On 21 April 2016 the Competition and Consumer Protection Commission (“CCPC”) announced it would not proceed with an appeal against a decision of the High Court concerning the acquisition by Kerry Group plc of a rival food manufacturer, Breeo.
The appeal related to a March 2009 judgment of the Competition division of the High Court which overturned an earlier deal prohibition determination by the Competition Authority (now the CCPC). The CCPC’s decision not to pursue the case means a review standard akin to the “manifest error” test applied by the European Courts, and effectively adopted in the 2009 judgment, remains in place.
In August 2008, the Competition Authority prohibited the implementation of a €165 million merger which involved the acquisition by Irish food conglomerate, Kerry Group, of various meat and cheese brands from a rival. Following a protracted Phase 2 investigation, the Competition Authority blocked the deal on the basis that it would substantially lessen competition in the “rashers” (or uncooked bacon), nonpoultry cooked meats and processed cheese markets.
Kerry Group subsequently appealed the Competition Authority’s determination to the Competition division of the High Court. This remains the first, and only, appeal of a Competition Authority/CCPC merger decision since adoption of Ireland’s merger control regime in 2002.
In March 2009 the Competition Court annulled the Competition Authority’s prohibition. Cooke J found that the Competition Authority’s determination was vitiated by material error in two respects:
- The Competition Authority made a material and significant error in its appraisal of the countervailing buyer power of the four main supermarket retail chains in Ireland; and
- The Competition Authority had erred in its definition of the product markets for the cheese sector with the result that its conclusion as to a resulting substantial lessening of competition in a product market comprising processed cheese was fundamentally flawed.
Of particular significance were the Competition Court’s pronouncements on the standard of review to be applied by the Competition Authority (and now the CCPC) when reviewing a deal. The Court effectively endorsed a “manifest error” standard of review, akin to that applied by the General Court in reviewing European Commission decisions, by citing with approval the former Court of First Instance’s judgments in Tetra Laval and Microsoft. Accordingly, this meant that “… the Court will be entitled and obliged to intervene to set aside a material economic conclusion if it is shown to be incorrect because it is unsupported by or inconsistent with the clear effect of the evidence, information or data upon which it is based.”
As a result, the Court considered whether certain evidence relied upon by the Competition Authority was sufficiently robust and probative to support the initial prohibition determination’s conclusions. This was found not to be the case. The judgment arguably establishes a more rigorous standard of judicial scrutiny of merger decisions than may be typical in judicial reviews of regulatory decisions under Irish law.
As a result of the Competition Court’s annulment decision, Kerry Group and its rival subsequently implemented their deal notwithstanding a Competition Authority appeal lodged to the Supreme Court in April 2009. Now, seven years later and just before the case was due to be heard by the Supreme Court at the end of this month, the CCPC has decided to end the matter. In concluding its challenge, the CCPC’s press release states:
“Following the latest review of the case, taking all the circumstances of this case into account, particularly the passage of time since the High Court judgment, the CCPC has decided not to proceed with the appeal to the Supreme Court.”