After roughly 11 months of review each, Ireland’s Competition and Consumer Protection Commission (CCPC) has cleared both LN Gaiety/MCD Productions and Berendsen (Elis)/Kings Laundry transactions, accepting commitments to protect competition.
LN Gaiety/MCD Productions
On 5 July 2019, the CCPC announced that it had cleared the proposed acquisition of sole control of MCD Productions Unlimited Company (MCD) by LN-Gaiety Holdings Limited (Live Nation/Gaiety JV), from MCD’s ultimate parent company Gaiety Investments Unlimited Company (Gaiety).
The deal essentially involved giving Live Nation (the owner of Ticketmaster and operator of many of Ireland’s premier event venues (e.g. 3 Arena)) an indirect 50.1% stake in MCD Productions, through Live Nation’s joint ownership of the Live Nation / Gaiety JV. This would bring further together Ireland’s largest ticketing company and significant venue operator and the country’s largest event promoter. The merger is mostly vertical in nature; vertical mergers tend to be less controversial than mergers between direct competitors, but given the market strength of both Ticketmaster and MCD, it is a controversial deal.
Berendsen (Elis)/Kings Laundry
On 8 July 2019, the CCPC approved takeover by Berendsen (the Irish arm of French laundry multinational, Elis) of Kings Laundry. Berendsen and Kings Laundry are two of the three main providers of outsourced flat linen rental and maintenance services to healthcare customers in the State. This is a significant merger of competitors and the CCPC required divestment of contracts before it will permit the deal to close.
- Tough reviews are getting longer: These two very recent decisions seem to reflect a broader trend of longer review processes by the CCPC (for example, the five phase 2 mergers decided in 2018 and 2019 make up the five longest ever reviews). In light of this trend, businesses should be prepared and plan their acquisition timetables for long reviews by the CCPC in the case of transactions with raising competition concerns.
- Complex deals still get approved: The LN Gaiety/MCD Productions deal involved merging the three largest festivals on the island of Ireland, many of Dublin’s largest concert venues and gave Ticketmaster an indirect 50.1% stake in the largest event promoter, MCD. But it was cleared without any divestments being required. The Berendsen (Elis)/King’s Laundry deal involved merging two of Ireland’s top linen rental businesses. It is over a decade since the CCPC blocked a deal outright (Kerry/Breeo M/08/009, the CCPC’s decision in which was overturned on appeal by The Competition Court).
- A ‘fix it first’ remedy: Having to make a divestment pre-closing is unusual and shows the depth of the CCPC’s concern about the acquisition of King’s Laundry. Perhaps the CCPC will require up front remedies again in the future.
- Devil in the detail? For now, limited information is available about the evidence unearthed by the CCPC’s investigations and its decision rationale. When the determinations are published, it will be interesting to see how the CCPC analysed the transactions and its specific concerns which elongated the review processes. The CMA in the UK is continuing to investigate the LN Gaiety/MCD Productions deal (which it started investigating 9 months after the CCPC) and has opened a full ‘phase 2’ investigation into the deal, stating “[a]s Live Nation already owns Ticketmaster, the CMA is concerned that if it were to acquire MCD, it may be able to stop rival promoters selling tickets through that platform post-merger”. The CMA did not indicate concern about effects on competition between festivals or venues.
Lengthy Review Periods
At 325 calendar days, LN Gaiety/MCD Productions was the longest ever CCPC review process, until Berendsen (Elis)/Kings Laundry was approved three days later, 334 calendar days after it was notified to the CCPC. The previous record, Enva/Rilta (cleared in late 2018), was 230 calendar days.
Concentration in festival ownership: The CCPC had concerns about the impact of LN Gaiety/MCD Productions on competition for acquisition of festivals. Live Nation/Gaiety JV owns Electric Picnic, whereas MCD promotes Longitude and Vital (so the deal merges the three largest festivals on the island of Ireland). The CCPC accepted the parties’ commitment to inform it in advance of any future acquisition of a festival and to submit to formal scrutiny of such acquisitions, if requested by the CCPC.
Information sharing: The CCPC was concerned about “potential for anticompetitive information sharing”. The concern appears to have been that Live Nation (one of Live Nation/Gaiety JV’s parents) which owns and/or operates a number of live venues (e.g. 3 Arena, Bord Gais Energy Theatre, Gaiety, Olympia) would learn sensitive details of third party event promoters’ plans and post-merger provide to the merged Live Nation/Gaiety JV (including MCD Productions) confidential information about the activities of MCD Productions’ competitors in promotion of live events. The parties agreed to take steps to ensure that such information is not directly or indirectly shared between Live Nation and MCD. The CCPC has previously required commitments to avoid sharing of information between JV parents through the JV (e.g. Trinity Mirror/Northern & Shell M/18/016 and Oaktree/Alanis/Lioncor (JV) M/18/042), but it is less common between a JV parent and the JV (although this was also required in Trinity Mirror/Northern & Shell).
Pressuring independent venues: The CCPC was also concerned about the potential for “retaliatory action against independent live event venues because they choose an alternative ticketing services provider” to Ticketmaster. It appears that the CCPC was concerned Live Nation and MCD could use their combined might in the market to bully independent venues. The parties offered (i) not to refuse or threaten to refuse to provide live events to an independent live event venue and (ii) not to provide events (or threaten to) to independent venues on worse terms than those currently provided to that venue, in each case in retaliation for that venue choosing or threatening to deal with a primary ticketing services provider other than Ticketmaster.
Arm’s length negotiation: The parties also committed to conduct any negotiations relating to the supply of primary ticketing services between Ticketmaster (owned by Live Nation) and MCD (owned by the Live Nation/Gaiety JV) on an “arm’s length” basis.
Duration: All of the LN Gaiety/MCD Productions commitments last for five years (except the arm’s length negotiation, which is for an undisclosed term). No information is available yet as to why five years was considered the right duration.
Concentration in linen rental and maintenance: In the Berendsen (Elis)/King’s Laundry case, a horizontal overlaps case, structural-type commitments were accepted by the CCPC. These commitments require the parties to sell to an independent competitor a set of contracts with healthcare customers that were serviced by Berendsen prior to the proposed transaction, interestingly, potentially including relevant linen stock but excluding sale of any facilities or fixed assets (e.g., washers, dryers, or trucks), subject to approval by the CCPC. These commitments will likely be more easily supervised and verified by the CCPC than the LN Gaiety/MCD Productions commitments. Interestingly, the commitments must be completed before the deal can be closed, which is not normally the CCPC’s practice.
In the Berendsen (Elis)/King’s Laundry case, the CCPC has committed to revisit the commitments if the parties struggle to sell contracts within a specified time period. If an agreed amendment to the commitments cannot be found, questions may arise about what options will be open to the CCPC for further enforcement, since it has already cleared the deal.