Following the long awaited overhaul of Ireland’s competition and merger control regime in 2014, the past year has proven to be the busiest year for Irish merger control in a decade. It also saw the regulator stepping into new territory.
Key topics in 2015 included:
The past year has been an exceptionally busy year for Irish merger control. 2015 also saw the first application of the new media merger regime and the first ever acceptance by an Irish competition regulator of the elusive ‘failing firm’ defence.
The last 12 months saw an almost doubling, to 78, of merger filings with the Competition and Consumer Protection Commission (“CCPC”) over the previous year. This figure also exceeds the total for every year since 2006.
While much of this uptick in activity can be put down to the improved economic situation, it is likely that much is also a result of the changes introduced in 2014. The new lower thresholds and confirmation that asset-only deals are caught has resulted in property transactions involving assets generating relatively small amounts of turnover, e.g. hotels, bookmakers, requiring notification. For example, in 2015, over one in four filings were property-related transactions, compared with just one for the whole of 2014. Also, these changes mean that the CCPC’s limited resources are increasingly tied up in assessing transactions with very little likelihood of raising competition concerns.
However, the majority of those property transactions were notified earlier in the year with a significant fall off in the final third of the year, so it remains to be seen whether this trend will continue into 2016. Helpfully, the CCPC also intends to publish guidance on its interpretation of the provisions governing property / asset acquisitions.
2014 saw a complete overhaul of the media merger regime. As was previously the case, media mergers are automatically notifiable regardless of the turnover of the undertakings involved. However, media mergers must, following approval by the CCPC, now also be notified to the Minister for Communications, Energy and Natural Resources who is responsible for conducting a new media plurality assessment.
New media merger guidelines were also published in 2015 which provide helpful guidance on the process involved and how the Minister will apply the new media plurality test.
2015 saw the first seven media mergers notified under the new regime. Our EU & Antitrust team were involved in the first three, including the high profile acquisition of TV3 by Liberty Global, parent company of Virgin Media.
2015 saw the CCPC, in its Phase II clearance of Baxter / Fannin Compounding, clear a merger on the basis of the so-called ‘failing firm’ defence (“FFD”), a first under Irish merger control.
The FFD provides a defence to a merger that would otherwise lead to a substantial lessening of competition. In essence, the test is whether the competitive structure of the market would deteriorate to at least the same extent in the absence of the merger, the core assumption being that the target firm and its assets will exit the market without the merger. The test has four elements, all of which must be met. The CCPC emphasises that such conditions will 'rarely' be met in practice and the onus rests with the merging parties to demonstrate that the test is satisfied.
The determination in Baxter / Fannin Compounding is even more surprising because it concerned a ‘failing division’ argument, which is essentially similiar to the FFD but a higher level of scrutiny can be expected.
The first full calendar year under the new merger control regime has seen a significant increase in the number of filings. Changes introduced mean that some transactions which would previously have been exempt now require filing, including relatively small transactions with very limited possibility of causing competition problems. It remains to be seen whether these trends will continue into 2016.
2015 also saw the CCPC step into new territory with its first ‘failing firm’ clearance. It will be interesting to see if this represents the first steps of a more confident regulator in 2016.