The Competition and Consumer Protection Commission (CCPC) has published its Annual Report for 2018, its fourth such report since it was established in October 2014.
The 2018 Annual Report highlights the CCPC’s continued focus on enforcement activity, with the CCPC noting in particular the Court of Criminal Appeals decision to increase a fine for bid-rigging offences and the CCPC’s investigation into “gun-jumping” (where a transaction that requires merger control clearance is implemented prior to clearance). The CCPC has welcomed the progress made towards the transposition of the ECN+ Directive (an EU Directive to make national competition authorities more effective enforcers) and, in particular, the introduction of civil/administrative fines for breaches of competition law. In addition to identifying its high priority areas during 2018 as the household waste collection market, bid-rigging, the motor sector and the online retail sector, the report also highlights the CCPC’s ongoing preparation for Brexit.
Below are the highlights of the Report in the competition arena.
Merger Activity Overview and Statistics
The CCPC had its busiest year on record in 2018 in terms of merger control, with a total of 98 mergers notified and 95 determinations issued. Real estate was the most active sector with information and communications, healthcare and financial and insurance services remaining prominent areas of activity. The CCPC also noted increased merger activity in both the motor sector and in the entertainment and recreation sector.
In the case of five mergers in 2018, formal commitments to address perceived competition concerns were required and obtained from the parties. The types of commitments obtained ranged from requirements to divest significant business facilities to restrictions on access to confidential information amongst parties to the transaction.
The Report also highlighted developments in merger policy, including the increased merger thresholds which came into force on 1 January 2019 (see our Group Briefing on the increased thresholds here) and its public consultation in November 2018 on a potential simplified merger procedure.
|3||Number of media mergers notified to the CCPC, down from four in 2017. One media merger (Trinity Mirror/Northern & Shell) was subject to a Phase 2 investigation before being cleared by the CCPC with commitments.|
|85%||Percentage of mergers cleared within the standard Phase 1 review period. Of the 95 merger determinations issued by the CCPC in 2018, 14 were subject to an extended Phase 1 review, double the number of extended Phase 1 reviews in 2017. There were three mergers subject to a Phase 2 review during 2018, whereas there was none in 2017. As in 2017, no cases were prohibited by the CCPC, however, five clearances were conditional on the implementation by the parties of commitments to address perceived competition concerns.|
|24||Average number of working days for Phase 1 clearance. Consistent with its 2017 average timeline, the CCPC continues to clear Phase 1 transactions well ahead of the 30 working days allowed for under the Competition Act 2002 (as amended) (Competition Act).|
What were the key merger cases in 2018?
House of Fraser (Dundrum) / Sports Direct
The acquisition by Sports Direct International plc of the House of Fraser store at Dundrum Town Centre was cleared by the CCPC in October 2018.
The acquisition arose in the context of the administration of the House of Fraser group and involved the rescue acquisition by Sports Direct International of House of Fraser stores located in England, Scotland and Northern Ireland as well as House of Fraser Dundrum. An interesting aspect of the case was that, while the UK aspects of the deal completed immediately on signing of the deal, House of Fraser Dundrum was held separately and under the sole control of the administrators, pending approval by the CCPC.
Trinity Mirror / Northern & Shell
The deal concerned the acquisition by Reach Plc (formerly Trinity Mirror Plc) of Northern & Shell Network Limited, International Distribution 2018 Limited and joint control of Independent Star Limited (ISL). Prior to completion of the transaction, Northern & Shell and Independent News & Media PLC (INM) each held 50% of the issued share capital of Independent Star Limited.
The deal was cleared by the CCPC following a Phase 2 investigation and subject to commitments. The commitments addressed the CCPC’s perceived concern in relation to the potential exchange of competitively sensitive information between Reach, INM and ISL, following Reach’s acquisition of 50% of the issued share capital of ISL. Reach submitted proposals to prevent the direct or indirect exchange of competitively sensitive information between (i) Reach and INM; and (ii) Reach and ISL following completion of the transaction. The CCPC concluded that the commitments were appropriate and effective in addressing its perceived concerns. This is one of a number of cases in recent years in which the CCPC identified information exchange concerns and has required confidentiality/firewall commitments by the parties to the deal to address its concerns.
What were the key criminal and civil investigations in 2018?
Following the CCPC’s investigation into a cartel in the commercial flooring sector in 2017, the first criminal conviction in Ireland for a bid-rigging cartel offence was handed down in the Aston Carpets case. The sentences originally imposed were appealed by the Director of Public Prosecutions on the basis that they were unduly lenient and in 2018 the Court of Criminal Appeal increased the fine imposed on a former director of Aston Carpets from €7,500 to €45,000.
The CCPC also referred a file to the Director of Public Prosecutions following an investigation into the acquisition by Armalou Holdings Limited, through its subsidiary Spirit Ford Limited, of Lillis O’Donnell Motor Company Limited. The parties had not notified the CCPC prior to implementing the acquisition despite it being a notifiable transaction under the Competition Act. In 2019, the parties pled guilty to six breaches of the merger control provisions in the Competition Act. The Court was satisfied that the parties were unaware of their obligations and that it had not been a wilful breach and in the circumstances ordered that each make a charitable donation of €2,000. While the sanction in this case was insignificant, the willingness of the CCPC to seek prosecution for “gun-jumping” is a signal that it will take a hard line on enforcement in this area, reflecting recent developments at the EU level.
The CCPC secured competition law compliance commitments from Nursing Homes Ireland (NHI) following an investigation into a suspected breach of competition law concerning a meeting organised by NHI at which collective action in relation to the Fair Deal Scheme was allegedly discussed. NHI entered into commitments not to engage in discussions with its members in relation to anti-competitive collective actions and not to seek to influence the pricing or supply decisions of its members.
The CCPC also launched an investigation into the conduct of the Restaurants Association of Ireland (RAI) in respect of public statements made by the RAI recommending that its members should introduce booking policies, including obtaining non-refundable deposits from customers to counteract ‘no show’ bookings. The RAI also suggested to its members a deposit amount that should be sought from customers.
The CCPC’s investigations into ticketing services for live events and motor insurance were ongoing in 2018.
What are the CCPC’s priorities?
The CCPC has identified its ongoing enforcement actions and its preparations for Brexit as key priority areas for 2019. In addition, the CCPC highlighted its ongoing work in relation to implementation of the ECN+ Directive in Ireland as a pivotal area of focus in the coming months.