Greywash - Village Magazine

22June 2015

HAT do you get when you

merge two failed quan-

gos? Last year the

National Consumer

Agency and the Competi-

tion Authority merged and became the

Competition and Consumer Protection

Commission (CCPC).

To put the intended role of the CCPC

into perspective, it should be pointed

out that the Authority has estimated

that competition law infringements are

costing €bn per year, which amounts

to €, for every household in the

State. A properly functioning Authority

could have obviated the need to commit

a €, pay increase to civil servants

simply by increasing purchasing power

by an equivalent amount. This would

have the eﬀect of improving the balance

of payments, improving competitive-

ness and increasing living standards.

Are things going to change with the new

CCPC?

Two weeks ago, some forty-six years

after the State ﬁrst drove a coach and

horses through our Constitution by

allowing Roadstone to merge with Irish

Cement, a CCPC investigation was

announced in front-page news by the

traditionally CRH-friendly Sunday

Business Post.

There are two fundamental questions

arising from the headline. Does CRH plc

warrant investigation and is the CCPC

capable of carrying out the type of

investigation that will be required? The

ﬁrst question is easily answered. CRH

has continually attracted attention for

all the wrong reasons over several dec-

ades and is currently sheltering from a

hail of accusations of criminal breaches

of competition law.

The  merger created Ireland’s

biggest company but at the expense of

the public and its many SME competi-

tors in Ireland. The merger allowed the

new Cement Roadstone Holdings to

integrate both vertically and horizon-

tally thus allowing it to gouge artiﬁcially

high prices for cement and explosives on

the one hand whilst using its market

power to evict all before it through the

use of margin squeeze, banking embar-

gos and other predatory tactics.

Back in , ‘Prime Time’s precur-

sor ‘Today Tonight’ did an excellent

expose on CRH’s dirty tricks and uncov-

ered prima facie evidence of cartels in

several of its markets, together with a

host of predatory practices. CRH’s then

senior executive Declan Doyle denied

the practices on air and CRH was taken

to the High Court by two courageous

families, the O’Regans from Cork and

the Quirkes from Kerry, amid allega-

tions of defamation. CRH came up with

a then record settlement on the steps of

the High Court. Despite the RTÉ revela-

tions, the State took no action. And

RTÉ’s hands have been well and truly

tied since then.

In , there was what should have

been a deﬁning moment: the European

Commission ﬁned  European cement-

makers ECUm. The Commission

found that Irish Cement played a lead

role in ﬁxing prices and dividing Euro-

pean cement markets. At a cartel

meeting in January , the Chairman

noted that: “Our Irish colleagues have

described the threats to their domestic

market and have asked for my help”.

At a later cartel meeting in March

, the Irish Cement delegate

Diarmuid Quirke noted of the Irish situ-

ation: “As the country which had

started these discussions, Ireland had a

duty to request that they be continued

as they had been extremely useful in

calming the situation in Ireland”, i.e. in

blocking cement imports into Ireland.

Despite incontrovertible evidence of

CRH’s cartel activities, no action was

taken against CRH even though the

State was one the biggest users of

cement and other construction

materials.

The Examiner of Restrictive Practices

turned a blind eye to complaints and the

Competition Authority was always

awash with complaints after it was set

up in . In , a Sunday Inde-

pendent investigation conﬁrmed that

CRH operated a web of secretly-control-

led downstream companies and named

four. There were, indeed are, several

more. The British-based Mergers and

Monopolies Commission once described

secretly owned subsidiaries as: “ﬁght-

ing-companies, that is to say a company

which is a member of a group, but whose

ownership is concealed from the public;

the ﬁghting-company can then be used

to attack a competitor’s customers by

oﬀering them favourable terms and

conditions”.

In fairness to economist Pat Massey

who was the Director of Competition

Enforcement, he immediately sought

funding from Government to instigate

an investigation into CRH and the build-

ing materials sector but promptly

resigned his position in February 

when the required funding was not

forthcoming.

In December , John Fingleton,

then Chairman of the Competition

Authority, stated that: “There was no

enforcement of Competition Law in Ire-

land at all until ” and “Small

concrete producers became proxies for

the consumer”.

However, in May , Dr Fingleton

wrote that the Competition Authority

would not be investigating the sector

but “will continue to monitor the

cement sector generally”. In , Pat

Rabbitte asked that a market study be

conducted into the sector. Dr Fingleton

responded that there was no funding

available until the following year. Again

there was no follow through and no

study.

Does CRH

warrant

investigation

and is the

CCPC capable

of carrying out

investigation

required? Yes

and No

“

NEWS CRH

Greywash

Despite recent showy dawn raids, CRH is more

than a match for the under-powered Competition

Commission. By Seamus Maye

June 2015 23

The stream of complaints continued.

The takeovers continued. Kilsaran

bought Tracy Enterprises amid a ﬂurry

of objections. Whistleblower Barry

Goode’s evidence given in  appears

to have been binned. Other potential

whistleblowers have been discouraged

by the Authority. The Authority stood

idly by when CRH, Readymix and Kil-

saran mounted the latest predatory

assault which involved a sustained cam-

paign of below-cost selling that wiped

out minority shareholder value in Read-

ymix [Cemex].

In April , gardaí from the Bureau

of Fraud Investigation attached to the

Authority informed the Goode family

that: “there isn’t a hope of the Authority

investigating this behaviour (concrete

and cement cartel) because of who you

are up against and what’s at stake”.

In October , the Authority told

the Goode family and their solicitor:

“that if the Authority were to carry out

any investigation, the Authority was

only going to investigate small compa-

nies similar to their own and stated they

would not go after the major companies

(CRH and Cemex)”.

In March , Hudson Brothers sub-

mitted a detailed complaint to the

Authority about the latest round of pre-

dation but this too was trashed. Cemex

then bought out the minority sharehold-

ers in Cemex Ireland for circa €m and

exited the market, allowing Kilsaran to

mop up the Cemex assets in the Republic

of Ireland. Once again, complaints to the

Authority about the manner of the

planned exit of Cemex and the CRH/

Kilsaran axis’ intention to purchase the

Cemex assets were completely ignored

by the Authority.

Question one above is therefore

answered in the aﬃrmative.

Is the CCPC capable of carrying out an

eﬀective investigation into CRH? Ire-

land’s Competition Law regime is an

amalgam of cut and paste from other

jurisdictions, mainly European Law. The

regime is hopelessly dysfunctional and

entirely inadequate if the aim is to

enforce European Law. Certainly, all of

the blame cannot be attached to the

CCPC. For example, Ireland does not

have the equivalent of the UK’s Enter-

prise Act. This gives the UK’s

Competition and Markets Authority

(CMA) the power to undertake civil

investigations and make eﬀective orders

in situations where an AEC (Adverse

Eﬀect on Competition) is discovered. A

recent UK market investigation into the

aggregates, cement and readymix con-

crete market found AECs. So the CMA

ordered the divestiture of a large cement

factory by Lafarge together with the

divestiture of a GGBS cement plant by

Heidelberg-owned Hanson, and made

several other orders. The CMA found

suﬃcient evidence of co-ordination

among cement manufacturers to enable

it make such robust orders under the

Enterprise Act. No ﬁndings were made

in relation to breaches of the UK’s Com-

petition Act as no investigation was

conducted under the Competition Act.

With no such legislation in Ireland,

the CCPC has to rely solely on the Com-

petition Acts. The two core provisions of

the Competition Acts are Section 

which deals with price-ﬁxing and mar-

ket-sharing and Section  which deals

with Abuse of Dominance. Strangely,

breaches of Section  are categorised as

criminal oﬀences while Section 

breaches are civil. Arguably, abuse of

dominance is the graver and less visible

of the two oﬀences and serves to create

an ideal platform for price-ﬁxing and

market-sharing.

Ireland’s track record in prosecuting

white-collar criminal oﬀences is deplor-

able. Despite swathes of criminal

behaviour across the banking sector, not

one banker has been incarcerated. The

same applies to Section  of the Compe-

tition Acts. It is noteworthy that the

CCPC is conducting its investigation into

the “bagged” cement market under Sec-

tion , i.e. for abuse of dominance. This

has resignation written all over it and

amounts to an admission by the CCPC

that it is virtually unable to bring a

criminal prosecution across the line.

Secondly, the bagged cement market is a

minuscule and somewhat detached ele-

ment of the building-materials sector.

There is and always has been price-ﬁx-

ing and market-sharing within the

bagged market (Section ). It will how-

ever be very diﬃcult to prove that there

is abuse of dominance (Section ) in the

bagged market.

It is extraordinary that the CCPC has

avoided looking into the real problem

within the sector, that of vertical inte-

gration and the secret ownership

structures that act as a platform for

wholesale abuse of dominance and hori-

zontal cartels across the cement,

aggregates, readymix concrete, asphalt,

ground-limestone and super-ﬁnes mar-

kets. These act as ﬁllers in fertiliser and

animal feedstuﬀs. The ODCE has also

steadfastly refused to investigate the

secret ownership structures in the

sector.

The CCPC is further handicapped by

the fact that it cannot of itself impose

ﬁnes or make orders for divestment or

make ﬁndings under the Acts as is the

case with the UK’s CMA. The CCPC must

refer all criminal matters to the DPP.

The UK has another useful tool in its

armoury, whistleblowers can be paid up

to £, for coming forward. The

US Dodd Frank Act whistleblowers can

receive up to % of the ﬁnes imposed.

The introduction of whistleblower

rewards in Ireland could dramatically

alter the landscape for competition law

enforcement.

As it stands, it will take more than a

mere name change to create a functional

competition regime in Ireland. Don’t

hold your breath on the CCPC upsetting

CRH too much anytime soon. •

CCPC is

handicapped

because it

cannot impose

ﬁnes or make

orders for

divestment or

make ﬁndings

under the Acts

as is the case

in the UK

“

Samus Maye is

Director Cartel

Damage Claims SA and

activist

laying it on thick

CRH bosses:

Myles Lee and

Albert Manifold