Conviction marks stride in enforcing competition law

The outcome of the Ford dealer case has dealt a blow against price-fixing, writes Paul Cullen, Consumer Affairs Correspondent Analysis

No one knows for sure how much extra buyers of Ford cars were paying because of price-fixing but, according to an informed estimate, it could have been as high as 30 per cent on some models.

Whenever price-fixing is discussed, people tend to think of collusion between rival brands. However, in this case, the activity took place within the small family of Ford dealers, and relied heavily on the brand loyalty of the marque's many customers.

Virtually all the Ford dealerships in the State were involved in the price-fixing, which continued for a decade under the central co-ordination of Denis Manning, a retired motor trade worker who served as honorary secretary of the Irish Ford Dealers' Association.

Ironically, it seems that Manning did not benefit directly from the scheme, apart from some relatively small payments - a figure of €9,000 for one year was mentioned in court.

The system was devilishly simple. There was to be no lively competition between competing garages. Instead, the association drew up a list of guideline prices for every Ford model, below which the dealers were not allowed to go. Members were required to lodge a bond with the association as protection against infringements. Penalties would be deducted from this sum if dealers were caught offering reductions, and association representatives regularly patrolled the showrooms posing as ordinary car buyers to make sure this did not happen.

This was hardly a system for the commercially ambitious but, in boom times with high demand for new cars, it was a surefire way of preserving high margins.

Manning's conviction represents a notable advance for the Competition Authority, which has been investigating price-fixing allegations in several industries for some years.

Recent legislative changes mean the authority has more teeth than it used to and the courts are shedding some of their traditional aversion to penalising white-collar crime. A number of the authority's long-running investigations are finally beginning to bear fruit.

A separate investigation into alleged cartels among home-heating oil suppliers has resulted in 17 convictions; the stiffest sentence imposed here was six months suspended. By contrast, Manning received a €30,000 fine and a 12-month suspended sentence, still mild compared to the maximum of €4 million in fines and five years in jail provided for under the legislation.

The Ford case is the first of its kind to come before the courts and was a full criminal proceeding. Criminal charges for breaches of competition law are very rare. In the EU, only the Republic, the UK and Estonia, have criminal breaches of competition law on the statute books.

However, it may not be the last. The Competition Authority has sent files on other investigations in the motor industry to the DPP, who must decide whether they too merit a prosecution.