In this edition's section on Irish and UK Competition News, we cover the recent amendments to Irish Competition law which have introduced changes to Irish merger control rules insofar as they apply to the financial sector in certain circumstances.
The following questions and answers address the practical implications of these changes:
- What do the changes mean for mergers involving Credit Institutions?
The merger provisions of the Competition Act 2002 have been amended by the Oireachtas in the Credit Institutions (Financial Support) Act 2008. The Minister for Finance (the Minister) can now assess mergers involving a Credit Institution or a subsidiary (CI Mergers) where he is of the opinion that: (i) the CI merger is necessary to maintain the stability of the financial system in the State; and (ii) there would be a serious threat to the stability of that system if the CI merger did not proceed.
- To whom would CI Mergers be notified?
CI Mergers would be notified to the Minister and not to the Competition Authority.
- When will the Minister make a decision in relation to a CI Merger?
The Minister will make a decision in relation to a CI Merger as soon as reasonably practicable after receipt of the notification. There are no other timelines under the Act.
- Can the notifying parties complete a CI Merger in advance of approval by the Minister?
No. A CI Merger cannot come into effect until approved by the Minister.
- Does the Minister consult any third parties on a CI Merger?
Yes. The Minister will consult with the Minister for Enterprise, Trade and Employment, the Central Bank and the Competition Authority regarding a notified CI Merger. The Minister will publish the notification and third parties are entitled to make submissions on CI Mergers.
- What decisions may the Minister take in relation to a Credit Institution Merger?
The Minister can: (i) approve; (ii) approve on conditions; or (iii) prohibit a CI Merger.
- What test for approval does the Minister apply in relation to a CI Merger?
The Minister will assess whether the CI Merger would "substantially lessen competition" in the State. However, the Minister can approve a CI Merger even if it substantially lessens competition if: (i) the stability of the State's financial system is at risk; (ii) there is a need to avoid a serious threat to the stability of CIs; and/or (iii) there is a need to remedy a serious disturbance in the Irish economy.
- What does the Minister take into account in imposing conditions on a CI Merger?
In imposing any conditions in relation to a CI Merger, the Minister will consider: (i) the effect of the CI Merger on the markets in the State; (ii) the maintenance of the stability of the financial system in the State; (iii) the need to avoid any serious stress in the stability of credit institutions; and (iv) the need to remedy a serious disturbance in the economy of the State. In particular, the Minister may impose conditions to facilitate competition in the market.
- Do the new provisions override the existing EU merger rules?
No. The Minister may not exercise jurisdiction over a CI Merger which is notifiable to the European Commission under the EU merger rules. However, the Government could request the Commission to refer a CI merger back to Ireland for analysis under the Act if it is otherwise notifiable to the Commission. The Government can also take measures to protect legitimate interests including in respect of prudential rules even if a CI merger is otherwise notifiable to the Commission.