I wrote to the RIAI and the RIBA as I could not find a Joint Venture agreement in Ireland. I needed to find what was actually required by those involved with a joint venture application. Both letters enquired about the provision of architectural services in relation to two architectural practises combining to become engaged in a special project, and also enquired if there are any institute guidelines that would be of assistance to me, highlighting that I was aware a separate company may have to be formed with separate professional indemnity, and any advice on set procedures that are available would be of great assistance.

The RIBA replied informing me there was a draft paper produced a few years back on joint ventures with a draft agreement [see attached appendix], however they advised you would need to take specific legal advice, however the paper may form a basis for beginning the process.

I received no reply from the RIAI however further research revealed in Ireland

when tendering for government works to a government body such as the Department of Education and Skills ,JV are required to fill out a Suitability Assessment Questionnaire.

whilst filling in the Suitability Assessment Questionnaire

are required to fill this out for each member of that Joint Venture which are combined and submitted as a single application. These in turn are then

evaluated and marked as a single application

It is these very type of applications that would see the formation of Joint Ventures in order to gain a higher marking return on their submission: in areas such as specialised work – previous history – staff size- similar projects completed previously etc..

The current DoES suitability assessment declaration 2013 makes reference to JV within their questionnaire, for example within section 2

details the nature of the applicant is asked - this can vary from a sole trader , partnership, private limited company , public limited

JV

Where there is a JV application being made the name and address of all company members needs to be supplied with

Evidence of applicants personal situation - here confirmation is required that none of the grounds as specified in Article 45 and

If any one of the grounds specified in Article 45 and 51 of Directive 2004/18/EC (and Regulation 53 of SI No.329 of 2006) apply

any member of the applicant Consortium or Joint Venture or their parent companies, the applicant may be excluded from this competition

This is confirmation firstly of article 45 of

Criteria for qualitative selection

Article

Personal situation of the candidate or tenderer

Generally this covers the personal situation of the tenderer[s] , items such as do they have a criminal background ? Have they been involved

fraud, corruption or money laundering? Or were ever part of a criminal organisation? This also covers areas of a financial background where the

tenderer must also give confirmation of no involvement ,are they bankrupt or in administration ?do they owe monies to or fail on payments

social security contributions

Have they failed on payment of their taxes ?If any one of the above [they cannot meet] they will be naturally excluded from the competition

Like wise regarding Article 51,

Article

Additional documentation and information

The contracting authority may invite economic operators to

supplement or clarify the certificates and documents submitted

pursuant to Articles 45

Regulation 53 of SI No.329

The DoES introduced 'New procedures for the Suitability Assessment and Appointment of Consultants postedÿ3rd January 2013. These procedures will come

into effect on theÿMonday 4thÿFebruary 2013. -

Another reason to follow procurement rules is that by following an open, transparent and non-discriminatory competition the most suitable partner and

the most favourable terms and conditions will be obtained by the local authority

C

Anyway further research on the Competition Authority website ,brought me to the Group 91 architects, an influential consortium of eight

responsible for the Temple Bar Architectural framework plan. Temple bar properties had a mission to develop Temple bar as Dublin's Cultural quarter

so they commissioned an Architectural framework plan, the first public agency to do so in ireland. A competition followed with the winner being Group 91

Architects, consisting of

Rachael Chidlow, Shay Cleary, Yvonne Farrell, Paul Keogh, Niall McCullough, Shelley McNamara, Michael McGarry, Valerie Mulvin, Siobhan N¡ Eanaigh

Sheila O'Donnell, Shane O'Toole, John Tuomey, and Derek Tynan

Further research resulted in the finding of the Competition Authorities decision of the 20th October 1995 relating to a proceeding

of the competition act

The case refers to Group 91 architects requesting a certificate from the Competition Authority in respect of a shareholders agreement-A joint venture

company should also prepare a shareholder's agreement, a contractual agreement between the parties involved that sets out the ownership and

management details of the newly formed company

This joint venture was formed for the particular purpose to provide architectural services for the framework Plan competition-as none of the eight

companies would have the expertise or knowledge to apply for this solo

The reason behind the shareholders agreement was to help manage & regulate the standing of each member of this group venture.

Notification was made by group 91

A : a request for a certificate under section 4 [4] of the competition act 1991

Or

B: if this fails – a license under section 4[2]in respect of a share holders agreement for Group 91

Section 4(1) of the Competition Act states that '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'.

Section 4 [4] : (4) The Authority may certify that in its opinion, on the basis of the facts in its possession, an agreement, decision or concerted practice notified under section 7 does not offend against subsection (1).

Section 4[2] : (4) The Authority may certify that in its opinion, on the basis of the facts in its possession, an agreement, decision or concerted practice notified under section 7 does not offend against subsection (1).

The decision reached by the CA was Group 91 Architects did not offend section 4[1] of the Competition Act 1991 and they were issued a certificate stating so.

Since the outcome of Group 91 verdict in 1995,the competition Act has been amended several times:

2002 – the Competition Act 2002

2006 - the Competition [amendment] act 2006

2012 - the Competition [amendment] act 2012

Competition Act 2002 continues with the same prohibitions under Section 4 [1] as it did previously.

The Competition [amendment] act 2006 revisions related to the grocery trade .

Whilst the Competition [amendment] act 2012 empowered the Competition Authority with increases in prison sentences and increase in fines etc. the amendments would not affect a similar outcome from a Joint Venture application to the Competition Authority today in the likes of group 91.

D

CONCLUSION : I began this assignment by typing ‘Joint Venture’ in the goggle search engine and was surprised to see the lack of relevant information available, narrowing my search to joint venture architect etc. I realised this would be harder than I first thought. I understood the term ‘joint Venture’ more so in relation to Public Private Partnership, as for architects teaming up with other architects and the implications of this in respect of competition law was foreign to me. The whole statement really hinges on ‘Joint Ventures and their relationship with competition law’.

The formation of jv may increase due to the new government procedure where architects must now tender for works REVIEW BELOW AND INCLUDE IN FINAL REFERENCE

Point that is being made is JV are deemed to be acceptable by the

insert the marking system page 11 of the

The very formation of JV - resulting very possibly from our current economic would

Enough for architects to consider forming a JV.The days of being on a School Board ,or the local architect or friend of the principal or having a

history in designing previous works for a school are over . Nowadays Architects, just like contractors have to apply for any government

works [ check is this the case with private] by firstly submitting a suitability questionnaire to see if they are capable to carrying out the

required .Being capable would require the following criteria on the applicanrs personal situation which they would be marked

Get an example from aaron of an actual submission

Applicant

Further to my research I was looking for any examples of Joint Venture in Ireland where they may have infringed on competition law

This I found difficult as all the documentation I came across as discussed earlier had all the bases covered - if one could make an application as

joint venture to a government body [as long as you adhered to their conditions] the transparency of it all etc...the allowance of these types of

applications for such works would appear to be ok - even from the competition law infringement

Legal advice

44 The Venture shall procure such legal advice and provide such information and evidence as required for the resolution of any dispute with the Client or third parties, but each Party shall procure its own legal advice for any dispute between the Parties.

Whatever the good intentions of the parties in the beginning, a cynic might say that working with one’s peers makes good contractual relationships particularly important. It is therefore as well to remember that the purpose of a contract is more to define what happens when things go awry than when things go well.

The above would refer to - By following or applying to the likes of government application competitions - such as 'DoES-QC1 Suitability

Declaration

And following all the criteria that one must - how could any joint venture be deemed to 'infringe on competition law' when all is

Here again - is it not the responsibility of those seeking tenders to make every effort