Enhanced merger review powers for the Competition and Consumer Protection Commission under new legislation

Introduction

The Competition Amendment Bill 2022 (the “Bill”) recently completed all stages of the Oireachtas (Houses of Parliament) and has been sent to the President to be signed into law. While the primary focus and impact of the Bill is the implementation of the ECN + Directive and the introduction for the first time of administration sanctions regime for breaches of EU and Irish competition law, the Bill also introduces some important changes to the merger control regime in Ireland which will impact how merger control issues are considered in merger transactions.

Powers to investigate “below threshold” mergers

The most significant of these changes is the introduction of new powers for the Competition and Consumer Protection Commission (the “CCPC”) to investigate mergers or acquisitions that do not satisfy the turnover thresholds for mandatory notification (so-called “below threshold” mergers).

Currently “mergers or acquisitions” that exceed the certain thresholds[1] and “media mergers”[2] must be notified to the CCPC for clearance before they can be implemented.

To date there also has been a provision whereby parties could voluntarily notify a merger or acquisition. The CCPC in theory retains residual jurisdiction to investigate anti-competitive “below threshold” mergers under general competition law rules in sections 4(1) and 5 and of the Competition Act 2002 (i.e. where the implementation of the merger has as its object or effect the restriction of competition or amounts to an abuse of dominant position). The voluntary notification regime allows parties to voluntarily notify a “below threshold” merger that might attract scrutiny from the CCPC to have the merger reviewed within a fixed time limit and, if approved, exempt from the prohibitions in sections 4 and 5.

The reality however is that only a comparatively small number of “below threshold” mergers are notified[3] (though in some cases, the CCPC has included a requirement to voluntary notify future “below threshold” mergers as a condition for clearing mergers). In addition, from the CCPC’s perspective, using sections 4(1) and 5 to investigate a “below threshold” merger is not ideal as it would require the CCPC to take High Court proceedings with the decision to restrict or unwind the merger resting with the Court and not the CCPC.

The Bill will enhance the CCPC’s ability to investigate and control “below threshold” mergers” in a number of significant ways, namely by giving the CCPC powers:

• to require parties to notify a merger that has not been notified to it if, in the opinion of the CCPC, that merger may have an effect on competition in markets for goods or services in the State;
• to impose interim measures to prevent any such merger or acquisition from being put into effect or further put into effect until the CCPC has issued its determination (including prohibiting the integration of IT systems, terminating the employment of key employees or closing/selling sites as well as requiring the parties to take certain steps and appoint persons to conduct or supervise the conduct of activities or safeguarding of assets); and
• to order that any such merger or acquisition that has been put into effect to be unwound or dissolved or where that is not possible such other steps as may be appropriate to restore the position prevailing before the merger or acquisition was put into effect.

While these powers are a welcome and important enhancement to the CCPC’s ability to effectively police and control “below threshold” mergers that might have anti-competitive effects, the broad manner in which the power of the CCPC to request notification has been drafted will create practical challenges and uncertainty for parties involved in such transactions. The threshold at which this power can be exercised (an effect on competition in the State) is much lower than the threshold at which the CCPC can block a merger or acquisition (a substantial lessening of competition). Conceivably any transaction involving a horizontal overlap or vertical relationship between the parties will have some effect on competition in the State with resulting uncertainty as to whether that transaction will be subject to review by the CCPC under these new powers. The CCPC has previously issued guidelines in relation to its policy around non-notifiable mergers and it is hoped they will issue revised guidelines in relation to how and when they will exercise these new powers perhaps building on its guidance in relation to the simplified notification procedure.

Other changes

The Bill also introduces a number of other changes to the merger control regime including:

• the introduction of offences for implementing a merger or acquisition prior to receiving clearance (also known as “gun-jumping”) and a failure to comply with interim measures with daily fines for non-compliance;
• a mandatory obligation on third parties to reply to CCPC information requests; and
• a requirement for responses to CCPC information requests to be certified by the responding party.

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[1] Merger or acquisition is notifiable if, in the last financial year the aggregate turnover in the State of the undertakings involved is not less than €60,000,000, and the turnover in the State of each of 2 or more of the undertakings involved is not less than €10,000,000.

[2] A media merger is a merger where either two or more of the undertaking parties carry on a media business in Ireland or one of the undertaking parties carries on a media business in Ireland and at least one other undertaking party carries on a media business in another country.

[3] Prior examples include M/17/012 Kantar Media/Newsaccess, M/18/067 LN-Gaiety / MCD Productions, M/20/012-Eason-Dubray M/21/009 – Citylink/Gobus.