Irish Competition Authority Decisions

1. Notification was made of two agreements by Estuary Fuel Limited on 30 September 1992 with a request for certificates under Section 4(4) of the Competition Act, 1991 or in the event of a refusal by the Competition Authority to issue certificates, a request for licences under Section 4(2).

2. The decision concerns two types of documents signed by Estuary and some of its exclusive distributors namely a standard form Debenture Agreement and a Guarantee and Indemnity Agreement.

3. The supplier involved in the notified agreements is Estuary Fuel Limited. Estuary is a private limited company which supplies fuel oils. The other parties to the debenture arrangements are distributors of fuel oils. In the case of the guarantee and indemnity agreements the other parties involved are the owners of a distribution company.

4. The products involved are fuel oils. The oil companies involved in this market generally use distributors to deliver to final customers and do not use their own staff as in the past.

5. The arrangements notified are those between Estuary and one or more of its distributors of fuel oils. These arrangements are embodied in a standard distribution agreement, for differing periods of time, which each distributor has executed. The Authority has already concluded that the standard distribution agreement (CA/629/92E), as amended, satisfies the conditions of the category licence for exclusive distribution agreements (decision no. 144 of 5 November 1993). In addition to the exclusive distribution agreement, there are two other documents, which are the subject of this decision, namely, a debenture signed by three distributors, and a guarantee and indemnity signed by the owners of one distribution company. The details of these are given below.

(a) Debenture. In association with the exclusive distribution agreement, the distributor agrees to pay on demand all sums due to Estuary for products supplied. To secure the indebtedness, the distributor creates a first fixed charge over the distributor's property and chattels, and over the undertaking and other property assets of the distributor. The debenture has been executed by three distributors, and they also agree to carry on business in a proper and efficient manner, and to keep proper books of account for inspection.

(b) Guarantee and Indemnity. Pursuant to the standard exclusive distribution agreement, the guarantee and indemnity has the purpose of providing security to Estuary in respect of amounts owing to it. The agreement is between Estuary and the guarantors, that is the owners of the distribution company. Each of the two guarantors, in consideration of the distribution agreement, guarantees to Estuary the full, prompt and complete performance and discharge by the distributor of its obligations under the distribution agreement, and in particular the due payment of all sums payable by the distributor to Estuary.

6. Section 4(1) of the Competition Act, 1991 prohibits and renders void all agreements between undertakings 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.

7. Section 3(1) of the Competition Act defines an undertaking as "a person being an individual, a body corporate or an unincorporated body of persons engaged for gain in the production, supply or distribution of goods or the provision of a service." Estuary and the distributors are engaged in the sale of oil products for gain, and are therefore undertakings within the meaning of Section 3(1) of the Competition Act. In the case of the guarantee and indemnity agreements, the owners of the distribution company own and control the business and, in line with previous Authority decisions, they are also undertakings.

8. The two notified agreements are connected with, and dependent upon, the exclusive distribution agreements, they form part of the exclusive distribution arrangements and, in some cases, they strengthen those arrangements. In the opinion of the Authority, while the agreements might contain some provisions which by themselves could offend against Section 4(1), the two notified agreements offend against Section 4(1) of the Competition Act because they underpin an exclusive distribution agreement which itself offends against Section 4(1) of the Competition Act for the reasons given in the category licence for exclusive distribution agreements.

9. Under Section 4(2), the Competition Authority may grant a licence in the case of any agreement or category of agreements which, 'having regard to all relevant market conditions, contributes to improving the production or distribution of goods or provision of services or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit and which does not-

(i) impose on the undertakings concerned terms which are not indispensable to the attainment of those objectives;

(ii) afford undertakings the possibility of eliminating competition in respect of a substantial part of the products or services in question.'

10. The Authority has decided that the basic Estuary standard exclusive distribution agreement satisfies the conditions of the category licence. It is of the opinion that the notified related agreements also satisfy the conditions of the category licence, for the same reasons, and thus they also satisfy the requirements of Section 4(2) of the Competition Act. This applies also to any exclusivity provisions specifically included in the notified agreements. A licence may therefore be issued in relation to each of these agreements. The licences come into effect on 10 June 1994. They will expire on the date of expiry of the category licence for exclusive distribution agreements, that is on 31 December 1998.

11. In the Authority's opinion, Estuary and the other parties to the agreements are undertakings . The notified agreements between the parties are agreements between undertakings. The Authority considers that the notified agreements offend against Section 4(1) of the Competition Act, 1991. The Authority considers that the notified agreements satisfy the conditions of Section 4(2) of the Competition Act. It has therefore decided to issue a licence to each of the notified agreements, and these licences shall apply from 10 June 1994 to 31 December 1998. It is not considered necessary to attach any conditions to the licences.

12. The Competition Authority has issued the following licences:

The Competition Authority grants a licence under Section 4(2) of the Competition Act, 1991 to the following agreements notified by Estuary Fuel Limited on 30 September 1992, on the grounds that, in the opinion of the Authority, all the conditions of Section 4(2) have been fulfilled:

(a) Distributor Agreement (Debenture)................CA/633/92E

(b) Distributor Agreement (Guarantee and Indemnity)..CA/635/92E

These licences shall apply from 10 June 1994 to 31 December 1998.

For the Competition Authority

Patrick M. Lyons

Chairman.

10 June 1994

The Competition Authority has issued the following licences:

The Competition Authority grants a licence under Section 4(2) of the Competition Act, 1991 to the following agreements notified by Estuary Fuel Limited on 30 September 1992, on the grounds that, in the opinion of the Authority, all the conditions of Section 4(2) have been fulfilled:

(a) Distributor Agreement (Debenture)................CA/633/92E

(b) Distributor Agreement (Guarantee and Indemnity)..CA/635/92E

These licences shall apply from 10 June 1994 to 31 December 1998.

For the Competition Authority

Patrick M. Lyons

Chairman.

10 June 1994

NOTICE UNDER SECTION 6(8) OF THE COMPETITION ACT 1991.

Notification Nos. (a) CA/633/92E - Estuary Distributor Agreement (Debenture) and (b) CA/635/92E - Estuary Distributor Agreement (Guarantee and Indemnity).

The Competition Authority has issued the following licences:

The Competition Authority grants a licence under Section 4(2) of the Competition Act, 1991 to the following agreements notified by Estuary Fuel Limited on 30 September 1992, on the grounds that, in the opinion of the Authority, all the conditions of Section 4(2) have been fulfilled:

(a) Distributor Agreement (Debenture)................CA/633/92E

(b) Distributor Agreement (Guarantee and Indemnity)..CA/635/92E

These licences shall apply from 10 June 1994 to 31 December 1998.

For the Competition Authority

Patrick M. Lyons

Chairman.

10 June 1994