Competition Authority Decision of 19 November 1998, relating to a proceeding under Section 4 of the Competition Act, 1991.

Notification No. CA/824/92E - Coillte Teoranta / Coillte Allocation Scheme.

Decision No 527.

Introduction

1.	This decision relates to a standard form agreement between Coillte Teoranta and certain customer companies involved in sawmilling for the guaranteed supply by Coillte Teoranta of minimum quantities of sawlogs to these companies. This agreement is known as the Coillte Allocation Scheme. The agreement was notified to the Competition Authority on 30 September 1992 by Coillte Teoranta with a request for a certificate under Section 4(4) of the Competition Act, 1991, or, in the event of a refusal by the Authority to grant a certificate, a licence under Section 4(2).

The Facts

(c) The subject of the notification

2.	The notification concerns a standard form agreement between Coillte Teoranta and its customer sawmills relating to the guaranteed supply of minimum quantities of sawlogs under the CAS for the timber production industry.

(b) The parties involved

3.	Coillte Teoranta was established in 1989 as an independent commercial state company under the Forestry Act, 1988, as a successor to the Forest Service of the Department of Industry. Coillte Teoranta is incorporated under the Companies Acts. Its functions include the development of the forestry industry on a commercial basis, to set up and manage woodland industries, to take part with others in forestry and related activities with a view to enhancing the effective and profitable operation of the company and to utilise and manage its resources in accordance with the above functions. The other parties to the agreement are the sawmills who comply with the required standards of the CAS.

(c) The products and the market.

4.	These have been described in detail in the Competition Authority’s “Report of Investigation of the Proposal whereby Coillte Teoranta would acquire the majority of the Issued Share Capital of Balcas Limited. 

(d) The notified arrangements

5.	The notified arrangements consisted of a Letter of Undertaking (dated 1991), a Coillte Allocation Scheme (CAS) list of mills, a CAS Audit (October 1992) detailing the areas for examination of sawmills wishing to qualify for the scheme,  CAS overall objectives, a sample letter concerning the audit, a CAS return form for the year 1991, an Explanatory Note on CAS, Interim CAS Specifications (July 1991), CAS Application Form, an Outline Proposal CAS for 1991, proposed specifications, Large Sawlog Quota Scheme, Small Sawlog Quota Scheme, Mill inspection form 1986 - Large Sawlog Quota Scheme and Mill inspection form 1986 - Small Sawlog Quota Scheme. The arrangements came into operation in January 1991. They replaced a previous scheme which had been administered by the Forest Service of the Department of Fisheries and Forestry since 1978.

(e) Submissions by the parties.

6.	Coillte made various arguments in support of its request for a certificate or, in the event of a refusal by the Authority to issue a certificate, a licence. As these are not considered relevant, they are not reproduced here.

(f) Subsequent Developments

7.	On 1 July 1997 the Authority wrote to solicitors for Coillte asking whether the notified scheme was still in effect and, if not, whether Coillte wished to continue to seek a certificate and/or licence for the original notified scheme. On 29 July 1997 solicitors for Coillte replied, stating that the original notified allocation scheme was no longer in operation but that Coillte did not wish to withdraw the notification. The Authority is aware that the Coillte Allocation Scheme system which is the subject of this notification was superseded in mid-1996 by a new log sales system, the Timber Sales System (TSS).

The Assessment

8.	The Authority has considered what the status of a decision on a certificate or licence related to an expired agreement dating from before the commencement of Section 4(1). Under the original Section 6(7) of the Competition Act, 1991, an aggrieved party could not seek relief in respect of any agreement, decision or concerted practice which had been duly notified to the Authority until the Authority had made a decision (to issue or not to issue a certificate, or to grant or refuse a licence), and any appeal under Section 9 had been concluded. In other words, under the 1991 Act a third party could seek damages for the period between notification and decision, but had to wait until after the decision and any possible appeal to do so. However, Section 6 of the Competition Act, 1996, modified Section 6(7) of the 1991 Act by providing that no relief could be granted in respect of the period beginning on the commencement of Section 4 and ending on the date that the Authority made a decision or an appeal was concluded. In this case the agreement expired before the Authority could make a decision on it. The Authority therefore considers that a decision on the issue of a certificate in this case would have no legal meaning or effect.

9.	A similar position arises in respect of the possible grant of a licence. Under Section 7(3) of the 1991 Act, a licence may be made retrospective to the date of notification, where the notification concerns an agreement which came into existence after the commencement of Section 4(1). However, there is no provision under the Act for the retrospective licensing of agreements which were already in existence at the commencement of Section 4(1). Since the agreement has already expired, to grant a licence now would again have no legal meaning or effect.

The Decision

10.	The Competition Authority considers that, as the notified agreement has expired, a decision to issue or not to issue a certificate has no legal consequences and that therefore there is no necessity to make any such decision. Equally, as no licence can now be awarded for the period during which the agreement operated, a licence request is equally redundant. The Authority has therefore decided to close the file without considering whether or not the agreement merits a certificate or licence.

For the Competition Authority,

Isolde Goggin,
Member. 

19 November 1998