The Irish Competition and Consumer Protection Commission (CCPC) has released its annual report on merger control for the year 2022. – As well as being a busy year for Phase 2 mergers, 2022 marked the twentieth year of merger review under Part 3 of the Irish Competition Act 2002. The legislative framework for Irish competition legislation was, however, subject to a number of important amendments which strengthen the review powers of the CCPC. In addition, the CCPC prohibited a proposed merger for the first time since its establishment.
The report provides an overview of the merger notifications received by the CCPC, the number of determinations issued, and the outcome of investigations. It also includes a breakdown of the sectors for merger notifications received and a list of extended Phase 1 and Phase 2 investigations.
Summary of key features of merger control law in Ireland
It is mandatory to notify mergers to the CCPC where the turnover of the merging parties exceeds €60 million in aggregate. At least two of the merging parties (together with their respective group companies which will form part of the merged entity) must individually achieve turnover in Ireland above €10 million. Turnover figures are assessed by reference to the most recently completed financial year.
The penalties under the Competition Act 2002 for failing to notify a merger to the CCPC in Ireland can be severe. Any person who fails to notify a merger in accordance with the Act is guilty of an offence and can be liable on summary conviction to a fine not exceeding €50,000 or on conviction on indictment to a fine not exceeding €4 million or imprisonment for a term not exceeding 5 years, or both.
Once a referral has been made and accepted, the CCPC must complete its first phase review within 30 working days. If the CCPC, at the end of its first stage review, considers the merger may lead to a substantial lessening of competition in Ireland, it must complete its more detailed second phase inquiry within 120 working days from the acceptance of the parties’ filing. Time can be prolonged in certain circumstances (e.g. while the CCPC awaits information from the parties).
Merger Notifications Received in 2022
The CCPC received 68 merger notifications in the 2022 calendar year, representing a decrease of approximately 16% compared to the number of notifications received in 2021, which was 81. Of the 68 merger notifications received in 2022, 37 were notified under the Simplified Merger Notification Procedure (SMNP).
Key statistics: investigations, determinations and sectors
The CCPC issued 70 Determinations during the course of 2022. 55 of these determinations were issued in respect of proposed transactions notified during 2022, and the remaining 15 were in respect of proposed transactions notified in 2021 that were carried over to 2022. Of the 70 Determinations issued, 39 were issued under the Simplified Merger Notification Procedure, representing approximately 56% of all determinations issued in 2022.
The Report states that in 2022, 18 investigations involved an extended Phase 1 review, seven of which were carried forward from 2021. Of the seven carried forward from 2021, a Phase 2 determination was issued in relation to six, and a Phase 1 determination issued in relation to the one. Of the remaining 11 extended investigations, Phase 1 determinations were made in respect of four, three were withdrawn, and four are still under consideration at the end of 2022.
The report states that in 2022, the most prominent sector for merger notifications was Professional Services (including legal, accountancy, consultancy, engineering, veterinary, etc.) with nine notifications received. This was followed by Grocery – Retail & Wholesale with seven notifications received. Other sectors that had a significant number of merger notifications were Manufacturing, Construction & Engineering, and Telecommunications.
Notable cases handled
Four cases were cleared with conditions. These were as follows:
- M/21/004 – AIB/BoI/PTSB – Synch Payments JV: behavioural commitments were put in place to set objective eligibility criteria for any banks or other financial institutions that wish to become participants in the Synch mobile payments service, and defined timelines for processing new applications by prospective licensees. Interoperability and a governance structure, including independent board members, were also implemented to prevent the exchange or disclosure of commercially sensitive information;
- M/21/021 – Bank of Ireland/Certain Assets of KBC: a hybrid commitment by Bank of Ireland to make €1 billion in total funding available to certain non-bank lenders through the purchasing of securities issued by them, to increase their funding capacity and reduce their cost of funding, and also to make €1 million in funding available for distribution to small and medium-sized enterprises;
- M/21/071 – Tesco Ireland/Joyce’s Supermarkets: Tesco Ireland agreed to divest one supermarket in Oranmore, Co. Galway as a going concern to a suitable purchaser to address local competition concerns.
- M/22/047 – BWG/McCarrick Brothers Wholesale: BWG gave a commitment to prevent the exchange of competitively sensitive information between BWG, Stonehouse and/or GRSL.
The CCPC also reached a determination prohibiting a merger since the its establishment in 2014. Having completed its full investigation in M/21/079 – Uniphar/NaviCorp, the CCPC determined that the proposed acquisition could not be put into effect on the grounds that it would result in a substantial lessening of competition in the markets for: (i) the provision of buying group services in Ireland and (ii) the provision of common management and branding services nationally.
Other cases of interest handled by the CPPC in 2022 included M/21/040, AIB and certain assets of Ulster Bank, was cleared (Phase 2 clearance); M/21/068, the merger between Heineken and Comans, (Phase 1 clearance); M/21/071, (Phase 2 clearance); M/21/076, which is the merger between PTSB and certain assets of Ulster Bank (Phase 2 clearance).
The Irish Competition Authority’s annual report for 2022 also includes information about the timeframes for completing the merger review process. The CCPC aims to complete the process in an efficient and effective manner, so that mergers that do not raise competition concerns are not unduly delayed. Between January 1, 2022 and December 31, 2022, the CCPC took an average of 17.9 working days to issue a Phase 1 decision, which is faster than the corresponding figure for 2021, which was 20.2. The timelines in individual cases that did not raise serious concerns varied from 11 to 30 working days depending on the complexity of the transaction and the nature of the competition issues involved.
Trend in Merger Notifications
The report also notes that there was a substantial increase in the number of mergers received in 2021, following the removal of Covid-19 restrictions, but a slight fall back in numbers received in 2022. The CCPC attribute this reduction to adjustments in financial thresholds for mandatory notification of proposed mergers or acquisitions that came into effect in January 2019. The report states that the fall in numbers is due to a decrease in the number of transactions that reach the threshold for mandatory notification.
The key take-away from the Report is that businesses involved in international m & a must take seriously the Irish merger control regime. As highlighted in the Report, Irish competition legislation has been subject to a number of important amendments which have strengthened the review powers of the CCPC, and given it more teeth as a result . The fact that the CCPC has now prohibited a proposed merger for the first time since its establishment indicates its willingness to intervene to protect markets. However, the CCPC aims to complete the process of merger review in an efficient and effective manner, with the average time for a Phase 1 decision being 17.9 working days. This suggests that the CCPC is indeed efficient in the majority of its review processes and the statistics demonstrate that the majority of procedures are cleared without a Phase 2 investigation. In a number of decisions, the CCPC has also shown an openness to addressing merger concerns with behavioural remedies, perhaps marking a different approach to the UK Competition and Markets Authority.
Further changes to the regulatory landscape can be expected in 2023. On 22 December 2022, the Dail Eireann (Irish Parliamentary lower house) passed the Screening of Third Country Transactions Bill 2022 (Bill 77 of 2022). Following on from EU Regulation (EU) 2019/452 the Bill, would for the first time enable Ireland establish a screening mechanism for third country investment. This Bill aims to address the national security concerns related to mergers and acquisitions by introducing a mandatory notification requirement for transactions that are likely to affect security or public order, even if the merger does not raise competition concerns. Failure to notify could result in a fine (up to a maximum of €4 million) or even a term of imprisonment under the proposals. These would also allow the CCPC to seek court injunctions to prevent the implementation of a merger pending a review. We will continue our scrutiny of the Irish regulatory framework with a more in-depth review of the Bill’s provisions in a future article.
Beale & Company Solicitors LLP