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Irish Merger Control Rules

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Ireland

Like many EU Member States, Ireland operates a mandatory and suspensory merger control regime.  This means that transactions that meet certain thresholds (as explained below) must be notified to – and cleared by – the Competition and Consumer Protection Commission ("CCPC") before being "put into effect" (i.e., closed or completed).  The CCPC's assessment focuses on whether a transaction will substantially lessen competition in markets for goods or services in Ireland.

In this article, we set out some of the Irish regime's key features.
 
  1. Jurisdiction – EU or Ireland?

 
Firstly, it is vital to remember that both EU and Irish merger control rules apply in Ireland.  EU merger control rules are set out in Regulation 139 of 2004 (the EU Merger Regulation or "EUMR")[1].  The EUMR operates as a "one-stop shop": transactions that must be notified to the European Commission under the EUMR are automatically outside the jurisdiction of any EU Member State.  If a transaction does not meet the EU thresholds, the parties must still assess whether the national rules of any Member States (including Ireland) apply.
 
  1. When does the Irish regime apply?

 
The Irish merger control regime is governed by Part 3 of the Competition Acts 2002 to 2014 (the "Act").  Very similarly to the EUMR, it applies to transactions where:
 
  • two or more previously independent undertakings merge;
  • there is a sole or joint acquisition of direct or indirect "control" of the whole or party of an undertaking (including the creation of a "full-function" joint venture); or
  • there is an acquisition of assets (which may include goodwill) constituting a business to which turnover can be attributed.
 
  1. Financial Thresholds

 
Parties are obliged to notify a transaction to the CCPC, where in the most recent financial year –
 
  1. the aggregate turnover in the State of the undertakings involved is not less than EUR 60 million and
 
  1. the turnover in the State of each of 2 or more of the undertakings involved is not less than EUR 10 million.
 
The CCPC interprets "turnover in the State" to mean revenue from sales made or services supplied to customers within the State, i.e., Ireland.  In effect, this means transactions where neither party has a physical presence in Ireland (so-called "foreign-to-foreign" transactions) are still subject to Irish merger control rules if their economic presence (i.e., sales to Irish-based customers) is sufficiently strong.  Generally, the "undertakings involved" means the entire group of undertakings to which an undertaking belongs.  However, in the case of an acquisition, only the turnover of the target (i.e., the corporate entity or assets being acquired) is relevant.
 
As described in section 8 below, special rules apply to media mergers in Ireland.
 
  1. Obligation to Notify

 
Where the turnovers of the undertakings involved in a transaction exceed the financial thresholds set out above, there is a mandatory requirement to notify the transaction to the CCPC.
 
Notifiable transactions are subject to a suspensory obligation.  This means such a transaction may not proceed until either the CCPC has cleared it (whether subject to conditions (or 'remedies') or not) or specified periods have elapsed without the CCPC informing the notifying parties of its determination.
 
  1. Penalties for Failing to Notify

 
Failure to notify a notifiable transaction to the CCPC is a criminal offence and can carry a fine of EUR 3,000 upon summary conviction or EUR 250,000 upon conviction on indictment.   
 
Putting a notifiable and/or notified transaction into effect prior to a determination by the CCPC, breaching the suspensory obligation, is known as "gun-jumping".  In this case, the transaction will be void until cleared (or deemed cleared) by the CCPC.  
 
  1. Notification Process

 
The Act requires a written notification by each of the undertakings involved in the proposed transaction to the CCPC.  The CCPC welcomes engagement from the parties prior to formal notification including pre-notification meetings, but unlike in the EU regime, this is not mandatory.
 
In the CCPC's merger notification form, parties are required to provide "full details" of their activities both worldwide and in the State, focussing in particular on any areas of horizontal or vertical overlap[2], together with some information on the transaction (including its commercial rationale).  (For transactions with no or minimal overlaps, a simplified notification procedure is available, under which the parties must still notify but do not need to complete certain parts of the form.)
 
Notifications may be joint or separate, although in the vast majority of cases the parties will notify jointly.  Ultimately, the CCPC must determine whether the transaction will substantially lessen competition in Ireland.
 
The CCPC will adopt either a one- or two-phase review procedure.
 
  1. Phase I
 
The CCPC must make a Phase I determination and inform the notifying parties within 30 working days after notification or, if the CCPC sends one or both parties a requirement for further information regarding the transaction (an "RFI"), the receipt of a complete response to the RFI.  An RFI thus effectively re-sets the clock on the 30 working day period in Phase I.
 
The 30 working day deadline may be extended to 45 working days if the parties submit proposals to ameliorate the competitive effects of the transaction.  Such proposals/remedies may be structural (e.g., the divestiture of part of the purchaser or target's business) and/or behavioural (e.g., restrictions on the exchange of competitively sensitive information).
 
At the end of Phase I, the CCPC must either (a) clear the transaction on the basis that it will not substantially lessen competition in markets for goods or services in Ireland or (b) initiate a full (or 'Phase II') investigation.
 
Where the CCPC fails to inform the notifying parties of a Phase I determination within the relevant
period, they will be permitted to put the transaction into effect. 
 
  1. Phase II
 
If the CCPC moves to Phase II, it has until 120 working days from the date of notification (or the date the CCPC received a complete response to an RFI during Phase I) to complete its review.  Similarly to Phase I, where the CCPC fails to inform the notifying parties of a Phase II determination within the time period, they will be permitted to put the transaction into effect.
 
At the end of Phase II, the CCPC will either (a) clear the transaction, (b) prohibit the transaction or (c) clear the transaction subject to conditions specified by it being complied with (i.e., structural or behavioural remedies).  The CCPC's power to specify remedies only arises in Phase II, although in either Phase I or Phase II the parties may propose remedies.  If the parties propose remedies, the Phase II review period is extended by 15 working days.
 
The 120 working day deadline may also be extended following an RFI during Phase II.  However, unlike in Phase I, an RFI in Phase II has the effect of pausing, rather than re-setting, the clock on the review period. 
 
In either Phase I or Phase II, where the CCPC clears the transaction (with or without remedies), it must be completed within 12 months of the determination.
 
  1. Appeal

 
If the CCPC prohibits a transaction or clears it subject to conditions, the notifying parties may appeal the decision to the High Court within 40 working days of notification of the Phase II decision. The High Court may then annul the CCPC's determination, confirm it outright or subject to certain modifications, or remit the matter to the CCPC.
 
  1. Media Mergers

 
Special rules apply to 'media mergers', i.e., a merger or acquisition where (a) two of the undertakings involved carry on a media business in Ireland or (b) one of the undertakings involved carries on a media business in Ireland and one of the undertakings involved carries on a media business elsewhere. 
 
After clearance by the CCPC, the parties must notify a media merger to the Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media (the "Minister") who will assess the transaction's impact on media plurality in Ireland. 
 
The Act defines "carries on a media business in [Ireland]" to mean, in relation to a media business, either (a) having a physical presence in Ireland and making sales to customers located in Ireland or (b) having sales in Ireland of at least EUR 2 million in the most recent financial year.  "Media business" is defined broadly.  The term includes the provision through various means[3] of content consisting substantially of news and comment on current affairs and the transmission, re-transmission or relaying of a broadcasting service.
 
All media mergers (as defined in the Act) must be notified to the CCPC, even if the above turnover thresholds for non-media mergers are not met.  For the avoidance of doubt, if a media merger has been notified to the European Commission under the EUMR, under the "one-stop shop" principle it does not need to be notified separately to the CCPC.  However, it must still be notified to the Minister after EUMR clearance, before being completed.
 
The Ministerial notification process is similar to the CCPC process.  There is an initial examination, which lasts up to 30 working days (and can be extended to 45 working days if proposals are submitted).  If the Minister is concerned about the transactions' effects on media plurality in Ireland – a full examination whereby the Broadcasting Authority of Ireland (the "BAI") is requested to provide a report within 80 working days.  This report must contain a recommendation as to whether the transaction should be cleared, prohibited or cleared subject to conditions.
 
Within 20 working days of receipt of the BAI's report, the Minister must either clear the transaction, prohibit it or clear it subject to conditions.

Written by Eoin Ó Cuilleanain and Sinéad Cussen. 
 
[1] Under the EUMR, a relevant transaction must be notified to the European Commission where:
 
(a) the parties' combined aggregate worldwide turnovers exceed EUR 5 billion and the aggregate EU-wide turnover of at least 2 undertakings concerned exceeds EUR 250 million; or
 
(b) the parties' combined aggregate worldwide turnovers exceed EUR 2.5 billion, the aggregate EU-wide turnover of at least 2 undertakings concerned exceeds EUR 100 million, the parties' combined aggregate turnover in at least 3 Member States exceeds EUR 100 million and in the same 3 Member States, the aggregate turnover of at least 2 undertakings concerned exceeds EUR 25 million,
 
unless each of the undertakings concerned achieves more than two-thirds of its EU-wide turnover within one and the same Member State.
 
Under the EUMR, the European Commission operates a different procedure to the Irish rules, although the assessment – whether a transaction will lead to a "significant impediment to effective competition" – is substantially very similar.
[2] There is a "horizontal" overlap where two or more undertakings involved provide the same or a similar goods or services – in effect, where they may potentially compete with each other.  A relationship is "vertical" where one party provides a good or service which is "upstream" to another – in effect, where one party may potentially be a supplier to the other.
[3] These include the publication of a newspaper or periodical; the provision of any programme material; and the making available of any written, audio-visual or photographic material on an electronic communications network.

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