Significant changes to Ireland's merger control regime at the end of last year have already had an impact on the number and type of transactions being notified to the new Competition and Consumer Protection Commission (the "Commission"). Hotel transactions are now more likely to trigger onerous notification requirements.
The Competition and Consumer Protection Act 2014 (the "Act") came into force on 31 October 2014. The Act introduced new thresholds for determining when a transaction will trigger the requirement to seek permission from the Commission to complete the transaction.
New Thresholds for Merger Notifications
A transaction will now have to be notified to the Commission where, in the most recent financial year:
- the aggregate turnover in the Republic of Ireland of all undertakings involved is €50 million or more; and
- the turnover in the Republic of Ireland of each of two or more of the undertakings involved is €3 million or more.
The new thresholds mean that any acquisition made by an entity that has relatively significant turnover in Ireland (even if that is just sales generated from outside the State) is likely to be caught. All that is required is that the target has sales in Ireland of €3 million. Previously, at least two of the undertakings involved in a transaction had to have worldwide turnover of at least €40 million to trigger a merger control review, which often brought acquisitions of smaller targets outside the scope of the filing requirement.
This is borne out by the types of transactions that have been notified to the Commission since the Act entered into force. Acquisitions of a number of individual hotels have been notified. It's unlikely that these transactions would have needed merger control clearance under the previous regime.
Extended Timelines for Merger Notifications
The Act has significantly extended the length of time the Commission has to consider notified mergers, by about 50%. Even a straight forward notification involving no competition law concerns, could take up to six weeks, compared to the one month review under the previous regime. A transaction that is notifiable cannot complete until merger control clearance has been given by the Commission.
Commentary
The revised turnover thresholds and the longer timelines involved in any notification may result in increased transactional costs and result in completion being delayed and uncertain.
Failure to notify a transaction that meets the statutory thresholds is a criminal offence under the Competition Act 2002. With this in mind, entities involved in hotel transactions should be vigilant as their deal could well be caught under the revised regime.
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