Background

The Irish media merger regime has a long history and remains a complex part of Irish regulatory law and politics. Irish regulators show a keen interest in any media merger and, following historical concern regarding media ownership concentration (beginning in the 1970s), the Competition and Consumer Protection Act 2014 created a special Irish regulatory process for media mergers administered by the Irish minister for communications, climate action and environment. As explained below, the Irish media merger regime requires many transactions to be notified to the minister, including acquisitions of non-Irish media businesses, and requires parties to respect a standstill obligation which typically lasts for more than two months (for a Phase I review) or even nine months (for a Phase II review).

Given the recent sharp increase in mergers of Irish and global media businesses – reflecting a dramatic decline in 'traditional' media consumption and 'e-substitution' leading to pressure to consolidate – the Irish media merger regime is affecting all corners of the global industry.

This article provides a reminder of the Irish media merger rules, the 2014 act and some key issues faced in practice.

Media merger rules under 2014 act

Notifiable transactions

The jurisdiction test under the 2014 act is met and a transaction is notifiable to the Irish minister where "two or more undertakings involved carry on a media business" and at least one of these is in Ireland.

A media business includes the following activities:

  • publication of newspapers or periodicals consisting substantially of news and comments on current affairs, including the publication of such newspapers or periodicals on the Internet;
  • transmitting, re-transmitting or relaying a broadcasting service;
  • providing any programme material consisting substantially of news and comment on current affairs to a broadcasting service; or
  • making available, on an electronic communications network, any written, audio-visual or photographic material, consisting substantially of news and comments on current affairs, that is under the editorial control of the undertaking making available such materials.

The 'media business' definition covers certain digital media businesses, including online-only news services. However, the unclear meaning of terms such as 'broadcasting service' and 'editorial control' leaves uncertainty about the coverage of certain online streaming and social media businesses.

The 'media business' definition does not cover certain traditional media businesses, including entertainment-only channels that are not self-broadcast and rather are licensed to third-party broadcasters.

'Carrying on a media business' means:

  • having a physical presence (including a registered office, subsidiary, branch, representative office or agency) and making any sales to customers in the jurisdiction; or
  • making sales in the jurisdiction of at least €2 million in the most recent financial year.

Relevant legal test

The minister will determine whether the transaction will be "contrary to the public interest in protecting the plurality of media in the State". The 2014 act outlines the relevant criteria in applying this test and the minister's approach is further outlined in guidelines and published determinations.

Process overview

Notifying the minister will be the second step in a two-step process for clients. The first step involves obtaining antitrust approval from the Competition and Consumer Protection Commission (CCPC) or the European Commission.

The minister publishes a standard notification form and guidelines for merging parties.

Pre-notification meetings to discuss a draft notification form are standard and parties can seek waivers from information requirements before submitting a final notification form.

The minister may re-start the clock following receipt of a final notification form by issuing a formal information request.

Following the minister's determination, the following documents are generally published:

  • a Phase I examination document;
  • an opinion from an advisory panel (if applicable); and
  • the Broadcasting Authority of Ireland's report and recommendations (if applicable).

Under the 2014 act, a media merger must be approved before it is put into effect.

Relevant timelines

Whoever submits the antitrust notification must also notify the minister within 10 working days of receiving antitrust approval and may notify at any point between the first and the 10th working day. From the 10th working day after antitrust approval, the minister has 30 working days to conduct a Phase I review. As stated above, that period can be re-started by the minister if the notification is considered to be incomplete and a formal request for information is requested.

There is a relatively low legal threshold for opening a Phase II review: the minister must only have formed the view that the deal may contravene the relevant legal test. Where a Phase II review is opened, a referral will be made to the Broadcasting Authority of Ireland, which has 80 working days to make a recommendation and may work alongside an advisory panel comprising independent experts. Following a Broadcasting Authority of Ireland recommendation, the minister has an additional 20 working days to decide. Like in Phase I, all statutory timelines can be extended where a formal request for information is issued.

Penalties for non-compliance

It is an offence for any person in control of an undertaking to fail to notify the minister of a media merger, for which fines can be imposed of up to €250,000 plus €25,000 per day.

In addition, any notifiable transaction which purports to be put into effect prior to ministerial approval is void as a matter of Irish law. The practical effect of this is unclear, particularly where:

  • the transaction is not governed by Irish law;
  • the acquired assets are outside of Ireland; or
  • a notification is subsequently submitted.

Notwithstanding the standstill obligation, there is an awareness of several transactions which were completed prior to ministerial approval but ultimately received all necessary Irish regulatory approvals.

To date, there has been no Irish court action by the minister on an alleged breach of the 2014 act.

2014 act: four years on

As of 1 November 2018, 22 Irish media mergers have been reviewed by the minister. The minister has opened one Phase II investigation (INM/Celtic Media, on which Matheson advised) and issued a formal request for information in 23% of mergers. The table below sets out further details.

 

Media mergers

 

CCPC (total)

Cleared at Phase I

Cleared at extended Phase I

Cleared at Phase II

Minister/Department of Communications (total)

Cleared at Phase I

Cleared at extended Phase I

Cleared at Phase II

2018

3

2

0

1

7

6

1

0

2017

4

2

1

1

4

3

1

0

2016

5

3

2

0

6

3

2

0(1)

2015

7

6

1

0

5

4

1

0

Average time for CCPC Phase I approval

Phase I: 24 working days

Extended Phase I: 55 working days

Average time for minister Phase I approval

Phase I: 27 working days

Extended Phase I: 38 working days

Average time for CCPC Phase II approval

119 working days

Average time for minister Phase II approval

N/A

Key issues in practice

Lengthy process

The regulatory process and standstill period for a notifiable media merger will always be lengthy as the 2014 act provides that the statutory timeline for the minister's review commences after (and cannot run in parallel) the necessary antitrust approval process. In particular, a Phase II media merger review can be lengthy and mean that the overall timeline is nine months or longer. However, there are indications that Phase II reviews will be rare, noting that the recent Irish Times/Irish Examiner media merger (resulting in a three-to-two merger in the national quality newspaper market) was cleared during a Phase I process.

Focus on online content

A growing eagerness by the minister to focus on online activities as well as the governance and ethos of the merging entities can be observed in recent determinations.

Concerns need not be 'merger-specific'

The minister considered the implications of Brexit in its 2017 decision in Sky plc & Twenty-First Century Fox, Inc (on which Matheson advised) notwithstanding submissions by the parties that Brexit was irrelevant and not a result of the media merger.

Limited procedural rights in Phase II scenario

Parties confronted with Phase II mergers can feel at a disadvantage in certain respects, as follows:

  • the minister is entitled to appoint an advisory panel to opine on the transaction without any opportunity for the parties to comment on its constitution or engage with it; and
  • the decision to open Phase II can be made without warning or an opportunity to comment.

Change in publicity protocol

An interesting development has been the increased transparency surrounding media mergers since 2017. The minister now publishes a non-confidential version of a detailed decision which is on average 40 pages in length. Further, the minister has made freedom of information disclosures of non-confidential versions of notification documents to the Irish press, leading to multiple news reports.

For further information on this topic please contact Helen Kelly, Kate McKenna or Simon Shinkwin at Matheson by telephone (+353 1 232 2000) or email (helen.kelly@matheson.com, kate.mckenna@matheson.com or simon.shinkwin@matheson.com). The Matheson website can be accessed at www.matheson.com.

Endnotes

(1) In INM/CNML, both parties consented to withdrawing the transaction following a protracted Phase II media merger investigation by the minister.

This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.