The Irish Competition and Consumer Protection Commission in Ireland (CCPC) wants to reduce the number of notifications to it and improve the efficiency of Ireland's merger regime. Higher financial notification thresholds came into force on 1 January 2019 to achieve this, and the CCPC is consulting on a simplified notification process. However, the CCPC anticipates increasingly complex mergers to be notified in Ireland as a result of Brexit.
2018 was the most active year on record for merger and acquisition (M&A) notifications to the CCPC, according to the competition authority's latest M&A report. The number of complex referrals is likely to increase in 2019 because of Brexit, so it is understandable that the CCPC wants to reduce the number of cases it is notified about.
These changes will benefit business as they help improve the CPCC's efficiency and focus on those deals where there are clear competition concerns.
Competition clearance in Ireland is required if the aggregate turnover in Ireland of the businesses is €60 million or more in the most recent financial year, and that the turnover in Ireland of each of the merging businesses is €10m or more in the most recent financial year.
The previous thresholds were €50m and €3m, so this change will reduce the number of merger notifications. This is particularly true for small Irish bolt-ons by a large corporate where there was limited impact on competition in Ireland.
The CCPC estimates that the new financial thresholds will reduce the number of filings by approximately 40%. Of the 98 deals notified to the CCPC in 2018, only 11 were subject to extended CCPC review and no deal was blocked outright. Five of them were cleared subject to conditions, in one case that one party had to divest existing businesses. However, when compared to the rest of the EU, merger control intervention rates remain low in Ireland.
Although the detail for a simplified merger filing process is not yet clear, the CCPC's intention is to bring Ireland in line with the European Commission and the majority of EU countries that operate a simplified procedure, especially for mergers which raise no substantive competition concerns. Tthe intention is to ensure that the Irish merger regime is more effects-based and focused on outcomes, as well as shortening the merger review timetable.
This should reduce time and costs for businesses in complying with the regime and provide greater certainty over the process. The CCPC's consultation on a simplified procedure has already closed and its findings will be published later in 2019.
These changes will help businesses to avoid unnecessary cost and legal uncertainty where there are clearly no competition issues arising. It is appropriate for the Irish competition authority to free up its resources to focus on mergers that are more likely to restrict competition and more generally on competition law enforcement.
The potential impact of Brexit on EU, UK and Irish merger filings remains unclear. However, we know that following the withdrawal of the UK from the EU, the European Commission will cease to have exclusive jurisdiction over mergers with both a UK and an EU dimension. This is likely to lead to more parallel investigations being undertaken by the Competition and Markets Authority in the UK alongside the Commission. There could also be a knock-on effect in terms of how many mergers qualify for investigation on a 'one-stop-shop' basis by the Commission under the EU Merger Regulation, and this could lead to more national filings, including in Ireland.
Alan Davis is a competition law expert and Dorian Rees is a corporate law expert at Pinsent Masons, the law firm behind Out-Law.com