Ireland is a very open economy. Many international businesses are connected, directly and indirectly, with Ireland. It is reckoned that the value of US foreign direct investment ("FDI") in Ireland is greater than the value of US FDI in Brazil, Russia, India and China (the "BRICs") combined. The UK's exports to Ireland are more valuable than the UK's exports to China, Switzerland, Spain, Italy, South Korea, Australia or India – indeed, UK exports to Ireland are three times more valuable than UK exports to Japan and six times more valuable than UK exports to Russia. Therefore the level of international trade involving Ireland means that many international businesses have the necessary "turnover" or sales in Ireland to trigger the application of Irish merger control law.
Ireland has a compulsory pre-"completion" merger control regime which means that the deals subject to the Irish regime may not be implemented unless they been approved under the Irish merger control regime.
A merger or acquisition is notifiable compulsorily in Ireland if:
- the aggregate turnover (i.e., sales) in the Irish State (i.e., the Republic of Ireland) of the undertakings (i.e., businesses) 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 thresholds do not apply to qualifying "media" mergers and acquisitions which have to be notified even if these thresholds are not reached. There are about 70 or so notifications made annually to the Competition and Consumer Protection Commission ("CCPC") – Click here to read our report on merger control in Ireland in 2017.
On 9 February 2018, the CCPC received a notification of the acquisition by Armalou Holdings Limited, through its wholly-owned subsidiary, Spirit Ford Limited, of Lillis-O’Donnell Motor Company Limited. What made the notification interesting was that the CCPC believes, the acquisition occurred in 2015 but was not notified to the CCPC at the time. As mentioned above, deals must be notified and cleared in Ireland before completion. The CCPC has said in a press release, released on 16 February 2018, that in "August 2017, the CCPC became aware that Armalou Holdings Limited, through Spirit Ford Limited, may have acquired Lillis O’Donnell Motor Company Limited without notifying the acquisition to the CCPC". Under, section 19(1) of the Competition Act 2002, any proposed merger or acquisition that must be notified to the CCPC may not be put into effect until the CCPC has made a determination in relation to such merger or acquisition. Moreover, if a proposed merger or acquisition is put into effect in contravention of section 19(1) of the Act then such a transaction is legally void under section 19(2) of the Act. Interestingly, the CCPC has also said in its press release that the "CCPC has commenced an investigation into the suspected breach of the notification requirements under section 18(1) of the Act, which is an offence under section 18(9) of the Act. The CCPC’s investigation is ongoing and, as such, the CCPC is not in a position to provide further information at this time."
The consequences for failure to notify include criminal penalties. Under the Act, where there is a failure to notify within the specified period then there is generally an offence which attracts: (a) on summary conviction, a fine not exceeding €3,000; or (b) on conviction on indictment, a fine not exceeding €250,000. These fines are on an undertaking, or the person in control of an undertaking, which has not complied with the obligation. These fines are not imposed by the CCPC itself but would follow from a prosecution brought in a court. There is also the distraction and bother of an investigation for those involved.
Even if the CCPC approves the transaction as not "substantially lessening competition", it will be interesting to see what happens in respect of the apparently late notification. And while this case appears to be domestic in nature, the lesson for international businesses to monitor Irish developments is equally valid.