The Competition and Consumer Protection Act 2014 significantly alters the Irish and merger control landscape.
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"). Transactions are now more likely to be subject to onerous notification requirements and longer review periods.
The Competition and Consumer Protection Act 2014 (the "Act") entered into force on 31 October 2014, creating a new agency that amalgamates the former Competition Authority and the National Consumer Agency. The Act also introduced new thresholds for determining when a transaction will require competition approval 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 e50 million or more; and
- the turnover in the Republic of Ireland of each of two or more of the undertakings involved is e3 million or more.
Any acquisition made by an entity with relatively significant turnover in Ireland (even if that is just sales generated from outside the State) is now likely to be caught. All that is required is that the target has sales in Ireland of e3 million. Previously, at least two of the undertakings involved in a transaction had to have worldwide turnover of at least e40 million, which often brought acquisitions of smaller targets outside the scope of the filing requirement.
This is borne out by the types of transactions notified to the Commission since the Act entered into force. For example, acquisitions of a petrol service station and 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 time the Commission has to consider notified mergers, by about 50%. Even a straightforward notification, involving no competition law concerns, could take up to six weeks, compared to the one-month review under the previous regime. New 'stop the clock' powers in an in-depth investigation will further extend an already lengthened review process where the Commission identifies potential competition concerns.
On the upside, the Act has introduced the possibility of notifying the Commission in advance of the parties signing a final agreement. This is a significant development. Parties can now, in theory, get the clock ticking on the review period much earlier in the deal timeline, and shorten the period they have to wait after signing to complete the transaction.
New Media Merger Regime
The Act has brought in an entirely new procedure for media mergers, which continue to be subject to mandatory notification irrespective of the turnover of the undertakings.
Parties to these particular transactions are now required to make two separate notifications: one to the Commission, or to the European Commission where appropriate, and a second notification to the Minister for Communications, Energy and Natural Resources (the "Minister"). Whereas the Commission's review is based purely on a competition law assessment, the Minister's review will focus on the effect of the proposed transaction on media plurality and diversity in Ireland.
Importantly from a timing perspective, the media merger cannot be notified to the Minister until after the Commission / European Commission has completed its competition law assessment.
Aspects of the revised merger control regime are certainly to be welcomed, in particular the ability to notify before a signed agreement is in place. This brings Ireland into line with the merger control review processes in most other European jurisdictions, including those of the EU. Notwithstanding this, the revised turnover thresholds and the longer timelines may see potential deals facing an increase in transactional costs and a decrease in completion certainty.
Failure to notify a transaction that meets the statutory thresholds remains a criminal offence. Entities involved in M&A activity should, therefore, be vigilant, as transactions which previously went under the radar of the Irish merger control review process could well be caught under the revised regime.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.