The Competition and Consumer Protection Commission (CCPC) has published its Mergers and Acquisitions Report for 2020 (Report). The Report provides an overview of merger control activity in Ireland during 2020. We have distilled the main takeaways from this Report below.
Irish merger control regime
The Irish merger control regime is a mandatory regime modelled on the EU system. Mergers or acquisitions which exceed the following financial thresholds must be notified to the CCPC for review:
- the aggregate turnover in Ireland of the undertakings involved in the most recent financial year is not less than €60 million
- the turnover in Ireland of each of two or more of the undertakings involved in the most recent financial year is not less than €10 million
The parties must suspend completion of the transaction until clearance from the CCPC has been obtained (or the timeframes for the CCPC’s review have expired). Failure to notify a proposed transaction to the CCPC is a criminal offence.
The CCPC must complete its review within statutory time frames. The ordinary time frame for a review at the initial Phase 1 is 30 working days while the CCPC has an additional 90 working days to undertake a more detailed, Phase 2, investigation. Both time limits can be extended in certain circumstances.
KEY STATISTICS IN 2020
- 41 transactions were notified to the CCPC, a decrease of 6 (or 13%) by comparison to 2019;
- the most prominent sectors were information & communications and healthcare;
- 43 determinations were issued, 1 of them with commitments (M/19/034 – CVC Funds/Celtic Rugby DAC) (compared to 4 in 2019);
- 15 transactions required an extended Phase 1 investigation, compared to 9 in 2019;
- there were 2 Phase 2 investigations (the same as last year), both of which are ongoing (M/20/003 – Link Group/Pepper and M/20/005 – ESB/Coillte (JV));
- the CCPC did not prohibit any mergers (the same as 2018 and 2019);
- the average time to issue a non-extended Phase 1 determination was 22.9 working days, down from 24.7 in 2019;
- 7 mergers were cleared under the simplified merger procedure with an average time of 13.4 working days (see below)
While the CCPC did not prohibit any transactions during 2020, one clearance was subject to behavioural commitments by the parties (M/19/034 – CVC Funds/Celtic Rugby DAC). This concerned the acquisition of a minority interest in Celtic Rugby by a newly incorporated company (invested in by CVC Funds). The proposed transaction concerned the licencing of TV broadcasting sports rights and other commercial rights, including sponsorship. The CCPC had concerns regarding CVC's market power in the market for the sale of TV broadcasting rights to broadcasters for rugby union sports events in the State, particularly in light of the fact that CVC was in exclusive negotiations with the Six Nations. These concerns were addressed by a commitment on the part of CVC to make a voluntary notification to the CCPC if it, directly or indirectly, enters into a legally binding agreement to acquire control over the commercial activities of the Six Nations competition, before it is put into effect (even if the financial thresholds for a mandatory notification are not met).
2020 also saw the implementation of divestment remedies in M/18/063 – Berendsen/Kings Laundry and M/18/036 – Enva/Rilta. The determinations in relation to these transactions were made in 2019 and 2018 respectively.
In March 2020, the CCPC put in place measures to ensure continuity in merger control reviews during the COVID-19 pandemic. These measures included submission of electronic merger notifications, extending deadlines for responses to formal information requests and the power to conduct remote oral hearings in Phase 2 mergers.
simplified merger procedure
On 1 July 2020, the Simplified Merger Procedure came into effect. The intention is to reduce time and resources of businesses by providing exemptions from certain information in merger notifications for mergers which do not raise significant competition concerns. During 2020, the CCPC cleared 7 mergers under the new regime with an average time of 13.4 working days.
Please read our summary of the new simplified procedure here.
Media mergers must be notified regardless of the turnover of the parties involved. A media merger is one where at least one of the parties carries on a media business in Ireland. In 2020:
- 3 media mergers were notified to the CCPC, the same number as in 2019;
- 1 media merger (notified in 2019) involved an extended Phase 1 investigation (M/19/040 – DMG/JPIMedia)
Merger remedies review 2003 – 2020
The CCPC completed an internal review of merger remedies for the period 2003 – 2020 and has, for the first time, published statistics on mergers cleared with commitments. Key statistics include:
- 33 mergers have been cleared with commitments (3.21% of all merger decisions);
- 66% involved behavioural remedies, 25% involved structural commitments and 9% required both structural and behavioural remedies. Structural remedies require the sale of one or more businesses, physical assets or other rights while behavioural remedies modify or constrain the future conduct of merging firms. Behavioural remedies were far more common in Phase 1 merger reviews (79%) while the split of remedies between behavioural and structural remedies was more equal in Phase 2 merger reviews
- Half of all behavioural commitments have consisted of ring-fencing commitments to prevent the flow of competitively sensitive information held by the target business about its competitors. Other commitments have included the obligation to notify the CCPC of future acquisitions, even is the transaction is not notifiable (17%) and access remedies (12%), for example access to information or technology of the merged entity by third parties.
- There are also some trends evident in the type of mergers in which commitments have been required. Unsurprisingly, the vast majority of mergers with commitment decisions were mergers with horizontal overlaps (69.7%), while the remainder of the commitment decisions were split equally between mergers with vertical overlaps (15.5%) and mergers with both horizontal and vertical overlaps (15.5%).
- The majority of commitments were required in media mergers (27%), followed by the retail and wholesale sector (18%) and the energy and utilities sector (12%).
- Out of the 33 mergers approved with commitments to date, 20 commitments have expired while 13 continue to apply. Six of these have defined expiry dates lasting up to 5 years and 7 will remain in force until certain ownership/holdings change.
PROGNOSIS FOR 2021
2021 will be an interesting year as it will show what, if any, impact Brexit will have on merger control notifications and reviews in Ireland. The CCPC has pointed to a potential increase in complex mergers and highlighted its close working relationship with European competition authorities.
The full report can be viewed here.
Beauchamps EU, Competition & Procurement team
The EU, Competition & Procurement team at Beauchamps has extensive experience advising on all aspects of competition law, including merger control. For more information or to discuss any competition law related issues impacting your business, please get in touch with Dorit McCann or your usual Beauchamps contact.