The Competition Authority has recently demonstrated its ability, and willingness, to intervene in transactions which do not fall within the scope of the Irish merger control rules.
In August 2012, Easons (Ireland’s leading retailer of new books) agreed to buy Argosy Libraries (which supplies new books to retailers in Ireland and Northern Ireland). Easons and Argosy are the only two Irish-based wholesalers of new books in Ireland.
The transaction did not fall within the scope of the formal merger control rules: Argosy’s turnover was below the relevant thresholds for mandatory notification and the parties decided not to make a formal voluntary merger notification. Nevertheless, the parties informed the Authority about the deal, on an informal basis. This informal disclosure prompted an investigation in which the Authority questioned businesses in the book trade, in order to establish whether the takeover would have adverse effects.
The investigation identified several competition concerns with the acquisition. The Authority was concerned that it would lead to a reduction in the number of new book wholesalers operating in the State from two to one. It was also concerned that due to the absence of potential competitors and the wide gap between Easons and the only significant alternative suppliers in the State (UK-based wholesalers and publishers), prices would increase and there would be a reduction in the range of new books available to consumers.
In light of these concerns, the Authority threatened to initiate proceedings to restrain the transaction, using its residual competition law powers. As a consequence, the transaction was abandoned and the parties also agreed to notify the Authority 30 days in advance of any similar future proposals, for a period of one year.
This was a highly unusual step by the Authority, which has not before used its general competition powers to this effect. This case emphasises the importance for parties to an acquisition to consider fully the impact of the deal on competition even if the formal requirements for merger notification are not satisfied.