The Competition and Consumer Protection Bill 2014 signed by the President
Ireland is set to reform several key provisions that govern its merger control regime after the Competition and Consumer Protection Bill 2014 was signed by the President making it an Act (the “Act”).
The most significant of the reforms are as follows:
- Creation of a new body, the Competition and Consumer Protection Commission (“CCPC”), following the merger of the Irish Competition Authority with the National Consumer Agency. The CCPC will be responsible for competition enforcement in general, including merger control, and consumer issues;
- Changes to the merger notification thresholds that determine which transactions are required to be notified for review to the CCPC;
- Extension of the review periods in which the CCPC is required to complete its assessment of notifications;
- Amendment to the notification process so as to enable notifications to be submitted where there is a good faith intention to conclude an agreement; and
- Introduction of new rules for media mergers with emphasis on protecting plurality of the media in Ireland.
The Minister for Jobs, Enterprise and Innovation has today (31 July 2014) announced that he will sign orders which will set 31 October 2014 as the establishment day for the CCPC as well as the commencement date for all parts of the Act for which he has responsibility.
Reform of the merger notification thresholds
The Act incorporates significant changes to the notification thresholds. The revised thresholds will require a transaction to be notified to the CCPC if, in the most recent financial year:
- the aggregate turnover in Ireland of the undertakings involved in the transaction is not less than €50,000,000; and
- the turnover in Ireland of each of two or more of the undertakings involved in the transaction is not less than €3,000,000.
Any merger or acquisition that triggers the revised thresholds will require compulsory notification to the CCPC and the parties will be required to suspend implementation of the transaction until clearance is granted.
This is a welcome reform, as it simplifies the current threshold test by removing previous references to “carrying on business in any part of the island of Ireland” and “world-wide turnover”. The revised tests also impose a more proportionate threshold for domestic nexus, by requiring that at least two parties have €3,000,000 turnover in Ireland.
Extension of the review periods
Notification to the CCPC will have a suspensory effect and parties will be unable to implement a transaction until the CCPC has given clearance (either explicitly or by default) for the transaction to proceed. Currently, the Phase I review period is one month and the Phase II review period is four months. The reforms change the CCPC timetable as follows:
- the Phase I review period changes to 30 working days from the date the CCPC receives the notification; and
- the Phase II (full investigation) review period changes to 120 working days (excluding any period of suspension that may apply).
This means that a Phase I review can last up to six weeks when, previously, decisions were received within 1 month.
The reforms will enable a proposed transaction to be notified before the agreement is signed provided that the undertakings can demonstrate to the CCPC a good faith intention to complete. This brings Ireland in line with many other merger control regimes and means that it will be possible to notify the CCPC of transactions at an earlier stage than provided by the current regime, which prevents notification from being made until the agreement has been signed.
The Act also seeks to overhaul the regime for media mergers in Ireland. The definition of the media business has been widened to include the publication of newspapers and current affairs periodicals over the Internet and the making available of certain audio-visual media consisting substantially of news and comment on current affairs on an electronic communications network.
Under the Act, a media merger is defined as a merger or acquisition in which: (a) two or more undertakings involved carry on a media business in the Ireland; or (b) one or more of the undertakings involved carry on a media business in Ireland and one or more of the undertakings involved carries on a media business elsewhere. An undertaking will be considered to carry on business in Ireland where it: (i) has a physical presence in Ireland and makes sales to customers in Ireland; or (ii) made sales to customers in Ireland of at least €2 million in the most recent financial year.
In addition to a competition law review by the CCPC, media mergers will also be subject to review by the Minister for Communications, Energy and Natural Resources (the “Minister”). The Minister will establish the effect of the merger on media plurality in Ireland, by reference to revised media plurality criterion (the CCPC has no role in the media plurality review).
The Minister has 30 working days to conduct its initial Phase I review with the possibility of opening a more detailed Phase II where plurality concerns exist. The detailed review, can last up to 100 working days and involves an examination and report by the Broadcasting Authority of Ireland.
The reforms should be welcomed. The current regime has been criticised for giving rise to unnecessary merger filings. The new regime should reduce the number of notifications that are required where there is limited local effect and ensure that only transactions of potential significance to the national market will be investigated.
The extension of the Phase I review time period to up to 30 working days will, however, potentially cause additional delay to transactions. It is to be hoped that, as has been the case to-date, decisions in straightforward cases may be reached more quickly.