Category: Competition Law

Impending changes to legal education

Stethescope and gavelWhile Portugal and Iceland garner headlines for their international financial woes, Ireland is getting on with implementing the terms of last November’s EU IMF Programme of Financial Support for Ireland. For readers of this blog, one very important element of that programme requires the removal of restrictions to competition in sheltered sectors, such as the legal and medical professions. In particular, the Programme recommends the implementation of the 2005 Report (pdf) of the Legal Costs Working Group and of the Competition Authority‘s 2006 Reports on regulated professions, including their Report on the Legal Professions. Unsurprisingly, the Bar Council professed itself unhappy with the IMF proposals; but, in my view, the implementation of these recommendations can change the Irish legal system for the better.

In January of this year, the Public Accounts Committee published their Third Interim Report on the Procurement of Legal Services by Public Bodies (pdf). Starting from the premise that public bodies procure huge amounts of legal services every year, the Report concluded that the ability to get value for money is restricted by the practices of the legal profession. Indeed, the Committee was very concerned that the two Reports mentioned above had not been implemented:

The Committee notes the restrictive practices that are keeping legal fees artificially high. As public bodies are the largest procurer of legal services, it behoves the State to bring in reforms that will eliminate restrictive practices and bring in more competition in this market. The Competition Authority has provided a blueprint which will facilitate change and it is the Committee’s view that this should now be implemented. [p38]

In this respect, it recommended:

1. Competitive tendering should be made mandatory for the procurement of solicitors’ and barristers’ services by the State, so that a greater number of legal service providers have the opportunity to compete for work. This will lead to better service and better value for money for all State and public bodies. …

3. The taxation of costs system should be overhauled or replaced so that legal professionals and consumers of legal services have available to them clear guidance on current market rates for such services. …

6. Restrictive customs and practices in the two legal professions which lead to higher legal fees should be challenged and removed and should not tolerated any longer by the State. [p40]

It now looks as if all of these recommendations are about to be implemented. Writing in the Irish Times last Friday, Barry O’Halloran and Deaglán de Breádún report that the government intends to introduce new measures to shake up the legal and medical professions within three months:

Under the terms of the €67.5 billion EU-IMF bailout deal, the State is committed to boosting competition in sheltered sectors such as the legal profession, medicine and pharmacies by banning various restrictive practices. … The measures will include establishing an independent regulator for the legal profession and implementing recommendations made by the previous government’s legal costs working group and the Competition Authority.

From the point of view of legal education, the most important recommendation is the introduction of a Legal Services Commission, to act as an independent regulator for the legal professions, to set standards for the training of solicitors and barristers, and to approve and licence institutions that wish to provide such training. The EU IMF Programme requires that this should be completed by the end of the third quarter of this year. We may not meet that timetable, but I’m delighted that things are moving, and I look forward to the Government’s recommendations.

Network Neutrality in the EU and Canada

Net Neutrality. All Bits are Created Equal. It's not just a good idea. It ought to be the LAW. via Finest DailyNet neutrality matters. The basic principle of equal access to the internet – and consequent absence of discriminatory restrictions upon or priorities for ISPs, governments, classes of content, kinds of equipment, or modes of communication – is crucial to the preservation of online freedom, ensuring that the internet remains a free, open, and democratic forum of communication. Much of the debate has concentrated on the position in the US, especially after the recent Federal Communication Commission‘s (controversial) Open Internet initiative. However, the Canadian Radio-television and Telecommunications Commission had already issued its (equally controversial) internet traffic management review; and the EU has recently conducted a public consultation on The open internet and net neutrality in Europe.

Dr Daithí Mac Sithigh (UEA | Lex Ferenda | @macsithigh) has written a superb paper on net neutrality in the EU and Canada ((2011) 14(8) Journal of Internet Law 3; via SSRN):

Regulating the Medium: Reactions to Network Neutrality in the European Union and Canada

Abstract: In this contribution on network neutrality, the expression-related elements of this issue are considered, including a case study of Ireland, highlighting the broad powers enjoyed by ISPs, and discussing whether the problem is a genuine one. While noting that the matter has been the subject of various publications by a sizable number of US scholars, space is then given to comparing the state of the debate in Europe, Canada, and the United States, drawing on principles of telecommunications law. It is argued that the link between telecommunications and media regulation is at the heart of the net neutrality debates in Canada and (to a lesser extent) the European Union, and that the non-applicability of certain US doctrines in these jurisdictions (due to different market conditions and the established role of competition law) does not mean that regulatory or legislative action is unnecessary. Finally, it is contended that the consideration of net neutrality in the context of important social and political debates regarding speech, plurality, and innovation is a better approach than one focused on ex post identification of the most egregious examples of discriminatory practices.

Update (10 March 2011): Ars Technica reports that a key subcommittee of the US Congress has voted to undo net neutrality rules.

The IMF deal can change the Irish legal system for the better

Sunday Business Post, front page, 12 Dec 10, via their websiteIn yesterday’s Sunday Business Post, I argued that the IMF deal can change the Irish legal system for the better, reflecting arguments I have already made here and here.

IMF deal can change the Irish legal system for the better

The IMF deal has provoked a great deal of discussion, from its impact on our political and economic sovereignty, through the details of tax increases, state spending cuts and the implementation timetable, to the question of whether it needs to be ratified by Dáil resolution or even referendum. But there is a lot more to it than that.

IMF packages typically require structural reform to open the labour market and encourage competition in goods and services. The memorandum of understanding between the IMF and our government is no different. It requires the government to introduce legislation to remove restrictions on trade and competition in professions such as law, medicine and pharmacy. …

The IMF memorandum made it clear that all of the necessary legislation must be enacted by the end of the third quarter of 2011. This is probably not an impossible target, as these recommendations were not new in 2005 and 2006: many of them had been made in a report in 1990. Moreover, many other jurisdictions have already been down the same road. .. There are, therefore, many precedents to aid the Department of Justice in drafting the necessary legislation. It is unfortunate that successive governments have not implemented these reports.

Read the full piece here. Picking up on this, Rossa McMahon has rather dryly observed that the Government could help bring down legal costs overnight, but won’t. He concluded that if the IMF reforms “are implemented in the relatively short timeframe of the programme, they would represent something of a Big Bang for the professions”.

Bar Council unhappy with IMF proposals

Bar Council logo, via the Law Library websiteFollowing on from my post on the impact of the IMF bailout on Irish legal education, I see from today’s Irish Times that the Bar Council (logo left) is not happy with some of the proposals, in particular those directed to the establishment of an independent statutory Legal Services Commission:

Parts of legal sector reform ‘not in public interest’

CAROL COULTER, Legal Affairs Editor

THE BAR Council has criticised proposals concerning the legal professions in the Government’s four-year plan and in the EU-International Monetary Fund (IMF) programme of financial support. … Responding to queries from The Irish Times, the Bar Council said it welcomed aspects of the plan and the programme:

However, there are other aspects which have come as some surprise to the Bar Council, and which cause it concern, not because of any sectional or selfish interest but because they do not appear to be in the public interest.

… Bar Council chairman Paul O’Higgins SC said the Council had not been made aware of any detailed proposal to give effect to the establishment of an agency described as an “independent regulator” and it awaited details:

The Bar Council notes that the position of legal services ombudsman has recently been advertised in the national press. It is not clear how that position will interact with what may be a further State agency, namely, the ‘independent regulator’. …

Well, they would say that, wouldn’t they? The article finished with a quote from me:

the single most effective reform of the legal system would be the establishment of an independent regulator and the introduction of genuinely competitive tendering.

I don’t agree with the Bar Council’s point about there being a potential conflict between the Legal Services Commission and the Legal Services Ombudsman. The role of that office (which I welcomed when the current legislation was initially published) is to oversee the handling by the Law Society and Bar Council of complaints by clients of solicitors and barristers. The Ombudsman is independent in the performance of the functions of the office. There is no reason why this function could not simply be folded into the more general Legal Services Commission. For example, the Ombudsman could be a member of the Commission, and the Ombudsman’s office could be a division within the broader functions of the Commission. Moreover, there is no reason why the Ombudsman should not be given greater powers in respect of disciplinary matters relating to both branches of the profession: in particular, that office could be the first port of call for parties seeking to complain about a solicitor or barrister, and not simply be an appeal body from an internal complaints system.

Other divisions within the Legal Services Commission can take up the other functions recommended by the Legal Costs Working Group in 2005 and the Competition Authority in 2006. One of these concerns extending the provision of professional legal education beyond the monopolies currently enjoyed by the Law Society in training solicitors and the King’s Inns in training barristers. Most other common law countries have gone this route. In my view, it is long past time for Ireland to do the same. My only regret is that is has taken the IMF to make us do it!

The impact of the IMF on Irish legal education – Updated

IMF logo, via the IMF wesbiteI never thought I’d see the day when I’d put both the International Monetary Fund (IMF) and Irish legal education together in the title of a blogpost. But there it is, above. And this is because the summary of the the Joint EU-IMF Programme for Ireland on the Department of the Taoiseach website suggests that there will be consequences for legal education:

Competition

Removal of restrictions to competition in sheltered sectors including:

Legal profession:

– establish an independent regulator;

– implement the recommendations of the Legal Costs Working Group and outstanding Competition Authority recommendations. …

The enhancement of competition and the reduction of regulation in sheltered sectors is a standard IMF prescription, so this recommendation comes as little surprise. As for its details, the Legal Costs Working Group was established in 2004 and asked to look at the way in which legal costs are determined and assessed, and it reported in 2005 (pdf). In December 2006, as part of a series of reports on regulated professions, the Competition Authority published a Report on the Legal Professions which determined that the legal profession was in need of substantial reform. (more…)

Tobacco advertising challenges

The Public Health (Tobacco) Act, 2002 (also here), as amended in 2004 (also here) – and in particular Part 3 of the 2002 Act – constitute a comprehensive control on the sale and advertising of tobacco (the Office of Tobacco Control has a comprehensive list of the relevant legislation), and the legislation largely gives effect to EU law in this field. In particular, Section 33 of the 2002 Act as amended by section 5 of the 2004 Act prohibits advertising of tobacco products and section 43 of the 2002 Act as amended by section 14 of the 2004 Act requires vendors to ensure that tobacco products are kept in a closed container that is not visible or accessible to customers. These and related provisions were brought into force by the Public Health (Tobacco) Act 2002 (Commencement) Order 2008 (S.I. No. 404 of 2008) (also here) and took effect on 1 July of this year. Dublin solicitors Matheson Ormsby Prentice have a helpful description of the restrictions here. Now, today’s Sunday Times brings news that these prohibitions are to face a legal challenge in the Irish courts:

Philip Morris sues Irish government on tobacco ban

Tobacco giant Philip Morris International is to launch a legal action against the Irish government over its ban on the display of cigarettes in shops. …

The restriction on displaying tobacco products on shelves came into force in Ireland on July 1 and a similar prohibition is being discussed in the UK [Holyrood | Westminster]. … The governments of both countries believe forcing shops to stock cigarettes under the counter, where they cannot be seen by consumers, is an effective measure to combat the problem of teenage smoking. …

Philip Morris, which is being advised on the case by Matheson Ormsby Prentice, an Irish law firm, claims that the ban is anti-competitive because it favours those manufacturers who already have a large market share through the sale of cheaper brands. … The US company will argue that if retailers are unable to display cigarettes, smokers are more likely to stick with the brands they currently buy. …

In cases C-376/98 Germany v Parliament and Council 2000 E.C.R. I-8419 and C-74/99 Imperial Tobacco 2000 E.C.R. I-8599, the European Court of Justice struck down the Commission’s first set of rules on this issue on the grounds that they had not been adopted on the correct basis. This was relatively easy to correct: the Commission adopted a similar set of rules on another basis, and in another challenge by Germany, the ECJ upheld the new rules in Case C-380/03 Germany v Parliament and Council (noted by EU Law Blog and IRIS Merlin). Now that the EU rules have a valid legal basis, the next question becomes whether they infringe other provisions of the EU Treaties, and that is in effect the issue which Philip Morris seek to test; in particular, it seems that they are arguing that the display prohibitions infringe the competition provisions of the EU Treaty. Because of the EU background to the display restrictions and the competition arguments, the matter will doubtless end up in the European Court of Justice, and we will not see a resolution for quite some time.

However, if the competition law issues are to get an airing, what about the freedom of expression issues? (more…)

Number unavailable – is locking phones lawful or anticompetitive?

Locked phone, via the NYT site.Have you bought a locked mobile/cellular telephone? Are you thinking about doing do? If so, then you will be interested in an article in the New York Times during the week, entitled Locked vs. Unlocked: Opening Up Choice (also here). One element of it caught my eye in particular:

In the United States … some carriers — and in the case of the iPhone, a phone maker — say that unlocking the phone may violate the company warranty and thus the company will not repair or replace it if something goes awry. Some imply that it is not legal to unlock a phone, but the legal issues are murky at best. A subsection [ie, section 1201] of the Digital Millennium Copyright Act of 1998 could be interpreted as saying that anyone who unlocks a phone for someone else or tells others how to do it might face legal action.

Some legal scholars, like Susan Crawford, a visiting professor at the University of Michigan Law School and an authority on digital copyright law, have argued that interpreting the act that way has little to do with protecting copyrights, and more to do with limiting competition. The Librarian of Congress, the office that determines what things are covered under the copyright act, exempts the unlocking of mobile phones from the law.

Several recent cases support Professor Crawford’s view. In one of those cases, Lexmark, a printer manufacturer, tried to use the act to sue a company that made compatible ink cartridges [see Lexmark International Inc v Static Control Components Inc 387 F3d 522 (6th Cir. 2004) (pdf)]. In another, a garage door opener manufacturer tried to sue a rival company for making a universal door opener [see Chamberlain v Skylink 381 F3d 1178 (Fed Cir. 2004) (html)]. In both instances, federal courts ruled that these cases were not about preventing copyright infringement, but rather about stifling competition, Professor Crawford said. “Courts have said you shouldn’t use the D.M.C.A. to leverage your copyright monopoly into other markets,� she said.

It is a classic rule against monopoly power in general, though it is particularly so in the intellectual property context (pdf). A fuller statement of Prof Crawford’s views is here (also here).