Proposed reforms to Jersey's competition laws aimed at focusing the regulator's powers on mergers and acquisitions that are most likely to affect the local economy have been cautiously welcomed by Ogier's Head of Competition Law.
The Channel Islands Competition and Regulatory Authorities (CICRA) consulted last November on proposed changes to the law and are now suggesting reforms that would align the merger control regimes in Jersey and Guernsey. If the reforms are adopted by the States, Jersey's legislation requiring mergers and acquisitions to be approved by the competition regulator based on the parties' market shares would be replaced with a test based on their local turnover.
However, the regulator would also be able to step in if it has concerns about a merger involving smaller businesses with lower turnover but significant market shares.
Advocate Sara Johns, who heads Ogier's Competition Law practice, said that overall the proposals were a welcome step forward, particularly given the parallel exercise being carried out in Guernsey.
She said: "The new test that would engage CICRA with a merger involving two firms each turning over more than £2 million a year in Jersey, and more than £5 million a year between them in the Channel Islands, has been applied in Guernsey since 2012. Barring a few wrinkles that are being ironed out with the detail of how the turnover is calculated, generally it has worked pretty well.
"However, the challenge for CICRA in formulating its recommendations has been to get the right balance for dealing with high turnover financial services businesses that have relatively few "local" customers, as well as much smaller businesses with potentially significant market shares.
"Although we recognise this difficulty, we are concerned about the possibility of uncertainty arising from the rules allowing certain mergers to be reviewed by the regulator even if they don't meet the turnover test. We would like to see more detail about how and when that power would be used. "
CICRA's proposals have now been referred to the States in both islands for review.
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