1. Introduction

The Irish  merger control rules are  mainly contained in Part 3 of the Competition Act 2002 as  amended.

The main features of the Irish regime are:

  • turnover thresholds  and  carrying  on business requirements for mandatory notifications;
  • no completion before clearance;
  • the application of the “substantial lessening of competition” test;
  • special provision for “media mergers”; and
  • the possibility of voluntary notifications.

A number of important changes to the regime will take effect on 31 October 2014. These changes are  highlighted below.

  1. Qualifying Mergers

A qualifying merger or acquisition occurs where:

  • two or more previously independent undertakings merge;
  • there is sole or joint acquisition of direct or indirect “control” of the whole or part of an undertaking  (including  the  creation  of  a “full-function” joint venture); or
  • one undertaking acquires  all  or  a substantial part of the assets, including goodwill, of  another undertaking so as effectively  to  replace  the  second  in  the business concerned.

A qualifying merger or acquisition will not occur in cases of a receivership, a liquidation or an  intra-group transaction. The concept of “control” is similar to that under the EU Merger Regulation. It will exist if decisive influence is capable of being exercised with regard to the activities of an undertaking, by reason  of securities, contracts or other means, or any combination of these, in particular by:

  • ownership of, or the right to use all or part of the assets of another undertaking; or
  • rights or contracts which enable decisive influence to be exercised with regard to the composition,  voting  or  decisions  of  the organs of an undertaking.
  1. Notification Requirements

A qualifying merger or acquisition must be notified to the Competition Authority if it is agreed  or, in the case of a public bid, if a formal offer is made, and:

  • in the most recent financial year the world- wide turnover of each of two or more of the  undertakings involved is not less than €40 million; and
  • each of two or more of the undertakings involved carries on a business in any part of the island  of Ireland (including Northern Ireland); and
  • one of the undertakings involved has a turnover in the State/Republic of Ireland of not less than  €40 million.

These financial thresholds do not apply in the case of media mergers, to which a special regime  applies (see 8, below).

According to the Authority, the entire group of companies to which a merging undertaking belongs  constitutes an “undertaking involved”. “Turnover in the State” comprises sales made or services   supplied   to customers within the Republic of Ireland.

Generally, the vendor is not “involved” in the merger or acquisition. In the case of an acquisition  of assets, however, the undertaking whose assets are being acquired is considered to be involved for the purposes of determining whether the acquisition is notifiable (with the relevant turnover being the turnover generated from the assets being acquired), but is not obliged to notify the transaction to the Authority.

In the view of the Authority, the carrying on business in any part of the island of Ireland  criterion is satisfied where an undertaking:

  • has a physical presence on the island of Ireland (including a registered office, subsidiary, branch, representative office or agency) and makes sales and/or supplies services to customers on the island of Ireland; or
  • has made sales into the island of Ireland of at least €2 million in its most recent financial year.

Notification should be made by each undertaking involved using the prescribed merger notification form, which may be submitted jointly or separately. A joint notification is normally submitted.

A fee of €8,000 applies to each notification. Failure to notify a notifiable merger or acquisition  or to supply information required is a criminal offence and can result in significant fines    (€3,000   on   summary   conviction   or €250,000 on conviction on indictment). A notifiable merger or acquisition which has not been notified is void.

Once notified, the merger or acquisition may not be put into effect until:

  • the Authority has determined that it may be put into effect;
  • the Authority has made a conditional determination; or
  • specified time  periods  have   elapsed without the Authority informing the notifying
  • parties of a determination.
  1. Voluntary Notifications

Qualifying mergers and acquisitions below the financial thresholds may be voluntarily notified to the Authority. A voluntary notification should clearly be considered where the proposed transaction is likely to give rise to competition concerns attracting the interest of the Authority.

Non-notifiable transactions which raise competition concerns can be challenged under other  provisions of the Competition Act 2002 as amended (Section 4, on anti-competitive arrangements, and  Section 5, on abuse of dominant position). The Competition Authority or aggrieved third parties may  bring proceedings before the courts for breach of either of these provisions.

  1. Notification Procedures

Written notification of the proposed merger or acquisition, with full details of the transaction,  must be made to the Authority within one month commencing on the date of the conclusion of an  agreement or the making of a formal public bid. Brief details of each notification are published on  the Authority’s website. This is intended to make the process transparent and thereby facilitate  third party submissions.

The parties may request a meeting with staff of the Authority’s Mergers Division prior to making a  notification. While not binding on the Authority, these confidential discussions provide an  opportunity to discuss the scope of information to be submitted and to identify possible  competition concerns at an early stage.

There is a two-phase review procedure, the second phase of which will be initiated where the  Authority is not satisfied, during its first- phase analysis, that the merger will not  substantially lessen competition in the relevant market(s).

First Phase

The Authority must inform the notifying parties and third parties that have made submissions,  within one month (45 days where a notifying party submits a proposal aimed at addressing  competition concerns) commencing on the date of receipt of the notification (or the date of the  provision of the response(s) to a formal request for information) that it has made a determination  either:

  • allowing the transaction to proceed; or
  • initiating a full investigation.

The  Authority  may  hold  discussions  with  the notifying and/or third parties to identify measures to limit the anti-competitive effects of a  merger or acquisition; these can develop into formal commitments binding the parties.

If cleared at the end of the first phase, the merger must be put into effect within twelve months.  If the Authority fails to inform the notifying parties of its determination within the above  period, the merger is deemed to be cleared and may be put into effect within thirteen months of  receipt of the notification (or receipt of further information).

The Authority must publish its determination (with confidential business secrets removed) within  two months of making it.

Second Phase

If the Authority initiates a second-phase investigation, it has four months from the notification  date (or the date of provision of additional requested information) to make a determination that  the merger or acquisition may:

  • take effect;
  • take effect subject to conditions; or
  • not take effect.

If the Authority concludes that the merger will not substantially lessen competition, it will make  an early determination within eight weeks of the beginning of this second phase, allowing the  merger to proceed. If not, it can furnish an Assessment to the notifying parties, who may make  written and oral submissions to the Authority prior to its determination.

If cleared, the merger must be put into effect within twelve months of the determination. If the  Authority fails to make a determination within the four month period, the transaction is deemed to  be cleared and may be put into effect within sixteen months of receipt of the notification or  further information. The Authority’s determination must be published after allowing parties an  appropriate period to indicate whether any information contained in it is confidential.

  1. The Substantive Test

The substantive test is whether the result of the merger  or  acquisition  will  be  to   substantially lessen  competition  in  markets  for  goods  or services in the State/Republic of Ireland. This test is used in the US and is similar to the  “significantly impedes effective competition” test contained in the EU Merger Regulation.

In carrying out its analysis, the Authority first defines the relevant product and geographic  markets in terms of supply- and demand-side substitutability (applying the SSNIP test). It then  assesses the effect of the transaction on market structure in terms of market concentration, using  the HHI test as an indicator of pre- and post- merger concentration levels. Finally, it assesses  whether the merger will result in a substantial lessening of competition, taking into account, in  particular:

  • whether the merger facilitates overt or tacit collusion between competitors, resulting in raised  prices;
  • whether the merged firm is enabled to raise prices unilaterally;
  • opportunities for market entry; and
  • the “efficiency defence” - the  extent  to which the merger leads directly  to efficiency gains  that cannot be realised by other means and which offset any anti- competitive effects.
  1. Appeals

Any notifying party can appeal to the High Court within one month against a decision to block a  merger, or to allow a merger subject to conditions. Issues of fact and law may (subject to certain  limits) form the subject of such an appeal. As far as practicable, the High Court must rule on such  an appeal within two months. The High Court can annul the Authority’s decision or confirm it (with  or without changes). There is no provision in the Act for appeal by third parties in the event of  clearance by the Authority. Such parties may however seek remedies under normal principles of  judicial review.

  1. Media Mergers

“Media mergers” are defined in the Competition Act 2002 as amended as mergers or acquisitions in  which at least one of the undertakings involved carries on a media business in the State/Republic  of Ireland. Media mergers must be notified regardless of the turnover of the undertakings involved,  in cases where at least one undertaking involved carries

on a media business in the State/Republic of Ireland and at least one other undertaking involved carries on a media business either in the  State/Republic of Ireland or elsewhere. “Media business” is broadly defined to mean print media,  broadcasting services (radio, cable, multipoint microwave system) and the provision of a  broadcasting services platform, but excludes services provided by means of the Internet.

A special procedure - with the possible intervention of the Minister for Jobs, Enterprise and  Innovation - applies to the assessment of media mergers. The Minister may require a second-phase  review of a media merger and, at the end of that phase, override a decision of the Authority that a  merger may be put into effect (whether or not with conditions). In doing so, the Minister must take  into account a number  of public interest criteria set down in the Act such as the plurality of the  media and the competitiveness of indigenous media businesses. Additional periods are given for the  Minister to decide whether or not to act (10 days at the end of the first phase and 30 days at the  end of the second phase).

  1. Application of Sections 4 and 5 of the Competition Act 2002 as amended

Provisions of the Competition Act 2002 as amended dealing with anti-competitive arrangements  (Section 4) and abuse of a dominant position (Section 5) will not apply to mergers cleared under  the Act or to ancillary restrictions in the relevant agreements covered by the clearance.

  1. Forthcoming changes to the merger regime

Important changes to the merger regime will take effect on 31 October 2014. In particular, the  financial thresholds which trigger notification will change. Under the new regime, the obligation  to notify will arise if:

  • combined turnover in the State/Republic of Ireland of all of the undertakings involved is not  less than €50 million; and
  • turnover in the State/Republic of Ireland of each of two or more of the undertakings involved is not less than €3 million.

The timetable for review will also be extended: 30 working days for a Phase I review (up from one  month) and 120 working days for a full Phase II review (up from four months). These timeframes will  be extendable where a formal information request  is made or remedies are proposed.

With regard to media mergers, in addition to a notification to the Competition and Consumer  Protection Commission (which will replace the Competition Authority), these will be required to be  notified separately to the Minister for Communications, Energy and Natural Resources, who will  consider the transaction’s effects on media plurality.

The timetable for media merger review will be lengthy: 30 working days for the Minister’s Phase I  review, and if the review goes to Phase II, 80 working days for the Broadcasting Authority of  Ireland to report and a further 20 working days for the Minister’s final decision. Again, these  timeframes will be extendable where formal information requests are issued or remedies are  proposed.

In terms of transition, transactions  notified before 31 October 2014 will be reviewed under the  existing rules whilst transactions notified on or after 31 October 2014 will be reviewed under the new rules.