On 27 September 2023, the Competition (Amendment) Act 2022 (the "2022 Act") will enter into force following the recent publication of the much-anticipated commencement order regarding the 2022 Act. While the primary focus of the 2022 Act is to enhance the competition enforcement powers of the Irish competition authorities, the 2022 Act also gives the Competition and Consumer Protection Commission ("CCPC") additional merger control powers relating to M&A transactions that may have significant implications for Irish merger clearance analyses and strategies.
In this Insight, we examine the key reforms to the Irish merger control regime and implications for parties undertaking M&A in Ireland.
See our separate Insight in relation to the changes under the 2022 Act that overhaul the overall Irish competition enforcement regime.
5 Key Reforms to the Irish Merger Control Regime
1. New CCPC 'call in' power in relation to 'below-threshold' transactions
The CCPC may now require the notification of a 'below threshold’ transaction that is not mandatorily notifiable but which "may, in the opinion of the Commission, have an effect on competition in markets for goods or services in the State".
The CCPC must exercise this power within 60 working days after the earliest of: (i) the date that a public bid is publicly announced or made but not yet accepted; (ii) the date the CCPC becomes aware of signing of the transaction; or (iii) the date of closing of a transaction. When mandating a notification under this provision, the CCPC must specify a deadline for the notification to be made. The transaction parties may request an extension of this deadline.
Overall, the CCPC's new 'call in' power means that parties will need to assess whether a transaction falling below the mandatory notification thresholds could give rise to potential competition issues that would result in the CCPC making inquiries and ultimately 'calling in' the transaction for review. This will require parties to carry out a competition analysis in relation to the extent to which their activities overlap, the presence and size of other competitors and the presence of other factors in the usual course. This analysis will need to be carefully calibrated to give due weight to the competing risks and other considerations which ought to be taken into account (such as the need for a condition precedent in the transaction documents related to the 'call in' risk, for example).
2. New powers to impose interim measures
The CCPC may impose interim measures where "it considers it appropriate to do so due to the risk that the merger or acquisition may have an effect on competition in any markets for goods or services in the State".
This power is primarily envisaged for 'below threshold' transactions, but it can also be exercised in the case of mandatorily notifiable transactions, for example, where there is a perceived risk that parties may complete prior to clearance. The 2022 Act specifies the type of interim measures that may be imposed, including measures to refrain from implementing or further implementing a transaction or measures to mitigate the effects of any steps already taken to implement the transaction (e.g., obligations as to the carrying on of any activities or safeguarding of any assets – also known as 'hold-separate' orders). It is likely that the CCPC will issue a pro-forma set of interim measures such as the 'initial enforcement order' template used by the Competition and Markets Authority in the UK.
The CCPC must specify the period for which the measures shall remain in force and may also vary or revoke the measures at any time. Failure to comply with interim measures is an offence which may be subject to fines of up to €250,000, and continued contravention can give rise to additional fines.
3. New 'gun-jumping' offence
The 2022 Act provides for a new ‘gun-jumping’ offence where there has been a breach of the ‘stand-still’ obligation under Section 19 of the Competition Act 2002, as amended (i.e., where parties complete a transaction prior to clearance). In such circumstances, parties may be liable to fines of up to €250,000.
This supplements the existing ‘gun-jumping’ offence of failure to notify prior to completion. Notably, the 2022 Act also now envisages the offence of 'gun-jumping' to apply where parties fail to notify a ‘below-threshold’ transaction that the CCPC has required it to notify. The 2022 Act also clarifies that a transaction that is completed in breach of the 'failure to notify' or ‘stand-still’ obligations is void until the CCPC approves the transaction, reflecting the CCPC's practice to date.
4. New power to unwind completed transactions
If the CCPC finds that the result of the transaction will be to substantially lessen competition in markets in the State, it now has the power to unwind or dissolve completed transactions or – where this is not possible – seek that such steps are taken to achieve restoration, as far as practicable, of pre-merger market conditions.
This power is primarily envisaged for 'below threshold' transactions, however, it may also be applied where the transaction has been completed without the CCPC issuing its determination. This may occur where, for example, parties have completed the transaction prior to clearance, or the clearance timeframe has expired.
5. New rules in respect of 'requirements for further information'
The CCPC may now issue mandatory requests for further information to ‘undertakings involved’ and third parties (e.g., other market participants) that the CCPC considers may have information relevant to a transaction subject to review. Given that the CCPC has not been able to compel third parties to provide information to date, this is a significant new power for the CCPC and may add a significant further dimension to the CCPC's merger review processes.
Separately, where transaction parties subject to CCPC review respond to a request for further information, the CCPC is now under an obligation to either confirm compliance or request additional information within 10 working days of submission of the response.
Conclusion
The 2022 Act reforms provide a significant boost for the CCPC's merger review and enforcement powers. Dealmakers will therefore need to consider the implications of these reforms for Irish M&A transactions or international M&A transactions with an Irish nexus, especially where the transaction falls below the mandatory Irish notification thresholds.