The Competition and Consumer Protection Bill 2014 (the “Bill”) which was first published in late March was passed by the Oireachtas on 17 July 2014. We expect the Bill to be signed into law by the President as the Competition and Consumer Protection Act 2014 (the “2014 Act”) shortly. Following signature by the President, the 2014 Act will be subject to commencement, which may occur in stages. We understand that the time frame for commencement is not yet finalised.
The Bill underwent various amendments during the legislative process, most notably the introduction of revised merger control notification thresholds. The major changes to be introduced by the 2014 Act are:
- New merger notification thresholds and procedures
- Overhaul of the media merger review regime
- Strengthened enforcement regime in respect of criminal cartel investigations
- New authority responsible for consumer protection and competition law enforcement, the Competition and Consumer Protection Commission (the “CCPC”)
New Merger Notification Thresholds and Procedures
Under the 2014 Act, a merger or acquisition will be notifiable to the CCPC if, in the most recent financial year:
- the aggregate turnover in the State of the undertakings involved is not less than €50,000,000, and
- the turnover in the State of each of two or more of the undertakings involved is not less than €3,000,000.
These are markedly different to the current thresholds which require that one party must have turnover in the State of above €40,000,000, both parties must carry on business on the island of Ireland and both parties each has worldwide turnover of over €40,000,000. The stated intention of this amendment is to ensure that only transactions with a real nexus to the State are required to be notified. However, concerns have been expressed that the new thresholds will bring within the notification obligation transactions (including foreign-to-foreign transactions) that up to now were not notifiable.
Restriction of warehousing exemption
The 2014 Act restricts the so-called “warehousing exemption” which relieves parties from the notification obligation where control is acquired through an acquisition of securities in an undertaking on a temporary basis, by a firm that carries out transactions and dealings in securities for its own account or for the account of others as its normal activity and where the exercise of the related voting rights is limited to arranging the sale of the undertaking, its assets or securities. The 2014 Act clarifies that the exemption will not be available where the firm has acquired control on the basis of the onward transmission of the business to an ultimate buyer who will bear the major part of the economic risk.
Filing upon demonstration of a good faith intention to conclude an agreement
The 2014 Act introduces the possibility of a merger notification being filed where it can be demonstrated to the CCPC that a good faith intention to conclude an agreement or merger exists. This will bring the Irish regime into line with the European Merger Regulation.
Changes to Review Periods
The time periods for the review of notified mergers have been extended and a new power to ‘stop the clock’ during a Phase 2 investigation has been introduced. The key amendments are as follows:
- an initial Phase 1 period of 30 working days in which the CCPC must decide whether to allow a transaction to be put into effect or to open a Phase 2 process, subject to any suspension of that time period for a formal information request or extension where the parties have offered commitments (the Competition Authority currently has a one month Phase 1 period);
- a Phase 2 period of 120 working days from the date of receipt of the notification subject to any suspension for a formal information request or extension where the parties have submitted commitments (the Competition Authority currently has a four month review period).
- a new Phase 2 ‘stop the clock’ power allowing the 120 working day period to be suspended following a formal request for further information by the CCPC (although this power may be exercised only within 30 working days of the date of a decision to commence a Phase 2 investigation).
Overhaul of media merger regime
The 2014 Act introduces a revised media merger regime in Ireland which implements, with two changes, the recommendations of the Advisory Group on Media Mergers contained in the Sreenan Report. Once Part 4 of the 2014 Act is commenced by the Minister for Communications, Energy and Natural Resources (the “Minister”),
- a media merger is subject to review by the Minister by reference to a media plurality criterion (in addition to a competition law review by the CCPC);
- the media plurality review process consists of an initial review by the Minister with the possibility of a further more detailed review where media plurality concerns exist. The detailed review will involve an examination and report by the Broadcasting Authority of Ireland (the “BAI”);
- there is no role for the CCPC in the media plurality review;
- the term “plurality of the media” is now defined as including both “diversity of ownership” and “diversity of content”, each of which is in turn defined;
- revised criteria by reference to which the Minister is to make his or her determination apply - these include revised media plurality criteria and other items to which the Minister is to have regard (e.g. the report of the BAI, submissions of the undertakings involved); and
- a revised definition of “media business” applies. Of note in this regard is that the definition will 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.
Enhancements to criminal cartel investigation regime
Once commenced, the 2014 Act will amend the Criminal Justice Act 2011 (the “CJA 2011”) so that an offence under section 6 of the Competition Act of engaging in an agreement to fix prices, limit output or share markets (i.e. a serious cartel offence) will be designated as a “relevant offence” for the purposes of the CJA 2011. Some of the key consequences of this are as follows:
- it will be a criminal offence for “any person” to fail to disclose to the Gardaí as soon as practicable information which he/she knows or believes might be of material assistance to the Gardaí in relation to prevention of the commission or the investigation of a serious cartel offence;
- the Gardaí investigating a serious cartel offence may suspend and recommence the detention of persons suspected of such offences who are detained under the Criminal Justice Act 1984 (the “CJA 1984”) up to two times over a maximum period of four months from the date the person was first detained- thus, the questioning of a suspect may be split over three separate occasions;
- the Gardaí may question overnight a person detained under the CJA 1984 in connection with a serious cartel offence in certain circumstances, including where the Gardaí believe that there is a risk of the destruction of or interference with evidence; and
- the production to the Gardaí of documents and provision of information on foot of a court order may be required.
The 2014 Act allows for compelled disclosure of material which may be legally privileged pending a determination of the issue by the High Court. The 2014 Act provides that “the disclosure of information may be compelled, or possession of it taken… notwithstanding that it is apprehended that the information is privileged legal material”. This is subject to the proviso that the compelling of the information is done in such a way that the confidentiality of the information can be maintained. Following the compelled disclosure, an application to the High Court is required to be made for a determination of whether the information is privileged legal material. This power is not limited to seizures made during cartel investigations.
The 2014 Act will also extend the provisions of the Communications (Retention of Data) Act 2011 to serious cartel offences.
Creation of new authority
The 2014 Act will merge the National Consumer Agency and the Competition Authority into a single agency, the Competition and Consumer Protection Commission, with responsibility for consumer protection and competition enforcement. This new authority will not be created until such time as the Minister for Jobs, Enterprise and Innovation appoints a day for its establishment.