The Competition and Consumer Protection Commission (the “CCPC”) was established on 31 October 2014, combining the former Competition Authority and the National Consumer Agency. The CCPC has published its first annual report relating to the period from its establishment to 31 December 2015. This provides an insight into how the new agency has operated so far and where its priorities may lie going forward.
WHAT TRENDS HAVE EMERGED?
The number of notifiable mergers has increased: The CCPC reviewed 88 mergers during the period covered, up significantly from 48 in the previous corresponding period. The CCPC recognised two reasons for this. First, the lower financial threshold of €3 million for the mandatory notification of mergers meant a greater number of lower value mergers were notified. Second, there has been an increase in mergers and acquisition activity generally both at a national and international level as economic activity recovers.
Reviews of notifiable mergers can take longer: The CCPC now has 30 working days at Phase 1 to review a merger as opposed to previously being allowed just one calendar month. However, on average, the CCPC dealt with Phase 1 cases in approximately 24 working days.
A significant number of allegations were received: The CCPC reviewed 74 allegations of competition law breaches and began two large-scale formal investigations.
WHAT WERE THE KEY MERGER CONTROL CASES?
Baxter Healthcare / Fannin Compounding: This was the first notified merger in the State to be cleared on the basis of the “failing firm” defence. After a detailed investigation involving third party and expert evidence, the CCPC concluded that the competitive structure of the relevant market would deteriorate to at least the same extent in the absence of the proposed acquisition. While the transaction resulted in the combination of the only two suppliers in the market for the commercial supply of compounded chemotherapy medicines, the CCPC found that the counterfactual would also result in only a single supplier remaining, but with the additional disadvantage for consumers that the failure of Fannin Compounding would have seen its assets leave the market.
Topaz Investments Limited / Esso Ireland Limited: The acquisition by Topaz Investments Limited of Esso Ireland Limited was cleared by the CCPC at Phase 2 subject to Topaz giving a binding commitment to divest a number of the businesses being acquired, including three retail service stations in the Dublin area.
Valeo / Wardell / Robert Roberts: This Phase 2 merger review found issue with one of the twenty separate food products involved, concluding that the reduction from three to two competitors in the “brown sauce” market would likely lead to a substantial lessening of competition. The proposed transaction was cleared subject to Valeo identifying, and the CCPC approving, an appropriate upfront buyer for the YR brand of brown sauce.
WHAT WERE THE KEY INVESTIGATIONS?
Cartel investigations: A CCPC investigation in the industrial flooring sector led to the Director of Public Prosecutions deciding to charge an individual and an undertaking with bid-rigging offences. The CCPC also began investigating allegations of cartel offences in the aviation sector and closed two investigations in what the CCPC described as the procurement and retail sectors.
Bagged cement investigation: The CCPC launched an investigation into the bagged cement industry in May 2015 with dawn raids at five locations. This investigation is ongoing.
WHERE IS THE CCPC GOING NEXT?
Review of financial threshold levels: The CCPC is currently in the process of reviewing the financial thresholds for notification with the Department of Jobs, Enterprise and Innovation. The CCPC is concerned that a number of smaller, domestic mergers which have little or no effect on competition are being caught. However, any change to the threshold would be a matter for the Government to bring about through primary legislation.
Public procurement will remain a priority area: Commenting on the publication of the annual report, Isolde Goggin, Chairperson of the CCPC has stated that the CCPC’s “experience in investigating cartels shows that one of the most common forms of cartel concerns bid rigging”. The CCPC estimates that such activity could cost the Irish taxpayer in the region of €100 million each year. For this reason, the CCPC is considering the introduction of a screening programme for public procurement processes which would systematically search for indications that bid rigging may have occurred.
Cartel investigations remain a key priority: The majority of cases involving allegations of non-cartel anti-competitive conduct are closed following a preliminary investigation due to insufficient evidence. The CCPC says that it will continue to place emphasis on cartel investigations given their status as the most serious breach of competition law.
It is clear that although the CCPC is still in its early days, its first reporting period has been a very busy one, particularly in the areas of investigations and merger control. In order to manage its significant caseload, the CCPC is likely to continue to place emphasis on prioritising particular cases and applying the appropriate investigative techniques.