Vinters' price freeze in breach of settlement

THE HIGH Court has found the two main vintners’ groups to be in contempt of court by announcing a drinks price freeze.

Mr Justice Liam McKechnie yesterday ruled that announcements by the Licensed Vintners Association (LVA) and the Vintners’ Federation of Ireland (VFI) on December 1st last year of a one-year freeze on the price of drinks in pubs was in breach of previous undertakings given to the court in settlement of proceedings over alleged drink price fixing.

The judge said he “gladly acceded” to a request from the Competition Authority to defer even a consideration of the consequences of his finding and expressed the hope no further imposed order would be required from the court. The authority had previously told the judge it did not wish to see any persons jailed or assets seized and required only that the previous undertaking be complied with.

The judge also stressed his finding of a breach of undertaking was “entirely based” on an interpretation of the 2003 undertaking and he had “in no way” drawn any conclusion as to whether or not the recommendations by the publicans’ organisations breached provisions of the Competition Act 2002.

After the announcement of the price freeze on December 1st, the authority brought proceedings alleging contempt and seeking orders requiring the chief executives of the LVA and VFI to come before the court to explain why they should not be imprisoned for contempt or have the assets of their organisations seized.

The authority claimed a price freeze, especially during a recession, was likely to result in substantial consumer harm and breached the Competition Act 2002.

Both vintners’ groups denied any breach of the Competition Act or of the undertakings previously given to the court and said their legal advice was they were not in breach.

The authority’s applications arose from the 2003 settlement of proceedings brought by it in 1998 against the LVA and VFI. That settlement, made without admission of liability, included undertakings by both not to recommend prices to their members. The authority claimed December’s press release about the price freeze amounted to a recommendation from the publicans to their members in relation to the price of drinks contrary to the undertakings.

In his ruling, Mr Justice McKechnie found that the 2003 undertaking was not restricted to preventing any recommendation on specific price fixing but also related to any recommendation that prices should be increased, lowered, held at their current levels or held subject to an individual publican’s right to charge less than current levels.

He concluded that the press release must be construed as a recommendation as to the prices charged by publicans for the sale of alcoholic drinks.

“It was a recommendation intended to assure the public that there would be no increase in the price they would pay for drinks in licensed premises. A member of the public would certainly feel that the recommendation related to the price they would pay,” the ruling stated.

The judge said there was therefore “no doubt in my mind” but that this was a recommendation by the defendants to their members on the prices of alcoholic drinks. “I thus find that the defendants have breached their first undertaking and are guilty of contempt of court,” he added.

The LVA and VFI said that they needed time to “digest the full details of the ruling and will consider all their options”.