Merger control in Ireland is governed by the Competition Act 2002, which has been amended a number of times (the "Competition Act"), most recently by the Competition and Consumer Protection Act 2014 ("2014 Act"). The 2014 Act substantially reformed the merger process in Ireland, introducing new jurisdictional thresholds, updated the specific regime for media mergers and establishing a new national competition authority, the Competition and Consumer Commission ("CCPC").
The CCPC amalgamated the functions of and replaced the Competition Authority and the National Consumer Council from 31 October 2014. In relation to merger control, it has extensive legal powers and a broad mandate to examine mergers and acquisitions that fall under the Competition Act. The CCPC has maintained a busy workload since its establishment, reviewing 88 merger notifications in the period from 31 October 2014 to 31 December 2015, according to its most recent Annual Report.
Irish merger control practice and procedure follows closely the approach of the European Commission, and the processes laid down in the EU Merger Regulation and the Consolidated Jurisdictional Notice. In particular, jurisdiction (other than for media mergers) is established on the basis of turnover-based thresholds. The concepts of control and full-function joint ventures are highly similar under both regimes. Substantive assessments are based on whether or not the relevant merger or acquisition results in a substantial lessening of competition on markets for goods and services in Ireland, which is similar to the test under the EU Merger Regulation. The process can run into a second phase where the CCPC is not able to reach a decision during the first phase period of 30 working days. Economic analysis plays an important role in the assessment of cases. The design and implementation of remedies is largely based on the EU model.
While the updated merger control regime follows in many important respects the approach of the European Commission, there are points of divergence:
- New jurisdictional thresholds were introduced on 31 October 2014 consisting of two financial thresholds relating solely to turnover in Ireland (previously one of the thresholds related to global turnover). In addition, the second threshold is triggered when at least two of the undertakings involved generated turnover in Ireland of €3 million or more.
- Acquisitions of assets that constitute a business to which turnover can be attributed can also fall under the regime if the financial thresholds are met. This concept has been interpreted widely by the CCPC and includes the acquisitions of buildings that generated a rent roll.
- Media mergers in Ireland, as defined by the Competition Act, are subject to review irrespective of turnover.
The sections that follow set out the key features of the Irish merger control regime, highlighting these points of similarity and difference.
Is mandatory notification compulsory or voluntary?
A merger or acquisition within the meaning of the Competition Act is notifiable to the CCPC on a mandatory basis if either:
- It satisfies the turnover-based thresholds under the Competition Act; or
- It falls within a class of merger or acquisition that has been specified in an Order by the Minister for Jobs, Enterprise and Innovation (the "Minister") for the purposes of the Competition Act.
To date, the Minister has specified that all media mergers (as described in more detail in Section 4.3 below) are notifiable to the CCPC, regardless of the turnover of the undertakings involved.
3. Is there a prohibition on completion or closing prior to clearance by the relevant authority? Are there possibilities for derogation or carve out?
Where a merger or acquisition is either mandatorily notifiable, or has been voluntarily notified, to the CCPC under Irish merger control rules, the parties must not put the merger or acquisition into effect until either (i) the CCPC makes a determination that the transaction may be put into effect or put in effect subject to conditions; or (ii) the applicable statutory time limit for reaching a determination has passed without the CCPC having done so.
Generally, it is not possible to carve out local completion of a merger or acquisition and any transaction put into effect prior to receipt of clearance by the CCPC is void and unenforceable under Irish law. There are no derogations for "carving out" the Irish assets and/or legal entities and transferring them at a later date. The 2014 Act closed off the "warehousing exception" previously available, by which certain temporary acquisitions of control were not notifiable.
The position under the Competition Act is now that this exception does not apply to transactions involving the future onward sale of the business to an ultimate buyer in circumstances where the ultimate buyer bears the major part of the economic risk.
This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.