The Merger Control

Review

Law Business Research

Fifth Edition

Editor

Ilene Knable Gotts

The Merger Control Review

The Merger Control Review

Reproduced with permission from Law Business Research Ltd.This article was first published in The Merger Control Review - Edition 5

(published in July 2014 – editor Ilene Knable Gotts).

For further information please emailNick.Barette@lbresearch.com

The Merger Control

Review

Fifth Edition

EditorIlene Knable Gotts

Law Business Research Ltd

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Acknowledgements

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iii

CONTENTS

Editor’s Preface ...................................................................................................ixIlene Knable Gotts

Chapter 1 AUSTRALIA .............................................................................. 1Peter Armitage and Ross Zaurrini

Chapter 2 AUSTRIA ................................................................................. 17Heinrich Kühnert and Gerhard Fussenegger

Chapter 3 BELGIUM ............................................................................... 28Carmen Verdonck and Jenna Auwerx

Chapter 4 BOSNIA AND HERZEGOVINA ........................................... 40Rastko Petaković

Chapter 5 BRAZIL ................................................................................... 49Lauro Celidonio Neto, Amadeu Ribeiro and Marcio Dias Soares

Chapter 6 CANADA ................................................................................. 62Dany H Assaf and Arezou Farivar

Chapter 7 CHILE ..................................................................................... 76Julio Pellegrini and Pedro Rencoret

Chapter 8 CHINA .................................................................................... 84Susan Ning

Chapter 9 COLOMBIA ............................................................................ 93Dario Cadena Lleras and Eduardo A Wiesner

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Contents

Chapter 10 COSTA RICA ........................................................................ 101Edgar Odio

Chapter 11 CYPRUS ................................................................................ 112Elias Neocleous and Ramona Livera

Chapter 12 ECUADOR ........................................................................... 124Diego Pérez-Ordóñez and José Urízar

Chapter 13 EUROPEAN UNION ........................................................... 133Mario Todino, Piero Fattori and Alberto Pera

Chapter 14 FRANCE ................................................................................ 152Hugues Calvet and Olivier Billard

Chapter 15 GERMANY ............................................................................ 171Götz Drauz and Michael Rosenthal

Chapter 16 GHANA ................................................................................. 181Rosa Kudoadzi and Nana Esi Beduwa Ghunney

Chapter 17 GREECE ................................................................................ 190Alkiviades C A Psarras

Chapter 18 HONG KONG ..................................................................... 201Sharon Henrick and Joshua Cole

Chapter 19 INDIA ................................................................................... 214Samir R Gandhi, Kamya Rajagopal and Rahul Satyan

Chapter 20 INDONESIA ......................................................................... 225Theodoor Bakker and Luky I Walalangi

Chapter 21 IRELAND .............................................................................. 237Helen Kelly and Darach Connolly

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Contents

Chapter 22 ITALY ..................................................................................... 246Rino Caiazzo and Francesca Costantini

Chapter 23 JAPAN .................................................................................... 255Yusuke Nakano, Vassili Moussis and Kiyoko Yagami

Chapter 24 KOREA .................................................................................. 268Sai Ree Yun, Seuk Joon Lee, Cecil Saehoon Chung, Kyoung Yeon Kim and Kyu Hyun Kim

Chapter 25 LITHUANIA ......................................................................... 276Giedrius Kolesnikovas and Michail Parchimovič

Chapter 26 MACEDONIA ....................................................................... 285Tatjana Popovski-Buloski

Chapter 27 MALAYSIA ............................................................................ 293Jeff Leong

Chapter 28 NETHERLANDS .................................................................. 304Gerrit Oosterhuis and Weijer VerLoren van Themaat

Chapter 29 NIGERIA ............................................................................... 316Bayo Onamade

Chapter 30 NORWAY .............................................................................. 328Thea Susanne Skaug and Fredrik Alver

Chapter 31 PAKISTAN ............................................................................. 338Mujtaba Jamal

Chapter 32 ROMANIA ............................................................................ 348Carmen Peli, Manuela Lupeanu and Mihaela Ciolan

Chapter 33 RUSSIA .................................................................................. 361Evgeny Khokhlov

Chapter 34 SERBIA .................................................................................. 370Rastko Petaković

Chapter 35 SINGAPORE ......................................................................... 381Ameera Ashraf

Chapter 36 SOUTH AFRICA .................................................................. 390Lee Mendelsohn and Lebogang Phaladi

Chapter 37 SPAIN .................................................................................... 402Juan Jiménez-Laiglesia, Alfonso Ois, Joaquín Hervada and Laura Giménez

Chapter 38 SWITZERLAND .................................................................. 413Pascal G Favre

Chapter 39 TAIWAN ................................................................................ 422Victor I Chang, Margaret Huang and Jamie C Yang

Chapter 40 THAILAND .......................................................................... 432Pakdee Paknara and Kallaya Laohaganniyom

Chapter 41 TURKEY ................................................................................ 437Gönenç Gürkaynak and K Korhan Yıldırım

Chapter 42 UKRAINE .............................................................................. 448Dmitry Taranyk and Valentyna Hvozd

Chapter 43 UNITED KINGDOM .......................................................... 457Jordan Ellison and Paul Walter

Chapter 44 UNITED STATES ................................................................. 469Ilene Knable Gotts

Chapter 45 VENEZUELA ........................................................................ 477Pedro Ignacio Sosa, Ana Karina Gomes and Vanessa D’Amelio

Contents

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Chapter 46 INTERNATIONAL MERGER REMEDIES ......................... 488John Ratliff and Frédéric Louis

Appendix 1 ABOUT THE AUTHORS .................................................... 503

Appendix 2 CONTRIBUTING LAW FIRMS’ CONTACT DETAILS ...535

Contents

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EDITOR’S PREFACE

Pre-merger competition review has advanced significantly since its creation in 1976 in the United States. As this book evidences, today almost all competition authorities have a notification process in place – with most requiring pre-merger notification for transactions that meet certain prescribed minimum thresholds. Given the ability of most competition agencies with pre-merger notification laws to delay, and even block, a transaction, it is imperative to take each jurisdiction – small or large, new or mature – seriously. China, for instance, in 2009 blocked the Coca-Cola Company’s proposed acquisition of China Huiyuan Juice Group Limited and imposed conditions on four mergers involving non-Chinese domiciled firms. In Phonak/ReSound (a merger between a Swiss undertaking and a Danish undertaking, each with a German subsidiary), the German Federal Cartel Office blocked the entire merger even though less than 10 per cent of each of the undertakings was attributable to Germany. It is, therefore, imperative that counsel for a transaction develops a comprehensive plan prior to, or immediately upon, execution of the agreement concerning where and when to file notification with competition authorities regarding the transaction. In this regard, this book provides an overview of the process in 45 jurisdictions, as well as a discussion of recent decisions, strategic considerations and likely upcoming developments. The intended readership of this book comprises both in-house and outside counsel who may be involved in the competition review of cross-border transactions.

Some common threads in institutional design underlie most of the merger review mandates, although there are some outliers as well as nuances that necessitate careful consideration when advising clients on a particular transaction. Almost all jurisdictions either already vest exclusive authority to transactions in one agency or are moving in that direction (e.g., Brazil, France and the UK). The US and China may end up being the exceptions in this regard. Most jurisdictions provide for objective monetary size thresholds (e.g., the turnover of the parties, the size of the transaction) to determine whether a filing is required. Germany, for instance, provides for a de minimis exception for transactions occurring in markets with sales of less than €15 million. There are some jurisdictions, however, that still use ‘market share’ indicia (e.g., Bosnia and Herzegovina, Colombia, Lithuania, Portugal, Spain, Ukraine and the UK). Most jurisdictions require

Editor’s Preface

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that both parties have some turnover or nexus to their jurisdiction. However, there are some jurisdictions that take a more expansive view. For instance, Turkey recently issued a decision finding that a joint venture (JV) that produced no effect in Turkish markets was reportable because the JV’s products ‘could be’ imported into Turkey. Germany also takes an expansive view by adopting as one of its thresholds a transaction of ‘competitively significant influence’. Although a few merger notification jurisdictions remain ‘voluntary’ (e.g., Australia, Singapore, the UK and Venezuela), the vast majority impose mandatory notification requirements.

The potential consequences for failing to file in jurisdictions with mandatory requirements varies. Almost all jurisdictions require that the notification process be concluded prior to completion (e.g., pre-merger, suspensory regimes), rather than permitting the transaction to close as long as notification is made prior to closing. Many of these jurisdictions can impose a significant fine for failure to notify before closing even where the transaction raises no competition concerns (e.g., Austria, Cyprus, India, the Netherlands, Romania, Spain and Turkey). Some jurisdictions impose strict time frames within which the parties must file their notification. For instance, Cyprus requires filing within one week of signing of the relevant documents and agreements; and Hungary, Ireland and Romania have a 30-calendar-day time limit from entering into the agreement for filing the notification. Some jurisdictions that mandate filings within specified periods after execution of the agreement also have the authority to impose fines for ‘late’ notifications (e.g., Bosnia and Herzegovina, India and Serbia). Most jurisdictions also have the ability to impose significant fines for failure to notify or for closing before the end of the waiting period, or both (e.g., United States, Ukraine, Greece, and Portugal). Brazil issued its first ‘gun jumping’ fine this year. In Macedonia, the failure to file can result in a misdemeanour and a monetary fine of up to 10 per cent of the worldwide turnover.

In almost all jurisdictions, very few transactions undergo a full investigation, although some require that the notification provide detailed information regarding the markets, competitors, competition, suppliers, customers and entry conditions. Most jurisdictions that have filing fees specify a flat fee or state in advance a schedule of fees based upon the size of the transaction; some jurisdictions, however, determine the fee after filing or provide different fees based on the complexity of the transaction. For instance, Cyprus is now considering charging a higher fee for acquisitions that are subjected to a full Phase II investigation.

Most jurisdictions more closely resemble the European Union model than the US model. In these jurisdictions, pre-filing consultations are more common (and even encouraged); parties can offer undertakings during the initial stage to resolve competitive concerns; and there is a set period during the second phase for providing additional information and for the agency to reach a decision. In Japan, however, the Japanese Federal Trade Commission (JFTC) announced in June 2011 that it would abolish the prior consultation procedure option. When combined with the inability to ‘stop the clock’ on the review periods, counsel may find it more challenging in transactions involving multiple filings to avoid the potential for the entry of conflicting remedies or even a prohibition decision at the end of a JFTC review. Some jurisdictions, such as Croatia, are still aligning their threshold criteria and process with the EU model. There remain some jurisdictions even within the EU that differ procedurally from the EU model. For instance, in Austria the obligation to file can be triggered if only one of the involved undertakings has sales

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in Austria as long as both parties satisfy a minimum global turnover and have a sizeable combined turnover in Austria.

The role of third parties also varies across jurisdictions. In some jurisdictions (e.g., Japan) there is no explicit right of intervention by third parties, but the authorities can choose to allow it on a case-by-case basis. In contrast, in South Africa, registered trade unions or representatives of employees are even to be provided with a redacted copy of the merger notification and have the right to participate in merger hearings before the Competition Tribunal, and the Tribunal will typically permit other third parties to participate. Bulgaria has announced a process by which transaction parties even consent to disclosure of their confidential information to third parties. In some jurisdictions (e.g., Australia, the EU and Germany), third parties may file an objection to a clearance decision.

In almost all jurisdictions, once the authority approves the transaction, it cannot later challenge the transaction’s legality. The US is one significant outlier with no bar for subsequent challenge, even decades following the closing, if the transaction is later believed to have substantially lessened competition. Canada, in contrast, provides a more limited time period of one year for challenging a notified transaction (see the recent CSC/Complete transaction). Norway is a bit unusual, in that the authority has the ability to mandate notification of a transaction for a period of up to three months following the transaction’s consummation.

It is becoming the norm in large cross-border transactions raising competition concerns for the US, Canadian, Mexican and EU authorities to work closely together during the investigative stages, and even in determining remedies, minimising the potential of arriving at diverging outcomes. Regional cooperation among some of the newer agencies has also become more common; for example, the Argentinian authority has worked with Brazil’s CADE, which in turn has worked with Chile. Competition authorities in Bosnia and Herzegovina, Bulgaria, Croatia, Macedonia, Montenegro, Serbia, Slovenia and Turkey similarly maintain close ties and cooperate on transactions. Taiwan is part of the Asia-Pacific Economic Cooperation Forum, which shares a database. In transactions not requiring filings in multiple EU jurisdictions, Member States often keep each other informed during the course of an investigation. In addition, transactions not meeting the EU threshold can nevertheless be referred to the Commission in appropriate circumstances. In 2009, the US signed a memorandum of understanding with the Russian Competition Authority to facilitate cooperation; China has ‘consulted’ with the US and EU on some mergers and entered into a cooperation agreement with the US authorities in 2011. The US also has recently entered into a cooperation agreement with India.

Although some jurisdictions have recently raised the size threshold at which filings are mandated, others have broadened the scope of their legislation to include, for instance, partial ownership interests. Some jurisdictions continue to have as their threshold test for pre-merger notification whether there is an ‘acquisition of control’. Many of these jurisdictions, however, will include as a reportable situation the creation of ‘joint control’, ‘negative (e.g., veto) control’ rights to the extent that they may give rise to de jure or de facto control (e.g., Turkey), or a change from ‘joint control’ to ‘sole control’ (e.g., EU and Lithuania). Minority holdings and concerns over ‘creeping acquisitions’, in which an industry may consolidate before the agencies become fully aware, have become the focus of many jurisdictions. Some jurisdictions will consider as reviewable acquisitions in which only a 10 per cent or less interest is being acquired (e.g., Serbia for certain financial and

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insurance mergers), although most jurisdictions have somewhat higher thresholds (e.g., Korea sets the threshold at 15 per cent of a public company and otherwise 20 per cent of a target; and Japan and Russia at any amount exceeding 20 per cent of the target). Others use as the benchmark the impact that the partial shareholding has on competition; Norway, for instance, can challenge a minority shareholding that creates or strengthens a significant restriction on competition. Several agencies in the past few years have analysed partial ownership acquisitions on a standalone basis as well as in connection with joint ventures (e.g., Canada, China, Cyprus, Finland and Switzerland). Vertical mergers were also the subject of review (and even resulted in some enforcement actions) in a number of jurisdictions (e.g., Canada, China, Sweden and Taiwan). Portugal even viewed as an ‘acquisition’ subject to notification the non-binding transfer of a customer base.

For transactions that raise competition issues, the need to plan and to coordinate among counsel has become particularly acute. As discussed in the last chapter, International Merger Remedies, it is no longer prudent to focus merely on the larger mature authorities, with the expectation that other jurisdictions will follow their lead or defer to their review. In the current environment, obtaining the approval of jurisdictions such as Brazil and China can be as important as the approval of the EU or US. Moreover, the need to coordinate is particularly acute to the extent that multiple agencies decide to impose conditions on the transaction. Although most jurisdictions indicate that ‘structural’ remedies are preferable to ‘behavioural’ conditions, a number of jurisdictions in the past year have imposed a variety of such behavioural remedies (e.g., China, the EU, France, Netherlands, Norway, South Africa, Ukraine and the US). This book should provide a useful starting point in navigating cross-border transactions in the current enforcement environment.

Ilene Knable GottsWachtell, Lipton, Rosen & KatzNew YorkJuly 2014

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Chapter 21

IRELAND

Helen Kelly and Darach Connolly1

I INTRODUCTION

The Competition Act 2002–2012 (Competition Act) governs Ireland’s merger control regime. The Competition Authority has primary responsibility for most mergers notifiable under the Competition Act (i.e., where the EU Merger Regulation2 does not apply). The applicable merger control test used by the Competition Authority is whether the merger is likely to substantially lessen competition for goods or services in the state.

Currently, both the Competition Authority and the Minister for Jobs, Enterprise and Innovation (Minister for Jobs) have a role as regards ‘media mergers’. However, the Competition and Consumer Protection Bill (Bill) published on 27 March 2014, if enacted in its current form, will alter the treatment of mergers in a significant way. The Bill provides for the merger of the existing Competition Authority and National Consumer Agency to create a new Competition and Consumer Protection Commission (CCPC), amended merger notification thresholds, extended timelines for merger review and a fundamental restructuring of the media merger regime, and will involve the transfer of responsibility for media mergers away from the Minister for Jobs to the Minister for Communications, Energy and Natural Resources (Minister for Communications) (discussed further below).

Notification under the Irish system of merger control is mandatory where the jurisdictional thresholds are met, and a filing must be made by each of the undertakings involved in the transaction within one month of conclusion of the merger agreement or the making of a public bid. Failure to notify a notifiable transaction within the one-month period can constitute a criminal offence. Implementation of a transaction prior to clearance is prohibited but does not amount to a criminal offence, albeit that it

1 Helen Kelly is a partner and Darach Connolly is a solicitor at Matheson.2 Council Regulation (EC) No. 139/2004 on the control of concentrations between undertakings.

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would amount to a criminal offence to put a merger into effect in defiance of a Phase II prohibition or in breach of conditions attaching to a clearance.

Under Section 16(1) of the Competition Act, a merger or acquisition is deemed to occur if:a two or more undertakings, previously independent of one another, merge;b one or more individuals or other undertakings who or that control one or more

undertakings acquire direct or indirect control of the whole or part of one or more other undertakings;

c the result of an acquisition by one undertaking (first undertaking) of the assets (including goodwill), or a substantial part of the assets, of another undertaking (second undertaking) is to place the first undertaking in a position to replace (or substantially to replace) the second undertaking in the business or, as appropriate, the part of the business in which that undertaking was engaged immediately before the acquisition; or

d a joint venture is created that performs, on an indefinite basis, all the functions of an autonomous economic entity.

Section 16(2) of the Competition Act provides that ‘control’ shall be regarded as existing ‘if, by reason of securities, contracts or any other means, or any combination of securities, contracts or other means, decisive influence is capable of being exercised with regard to the activities of the undertaking’. Section 16(3) of the Competition Act provides that ‘control is acquired by an individual or undertaking if he, she or it: (a) becomes the holder of the rights or contracts, or entitled to use the other means; or (b) although not becoming such a holder or entitled to use those other means, acquires the power to exercise the rights derived therefrom’. Section 16(5) provides that ‘in determining whether influence of the kind referred to in subsection (2) is capable of being exercised, regard shall be had to all the circumstances of the matter and not solely to the legal effect of any instrument, deed, transfer, assignment or other act done or made’.

In interpreting concepts such as ‘mergers and acquisition’, ‘control’ and ‘decisive influence’ in the Competition Act, the Competition Authority may be influenced by the practice and decisions of the European Commission, including relevant parts of the Commission’s Consolidated Jurisdictional Notice under Council Regulation (EC) No. 139/2004 on the control of concentrations between undertakings.

Section 18(1)(a) of the Competition Act provides that a merger or acquisition is notifiable when, in the most recent financial year:a the worldwide turnover of at least two of the undertakings involved in the

transaction is not less than €40 million;b two or more of the undertakings involved in the transaction carry on business in

any part of the island of Ireland (i.e., Ireland and Northern Ireland); c any one of the undertakings involved has turnover in the Ireland of not less than

€40 million; and

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d certain mergers involving ‘media business’3 must be notified regardless of the size of the undertakings involved.

II YEAR IN REVIEW

The number of merger filings to the Competition Authority rose from 33 in 2012 to 37 filings in 2013. By comparison with previous years, there were 40 filings in 2011, 46 in 2010, 27 in 2009, 38 in 2008, 72 in 2007 and 98 in the ‘Celtic tiger’ peak period of 2006.

Industry sectors most likely to be subject to merger control review by the Competition Authority are mergers involving funds or financial services. This reflects the facts that the Irish merger control system is mandatory, and the only relevant factor is the turnover of the undertakings involved and not substantive overlap, such that the high proportion of such mergers is more a factor of the number of financial institutions carrying on business in Ireland and their high turnover, rather than the approach of the Competition Authority to market definition or to any other substantive concern. Within this industry sector, private equity buyers featured strongly in 2013, with 10 out of the 37 mergers notified (27 per cent) involving such entities, and a further six mergers involving other funds or financial services.

Other industry sectors that featured prominently in recent years include the pharmaceutical sector and the food and drink sector. The latter sector was the subject of six merger control determinations during 2013, and has also produced the only merger control determination that has been the subject of an appeal to date – in August 2008, the Competition Authority prohibited the proposed acquisition by Kerry Group plc of the consumer foods division of the former Dairygold Co-operative (Breeo Foods Limited and Breeo Brands Limited M/08/009). The Competition Authority’s prohibition decision was overturned on appeal by Kerry Group to the High Court, based in part on the Court’s critique of the Competition Authority’s approach to market definition, which had focused on very narrow segments within certain food sectors such as natural and processed cheese. During 2010, the Competition Authority made an application for a priority hearing of its appeal, in turn, to the Supreme Court. However, this application was not granted. At the time of writing, the Supreme Court case is still awaiting a hearing date.

Five of the mergers notified in 2013 were media mergers, compared with three in 2012. Four media mergers in 2013 were cleared following a Phase I review while one, TCH/Sappho (M/13/033), was cleared after 45 days as the parties submitted proposals to the Competition Authority.

No Phase II investigations were initiated by the Competition Authority during 2011 or 2012, but there were two Phase II investigations in the first quarter of 2013 arising from two notifications made in December 2012, namely, Uniphar/CMR (M/12/027)

3 A media business means a business of the publication of newspapers or periodicals consisting substantially of news and comment on current affairs; a business of providing a broadcasting service; or a business of providing a broadcasting services platform.

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and KP Snacks/Top Snacks (M/12/031). A third notification, Glanbia/Wexford Creamery (M/13/036), notified in December 2013, moved to a Phase II investigation in March 2014 and was later cleared on 30 April 2014.

The Competition Authority has the power to extend the one-month statutory timescale for a Phase I investigation by issuing a requirement for further information that ‘stops the clock’. During 2013, this tool was employed by the Competition Authority on 10 occasions in the context of five merger cases: Uniphar/CMR (M/12/027), C&C/Gleeson (M/12/033), Top Snacks/KP Snacks (M/12/031), BlackRock/CreditSuisse (M/13/001)and BT/ESPN (M/13/003). In the first quarter of 2014, a request for information was issued to the parties in Glanbia/Wexford Creamery (M/13/036). During 2013, the longest period between notification and clearance without moving to Phase II resulting from the issue of a requirement for further information was 90 days: BlackRock/CreditSuisse (M/13/001). To put this timescale in context, the average duration of a Phase II investigation by the Competition Authority in the period 2003–2011 was 113 days.

It is noteworthy that the merger with the potential to have the greatest impact on Ireland in 2013, Hutchison 3G UK/Telefonica Ireland (M.6992), was notified to the European Commission (Commission) in October 2013 with no request for a referral back of jurisdiction to Ireland under Article 9 of the EUMR. Only one other Irish merger was notified to the Commission in 2013, Canada Life/Irish Life (M.6883), and was cleared at Phase I.

In December 2013, the Competition Authority published revised Guidelines for Merger Analysis following a consultation process. The Guidelines confirm that the Competition Authority will utilise dynamic concepts such as closeness of competition and maverick behaviour when assessing the effects of the merger on market structure, as favoured by the Commission. Less-in-vogue analytical tools such as the Herfindahl-Hirschman Index will predominantly be used as a screening device for deciding whether the Competition Authority should intensify its analysis of the competitive impact of a merger.

Finally, during the financial crisis, certain emergency legislation was in force that waived the mandatory requirement to notify the Competition Authority of mergers or acquisitions relating to credit institutions. Pursuant to Section 7 of the Credit Institutions Act 2008, a special merger review regime applied in circumstances where the merger involved a credit institution and the Minister for Finance was of the opinion that the merger was necessary to maintain the stability of the financial system in the state. This emergency legislation was abolished on 1 August 2013 by Section 92 of the Central Bank (Supervision and Enforcement) Act 2013. However, a further provision in the Irish Bank Resolution Company Act 2013 provides that a sale by the special liquidator of assets or liabilities of Irish Bank Resolution Corporation (IBRC) may take effect without consent or notification relating to such transfer. The precise application of this provision is unclear but suggests that mandatory notification to the Competition Authority of a sale of IBRC assets or liabilities may not be required.

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III THE MERGER CONTROL REGIME

Mergers coming within the scope of the Competition Act must be notified within one month of the conclusion of a binding agreement or the making of a public bid. At present, merging parties cannot notify until they have concluded an agreement or made a public bid. However, the Bill provides that where either one of the parties has publicly announced an intention to make a public bid, or the parties can demonstrate a good faith intention to conclude an agreement, they will be able to notify the CCPC.

The Competition Act provides for a two-phase examination process for mergers. In Phase I, the Competition Authority has an initial period of one month in which to decide whether to allow the merger to be put into effect on the grounds that it would not substantially lessen competition, or to carry out a more detailed investigation. Most Phase I cases take close to the full one-month period, although the Competition Authority is prepared to consider requests for an accelerated investigation period in exceptional cases, including where firms are in financial difficulty. If the Competition Authority makes a formal request for information (RFI), the time frame is suspended, and the clock starts de novo on receipt by the Competition Authority of the information requested. As explained above, such RFIs have been issued quite frequently. Failure to comply with an RFI within the time period specified by the Competition Authority is a criminal offence. The one-month period may be extended to 45 days where the parties and the Competition Authority negotiate undertakings or commitments to secure ‘measures which would ameliorate the effects of the merger’. Under the Bill, the time periods will be extended to allow the CCPC more time to carry out its review.

If, at the end of Phase I, the Competition Authority is unable to form the view that the proposed merger will not result in a substantial lessening of competition, a Phase II investigation is initiated. In such cases, the Competition Authority has an additional three months (i.e., a total of four months from notification or receipt of response to a formal information request) within which to further investigate the merger and decide whether it should be cleared, cleared subject to conditions or blocked.

A Phase II investigation, by its nature, involves a more detailed examination by the Competition Authority of the merger. Notifying parties (and third parties) are given an initial period of 21 days to make additional submissions to the Competition Authority. The Revised Merger Procedures provide that the Competition Authority may change this time limit by notice on its website in individual cases, if the circumstances so require. Parties are also likely to receive detailed information requests from the Competition Authority (formal information requests have no effect on timing in Phase II), and may be requested to attend meetings with the Competition Authority to allow it to gather additional information by asking questions directly to the parties. Depending on the case and the industry concerned, the Competition Authority may also request (or the parties may wish to offer) a site visit.

If, after eight weeks from the opening of the Phase II investigation, the Competition Authority is satisfied on the basis of all submissions and information it has received that the result of the merger will not be to substantially lessen competition, it may, at that stage, issue a clearance decision or a clearance subject to conditions. Most Phase II clearance decisions occur at this stage.

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Otherwise, the Competition Authority (within an eight-week period or shortly thereafter) furnishes a written assessment to the notifying parties setting out its competition concerns. The written assessment outlines the initial conclusions of the Competition Authority on the relevant product and geographic markets, its competitive assessment of those markets and the key factors that it believes may give rise to a substantial lessening of competition. It also summarises the sources and evidence relied on by the Competition Authority in forming its initial views, including information provided by the parties, market enquiries and third party submissions.

At the same time, the notifying parties are given access to the Competition Authority’s file of documents in accordance with the criteria set out in its publication regarding the Procedures for Access to the File in Merger Cases. The Competition Authority may withhold access to or delete information from certain documents either to protect confidentiality (i.e., to protect the identity of a third party or confidential business information) or because the document is stated to be an ‘internal document of the Competition Authority’. An ‘internal document’ is one related to discussions or communications within the Competition Authority itself (e.g., between the staff and the members), between the Competition Authority and other government departments or bodies, or between the Competition Authority and other competition authorities (e.g., the European Commission or another national authority).

The notifying parties must respond to the Competition Authority’s written assessment within three weeks of receipt if they wish to contest the issues raised by the Competition Authority. As soon as possible after furnishing the assessment, and at the latest 10 weeks after the determination to open the Phase II investigation, the notifying parties may request the opportunity to make an oral submission.

The Revised Merger Procedures envisage that all-party hearings will no longer take place, but notifying parties and interested third parties may be entitled to make oral submissions in Phase II.

Under the Competition Act, there is a parallel system for voluntary merger review as a consequence of the residual application to mergers of Sections 4 and 5 of the Act, which prohibit anti-competitive agreements and abuse of dominance respectively (equivalent at the national level to Articles 101 and 102 of the Treaty on the Functioning of the European Union). Where a transaction does not meet the relevant turnover thresholds (set out above), Sections 4 and 5 could still potentially apply. However, if a merger is notified to the Competition Authority and cleared by it, it is immune from a subsequent challenge by the Competition Authority or any third party under Sections 4 and 5. Thus, the Competition Act provides for a voluntary merger notification system for mergers that do not meet the thresholds but that may raise competition issues. Once filed, voluntary notifications are dealt with in the same manner as mandatory notifications. A recent example of a voluntary notification to the Competition Authority occurred in 2011 in Glanbia/Dawn Dairies and Golden Vale Dairies (M/11/004), which was cleared following an extended Phase I investigation.

It is important to note that the Competition Authority can initiate its own investigation of non-mandatorily notifiable mergers (ie, below threshold). Two recent examples of below-threshold mergers investigated by the Competition Authority occurred in Eason/Argosy (October 2012) and Corrib Oil (September 2013). In Eason/Argosy, the merger would have reduced the number of wholesalers of new books in

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Ireland from two to one and was not voluntarily notified. Following an investigation, the Competition Authority decided to commence proceedings against the parties. The parties subsequently withdrew the merger. In Corrib Oil, following a complaint, the Competition Authority became aware that Corrib Oil had agreed to purchase Bord na Mona’s oil distribution business, Suttons Oil. The Competition Authority investigated the likely competitive impact of the sale but came to the view that it did not intend to challenge completion of the transaction. However, it reserved the right to investigate at a future date given that the sale was not formally notified to it. Both cases demonstrate the need for parties to conduct an early and detailed analysis of non-notifiable transactions that present potential competition issues, and to evaluate the appropriate strategy for interaction with the Competition Authority.

At present, a number of additional procedures apply in respect of media mergers. Under the current regime, if the Competition Authority clears a media merger at the end of Phase I, the Minister for Jobs may, within 10 days and under Section 22 of the Competition Act, direct the Competition Authority to carry out a Phase II investigation. If, on completion of a Phase II investigation the Competition Authority clears a media merger (with or without conditions), the Minister for Jobs may, within 30 days and having regard to the relevant criteria as defined in Section 23(10), order that the media merger be put into effect (with or without conditions) or may not be put into effect. Such order of the Minister for Jobs is then placed before each house of the Parliament and, if a resolution annulling the order is passed by either House within 21 days, the order is annulled. If the order is annulled, the Competition Authority’s Phase II determination has effect. As discussed in Section V, infra, if enacted, the media merger regime will be significantly altered by the Bill.

Parties to a merger may appeal a decision of the Competition Authority prohibiting a merger or imposing conditions to the High Court on a point of fact or law within one month of the Competition Authority’s determination. The High Court can annul, confirm or confirm with modifications the Competition Authority’s determination.

A further appeal on a point of law only may be made to the Supreme Court. The Competition Act provides no right of appeal against a decision to clear a merger, and third parties are not given a right of appeal under the Act, although a judicial review may be sought of the Competition Authority’s determination. As mentioned above, in September 2008, the Kerry Group successfully appealed the decision of the Competition Authority to block its acquisition of Breeo before the High Court. While the transaction subsequently went ahead, the Competition Authority has initiated an appeal of the High Court decision to the Supreme Court. At the time of writing, the hearing of the appeal is pending.

IV OTHER STRATEGIC CONSIDERATIONS

The Competition Act enables the Competition Authority to enter into arrangements with the competition bodies in other jurisdictions in relation to the exercise of its merger control function. One of the questions on the standard notification form requires the parties to identify the other jurisdictions where the transaction has been or will be filed. In certain circumstances, the Competition Authority seeks the consent of the notifying

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parties (via waivers) to enable it to discuss the case with competition officials in other jurisdictions where a notification is made and share information with them.

In 2013, the Competition Authority amended its communication policy in relation to publicising the fact of implementation of a transaction prior to issuing a clearance decision (i.e., ‘gun jumping’). Following publication of Top Snacks/KP Snacks (M/12/031), it stated that in such cases it will normally issue a press release announcing the fact that the merger is void without waiting for the conclusion of the merger investigation.

The Competition Authority is very influenced by the work of the International Competition Network, of which it is an active member, and also of the EU, UK and US competition authorities. It also participates in the Advisory Committee on concentrations that must be considered by the European Commission before decisions are made under the EU Merger Regulation.

While Ireland exited the EU–IMF programme of financial support on 15 December 2013, an ongoing commitment to increased competition enforcement appears to be in place, as evidenced by the publication of the Bill and the enactment of the Competition Act 2012, which introduced increased fines for certain non-merger related competition law offences. Notwithstanding the financial difficulties of many firms, there are no exclusions or exemptions to the application of the merger control rules in Ireland outside of the specific statutory exclusions introduced for certain financial institutions discussed above.

Three determinations published by the Competition Authority during 2013 make reference to the target company being in financial difficulty: Promontoria/Greenstar (M/13/015), Kepak/McCarren (M/13/026) and Sappho/TCH (M/13/033). However, ‘failing firm’ arguments were not addressed in these cases. In previous years, cases involving firms in difficulty have not led to any new failing firm analysis, but rather have involved the Competition Authority expediting its normal review process from one month to shorter periods, including, on one occasion, to 10 working days, to deal with the timing realities where firms are in liquidation or receivership.

The Competition Authority treats hostile transactions, such as a hostile takeover bid, as imposing an obligation to notify on the offerer or potential purchaser only, thus enabling such merger reviews to be expedited. This occurred in 2013 in relation to the Royalty Pharma/Elan transaction, where only Royalty Pharma was considered as the notifying party.

V OUTLOOK AND CONCLUSIONS

The biggest development likely to occur in 2014 in relation to the current merger control regime will arise from a number of important changes to the Competition Act if the Bill is enacted in its current form. The 10 most significant changes under the new Bill are set out below.

First, the Bill provides that where either one of the parties has publicly announced an intention to make a public bid, or the parties can demonstrate a good faith intention to conclude an agreement, notification can be made to the newly formed CCPC.

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Second, the CCPC’s decision-making deadlines are significantly extended. In general, the Bill provides for a migration from a ‘calendar month’ to ‘working day’ review timeline. For example, instead of a Phase I deadline occurring within one calendar month of filing, the CCPC will have 30 working days to reach a decision. A similar change to Phase II timing is introduced (i.e., a deadline of 120 working days from filing). Additionally, the Bill also provides for the introduction of a new ‘stop the clock’ provision for formal information requests in Phase II equivalent to that under Phase I.

Third, the Bill imposes a stricter information burden on notifying parties as a merger filing will be invalid and a related merger determination void where the new CCPC is of the opinion that ‘full information’ has not been provided by the merging parties. This increases risk for merging parties, as the current test for invalidity or voidness relates to information that is ‘false or misleading in a material respect’.

Fourth, the Bill introduces new merger notification thresholds. These will remove the worldwide turnover threshold of €40 million and introduce a two limb test. Parties will notify where the aggregate turnover in the state of the parties is not less than €50 million, and the turnover in the state of both parties is not less than €3 million.

Fifth, the Bill radically amends the current media merger regime. The Bill introduces a revised jurisdictional test for media mergers –to be notifiable, either two parties must carry on a media business in the state, or one party must carry on a media business in the state and one party must carry on a media business elsewhere. A statutory definition of ‘carries on a media business in the state’ is incorporated into the Bill, and provides that it must have a physical presence in the state and have made sales to customers located in the state, or have made sales in the state of at least €2 million in the most recent financial year.

Fifth, the Bill will expand the definition of media business itself to include online-only news sources, such that the regime now covers any acquisition of a website or blog ‘consisting substantially of news and comment on current affairs’ with a physical presence and de minimis turnover. It will be interesting to monitor the scope of transactions that will be affected by this expansion in practice.

Sixth, the Bill will transfer responsibility for the review of the media plurality issues from the Minister for Jobs (who is responsible for competition policy) to the Minister for Communications.

Seventh, the Bill will introduce a requirement to make two notifications – one notification to the newly formed CCPC and a separate notification to the Minister for Communications.

Eighth, the Bill clarifies the substantive test for identifying a media plurality concern. While the current legislation includes a range of ‘relevant criteria’, the Bill identifies a specific substantive test that the Minister for Communication’s decision-making can be examined against, namely ‘whether the result of the media merger will not be contrary to the public interest in protecting the plurality of the media in the state’.

Ninth, the Bill introduces a new role for the Broadcasting Authority of Ireland (BAI) in the preparation of a report on media plurality issues. The Minister for Communications must have regard to the BAI report in making his or her decision.

Tenth, the Bill introduces a new limited time frame for appeal from the Minister for Communication’s decision on media mergers, reducing the standard Irish judicial review deadline of three months to 40 working days.

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ABOUT THE AUTHORS

HELEN KELLYMathesonHelen Kelly is a partner and head of the EU, competition and regulatory group at Matheson. She has particular expertise in EU and Irish merger control work, and has experience in dealing with large-scale mergers and complex joint venture arrangements under the EU Merger Regulation as well as advising on Irish merger control issues. She has advised on a number of Phase II investigations at EU and Irish level, including Phase II unconditional and conditional clearances.

Ms Kelly is a graduate of Trinity College Dublin and the London School of Economics, and is a solicitor in Ireland and England and Wales.

Ms Kelly regularly publishes articles and speaks at leading conferences. She has frequently been recognised as one of Ireland’s leading EU competition and regulatory lawyers in international legal reviews.

DARACH CONNOLLYMathesonDarach Connolly is a solicitor in the EU, competition and regulatory group at Matheson. He specialises in advising on EU and Irish competition law, including merger control and state aid.

Mr Connolly is a graduate of University College Dublin and is a member of the Law Society of Ireland.

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MATHESON70 Sir John Rogerson’s QuayDublin 2IrelandTel: +353 1 232 2000Fax: +353 1 232 3333helen.kelly@matheson.comdarach.connolly@matheson.comwww.matheson.com