The Irish Competition and Consumer Protection Commission (“CCPC”) announced its decision on 14 June 2019 to proceed with introducing a simplified merger notification process for transactions which meet the financial thresholds for notification but clearly pose no risk of a substantial lessening of competition in Ireland. This welcome change is expected to be implemented in 2020 based on draft guidelines considered below.
The Current Law
Currently, all proposed mergers or acquisitions that satisfy the applicable turnover thresholds must be notified to the CCPC and clearance received in order for the transaction to go ahead. Completion of the entire standard notification form is required even in circumstances where it is obvious that no competition concerns arise. This requirement represents a costly and time consuming regulatory and compliance burden to the CCPC and to the merging businesses. It is out of step with the practice of the European Commission and most EU Member States, which operate a simplified procedure for particular types of merger review. The CCPC stated in its 2018 consultation paper on this issue that 55% of the mergers notified to it between 2016 and 2018 would have qualified for a short form review when applying the criteria used by the EU Commission in its simplified notification process.
The Proposed Changes
The Draft Guidelines published by the CCPC on the Simplified Merger Notification Procedure state that whilst transactions to which the simplified procedure applies will be notified using the same standard notification form that is currently used for all merger notifications, qualifying transactions will not be required to answer all of the questions included in the form. This shorter notification format would not require as much information and analysis of the proposed transaction to be submitted in the notification. In its consultation paper, the CCPC recognises that the standard notification form often requires the submission of a “significant volume of information”.
The Draft Guidelines provide that the CCPC will continue to be obliged to issue its determinations in relation to notified transactions under Phase 1 review within the current review period of 30 working days for those which fall under the simplified procedure. However, it is expected that in practice the shorter notification format and lower-risk nature of these transactions will mean shorter review periods for qualifying transactions. The CCPC undertakes in the Draft Guidelines that for future qualifying transactions it will endeavour to make a determination as soon as practically possible following the expiration of the deadline for receipt of submissions by third parties. Generally, this is set at 10 working days after the transaction is notified to the CCPC.
The Draft Guidelines state that the simplified procedure will apply, in principle, to transactions which fall under the following criteria:
- where none of the parties to the merger are active in the same product or geographic markets, or in any upstream or downstream product markets from one another;
- where two or more of the parties involved are active in the same product or geographic market, but their combined market share is less than 15%;
- where one or more parties involved are active in a market which is upstream or downstream to a market in which another party is active, but the market share of each of the parties involved in each market is less than 25%; or
- where a party which already has joint control over a company is to acquire sole control over that company.
Nonetheless it should be noted that even where the CCPC has initially indicated that a proposed transaction may be reviewed under the simplified procedure, it reserves the right to revert at any time to the standard procedure. The situations in which this has the potential to arise include transactions that occur in concentrated markets, those involving maverick firms or potentially important pipeline products (for example, in the digital and pharmaceutical sectors) and where a third party submission raises competition concerns.
The CCPC’s intention to streamline the merger notification process follows its January 2019 increase of the turnover thresholds for mandatory notifications. Both initiatives demonstrate the CCPC’s effort to reduce the red tape, burden and cost surrounding the merger control process, as well as bring the Irish regime into step with broader EU practice.
Since the upward revision to the financial thresholds triggering a compulsory notification, there has been a decline of approximately 60% in the number of compulsory notifications submitted to the CCPC year on year (as of 31 October 2019 compared with the same period in 2018). It is expected that once the simplified procedure comes into force, the number of transactions that are subjected to the complete merger review process will also decline.
This proposed change is good news for businesses potentially involved in notifiable transactions as a simplified merger notification procedure should result in lower compliance costs, time and legal uncertainty. It should mean also that for qualifying transactions the often substantial amounts of commercially sensitive information which would otherwise have to have been analysed and reported by the businesses to the CCPC as part of the notification can be reduced or omitted.
For further information on the simplified merger notification process and how it might affect your business, please contact Ken Casey email@example.com or Pauline Foster firstname.lastname@example.org at Hayes solicitors.Back to Full News
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About the Authors
Ken is Head of the Corporate team and has built a practice in acquisitions, disposals, and capital markets transactions across various industry sectors; joint ventures and corporate re-organisations of publicly quoted and private companies; and advises on corporate governance and general corporate law. He has extensive expertise in the financial services, aviation, gaming, technology, media and sports sectors.
Pauline Foster is a solicitor in the Corporate team at Hayes Solicitors. Pauline specialises in company law and provides transactional and advisory services to private companies and financial institutions. She assists in advising on domestic and cross-border mergers and acquisitions, corporate reorganisations, shareholder agreements, business structuring and formation, corporate governance and compliance.