The Irish Competition and Consumer Protection Commission (CCPC) recently cleared two mergers subject to commitments following detailed Phase 2 investigations.
The decisions show the increasing willingness of the CCPC to accept behavioural and structural commitments to address competition concerns, thus allowing mergers to go ahead.
LN-Gaiety/MCD - Behavioural commitments
The first merger is the acquisition of control of MCD Productions by LN-Gaiety Holdings. LN-Gaiety is a joint venture between Live Nation and Gaiety Investments which owns and operates live music festivals and venues, including Electric Picnic. MCD promotes live music events in Ireland and owns two live music festivals on the island of Ireland, namely Longitude and Vital. Live Nation owns Ticketmaster, which provides primary ticketing services for live events in Ireland and owns and/or operates a number of venues in Ireland, including 3Arena, the Bord Gáis Energy Theatre and the Gaiety and Olympia theatres.
Due to the overlap in the activities of the parties, the CCPC identified concerns in relation to primary ticketing services, the promotion of live events and the operation of live event venues in Ireland. In particular, it was concerned about future acquisitions of festivals or festival operators, the potential for anti-competitive information sharing and the potential for retaliatory action against independent live event venues who choose alternative ticketing services providers.
The CCPC accepted the following behavioural commitments from the parties to address their concerns:
- To inform the CCPC in advance of any proposal to acquire a live music festival or a live music festival operator in Ireland, regardless of whether the financial thresholds for notification are met.
- To ensure that the identity of artists that independent promoters propose to promote in Ireland is not shared between Live Nation and MCD.
- Not to refuse or threaten to refuse to provide live events to an independent venue as a result of that venue choosing to contract with a primary ticketing services provider other than Ticketmaster.
- To conduct any negotiations relating to the supply of primary ticketing services by Ticketmaster to MCD on an “arm’s length” basis, ie they must each act independently and in its own interest.
The transaction is also being investigated by the UK Competition and Markets Authority (CMA) which has identified competition issues. It is concerned that Live Nation may be able to prevent promoters competing with MCD to sell tickets through Ticketmaster and that this could result in less competition and higher prices. It will be interesting to see whether the CMA will accept similar behavioural commitments in this case as its preference is usually for structural remedies.
Independently of this merger investigation, the CCPC has been investigating the ticketing sector in Ireland since January 2017. It will be interesting to see what the outcome of that investigation will be. The CMA also investigated secondary ticket businesses and on 4 July announced legal proceedings against Viagogo for failure to comply with a court order requiring improved information to be displayed about the tickets listed for resale on its site.
Kings Laundry/Berendsen - Structural commitments
The second merger is the proposed acquisition of Kings Laundry by Berendsen Ireland, two of the three main providers of outsourced flat linen rental and maintenance services to healthcare customers in Ireland. The CCPC was concerned about the likely impact on prices and quality of services due to the reduction in the number of suppliers in the healthcare market.
In order to address these concerns, Berendsen offered to sell certain contracts with healthcare customers to an independent supplier and not to actively solicit healthcare flat linen business from these healthcare customers for a specified period. (The duration of the period is redacted from the determination.) The sale of the contracts is subject to approval from the CCPC. In addition, an independent monitoring trustee, proposed by Berendsen and approved by the CCPC, will be appointed to monitor compliance with the commitments. The transaction cannot be implemented until the contracts have been sold.
Since the change in the financial thresholds for mandatory merger notifications, significantly less mergers have been notified to the CCPC in the first half of 2019 compared to 2018 (17 filings compared with 50). The CCPC therefore has, at least in theory, more time and resources to investigate mergers which raise competition concerns. In the last few years, it has increasingly cleared mergers subject to commitments and, unlike many other competition authorities in Europe, has not shied away from accepting behavioural commitments to remove competition concerns it has identified.
While this can be positive for merging businesses in that the commitments enable them to complete their mergers, it highlights the need for businesses to assess the potential competition concerns of a potential transaction at an early stage to allow enough time to consider and develop potential commitments.