1

The Merger Control

Review

Law Business Research

Third Edition

Editor

Ilene Knable Gotts

Th

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Editio

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LawBusinessResearch

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ISBN 978-1-907606-40-3

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The Merger Control Review

THIRD eDITIon

Reproduced with permission from Law Business Research Ltd.

This article was first published in The Merger Control Review, 3rd edition(published in August 2012 – editor Ilene Knable Gotts).

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Acknowledgements

iii

Editor’s Preface ��������������������������������������������������������������������������������������������vii Ilene Knable Gotts

Chapter 1 aRGEnTina ����������������������������������������������������������������������� 1 Miguel del Pino and Santiago del Rio

Chapter 2 ausTRaLia ������������������������������������������������������������������������16 Peter Armitage, Amanda Tesvic and Ross Zaurrini

Chapter 3 ausTRia ����������������������������������������������������������������������������31 Isabella Hartung and Wolfgang Strasser

Chapter 4 BELGiuM ���������������������������������������������������������������������������41 Carmen Verdonck and Jenna Auwerx

Chapter 5 Bosnia and hERzEGovina ���������������������������������������55 Srđana Petronijević and Christoph Haid

Chapter 6 BRaziL �������������������������������������������������������������������������������65 Bruno L Peixoto

Chapter 7 BuLGaRia �������������������������������������������������������������������������75 Christoph Haid and Mariya Papazova

Chapter 8 Canada ����������������������������������������������������������������������������84 Julie A Soloway and Cassandra Brown

Chapter 9 China ������������������������������������������������������������������������������106 Susan Ning

Chapter 10 CoLoMBia����������������������������������������������������������������������114 Dario Cadena Lleras and Eduardo A Wiesner

Chapter 11 CRoaTia ��������������������������������������������������������������������������122 Christoph Haid

ConTEnTs

iv

Chapter 12 CyPRus ����������������������������������������������������������������������������130 Elias Neocleous and Ramona Livera

Chapter 13 dEnMaRK �����������������������������������������������������������������������140 Christina Heiberg-Grevy and Malene Gry-Jensen

Chapter 14 ECuadoR �����������������������������������������������������������������������147 Diego Pérez-Ordóñez and José Urízar

Chapter 15 EGyPT ������������������������������������������������������������������������������155 Firas El Samad

Chapter 16 EuRoPEan union �������������������������������������������������������163 Mario Todino, Piero Fattori and Alberto Pera

Chapter 17 finLand �������������������������������������������������������������������������178 Niko Hukkinen and Sari Rasinkangas

Chapter 18 fRanCE ���������������������������������������������������������������������������188 Hugues Calvet and Olivier Billard

Chapter 19 GERMany �����������������������������������������������������������������������204 Götz Drauz and Michael Rosenthal

Chapter 20 GREECE ���������������������������������������������������������������������������212 Alkiviades C A Psarras

Chapter 21 hunGaRy �����������������������������������������������������������������������221 Christoph Haid and Anna Turi

Chapter 22 india �������������������������������������������������������������������������������234 Rajiv K Luthra and G R Bhatia

Chapter 23 indonEsia ���������������������������������������������������������������������245 Theodoor Bakker and Luky I Walalangi

Chapter 24 iRELand �������������������������������������������������������������������������256 Lorcan Tiernan and Sinéad O’Loghlin

Chapter 25 iTaLy ��������������������������������������������������������������������������������267 Luca Toffoletti and Emilio De Giorgi

Contents

v

Chapter 26 JaPan �������������������������������������������������������������������������������279 Yusuke Nakano, Vassili Moussis and Tatsuo Yamashima

Chapter 27 KoREa �����������������������������������������������������������������������������290 Sai Ree Yun, Seuk Joon Lee, Cecil Saehoon Chung and Kyoung Yeon Kim

Chapter 28 LiThuania ���������������������������������������������������������������������297 Giedrius Kolesnikovas, Emil Radzihovsky and Beata Kozubovska

Chapter 29 MExiCo ���������������������������������������������������������������������������307 Luis Gerardo García Santos Coy, José Ruíz López and Mauricio Serralde Rodríguez

Chapter 30 nEThERLands ��������������������������������������������������������������317 Gerrit Oosterhuis and Weijer VerLoren van Themaat

Chapter 31 PaKisTan ������������������������������������������������������������������������329 Mujtaba Jamal, Fareed Yaldram and Sara Hayat

Chapter 32 PoRTuGaL ����������������������������������������������������������������������338 Gonçalo Anastácio and Alberto Saavedra

Chapter 33 RoMania ������������������������������������������������������������������������350 Carmen Peli and Carmen Korşinszki

Chapter 34 sERBia �����������������������������������������������������������������������������362 Srđana Petronijević and Christoph Haid

Chapter 35 sinGaPoRE ��������������������������������������������������������������������373 Ameera Ashraf

Chapter 36 souTh afRiCa ��������������������������������������������������������������382 Lee Mendelsohn and Amy van Buuren

Chapter 37 sPain��������������������������������������������������������������������������������395 Cani Fernández, Andrew Ward and Albert Pereda

Chapter 38 sWEdEn ��������������������������������������������������������������������������408 Fredrik Lindblom and Amir Mohseni

Chapter 39 sWiTzERLand ���������������������������������������������������������������417 Pascal G Favre and Silvio Venturi

Contents

vi

Chapter 40 TaiWan ���������������������������������������������������������������������������426 Victor I Chang, Margaret Huang and Jamie C Yang

Chapter 41 TuRKEy ���������������������������������������������������������������������������437 Gönenç Gürkaynak and K Korhan Yıldırım

Chapter 42 uKRainE �������������������������������������������������������������������������447 Christoph Haid and Pavel Grushko

Chapter 43 uniTEd KinGdoM ������������������������������������������������������452 Michael Rowe and Jordan Ellison

Chapter 44 uniTEd sTaTEs �������������������������������������������������������������463 Ilene Knable Gotts

Chapter 45 inTERnaTionaL MERGER REMEdiEs ���������������������471 John Ratliff and Frédéric Louis

Appendix 1 aBouT ThE auThoRs ������������������������������������������������485

Appendix 2 ConTRiBuTinG LaW fiRMs’ ConTaCT dETaiLs ����517

vii

Editor’s PrEfacE

Perhaps one of the most successful exports from the United states has been the adoption of mandatory pre-merger competition notification regimes in jurisdictions throughout the world. although adoption of pre-merger notification requirements was initially slow – with a 13-year gap between the enactment of the United states’ Hart-scott-rodino act in 1976 and the adoption of the European community’s merger regulation in 1989 – such laws were implemented at a rapid pace in the 1990s, and many more were adopted and amended during the past decade. china and india have just implemented comprehensive pre-merger review laws, and although their entry into this forum is recent, it is likely that they will become significant constituencies for transaction parties to deal with when trying to close their transactions. indonesia also finally issued the government regulation that was needed to implement the merger control provisions of its antimonopoly Law. Many of the jurisdictions that were ‘early adopters’ have either refined their processes and procedures in substantial ways or have proposals pending to do so, typically to conform their regime with the pre-merger regimes of other jurisdictions (e.g., Brazil, canada and the UK). This book provides an overview of the process in each of the jurisdictions as well as a discussion of recent decisions, strategic considerations and likely upcoming developments in each of these. 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.

as shown in further detail in the chapters, 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 outliers 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 provides for a de minimis exception for transactions occurring in markets with sales of less than €15 million. There are a few jurisdictions, however, that still use ‘market share’ indicia (e.g., Bosnia

Editor’s Preface

viii

and Herzegovina, colombia, Lithuania, Portugal, spain, Ukraine and the UK). Most jurisdictions require that both parties have some turnover or nexus to their jurisdiction. But, 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 on 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.

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 jurisdictions can impose a significant fine for failure to notify before closing even where the transaction raises no competition concerns (e.g., austria, the Netherlands, romania, spain and turkey). some jurisdictions impose strict time frames by which the parties must file their notification. for instance, cyprus requires filing within one week of signing of the relevant documents and agreements; Brazil requires that the notification be made within 15 business days of execution of the agreements; and Hungary 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 and serbia) for mandatory pre-merger review by federal antitrust authorities.

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 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 tribunal merger hearings 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 against a clearance.

Editor’s Preface

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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 for challenging a notified transaction.

as discussed below, it is becoming the norm in large cross-border transactions raising competition concerns for the Us, EU and canadian authorities to work closely with one another 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 that in Brazil, and Brazil’s cadE has worked with chile and with Portugal. competition authorities in Bosnia and Herzegovina, Bulgaria, croatia, Macedonia, serbia, Montenegro and slovenia similarly maintain close ties and cooperate on transactions. 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, and the Us has also announced plans to enter into a cooperation agreement with india.

Minority holdings and concern over ‘creeping acquisitions’, in which an industry may consolidate before the agencies become fully aware, seem to be gaining increased attention in many jurisdictions, such as australia. some jurisdictions will consider as reviewable acquisitions in which only 10 per cent interest or less is being acquired (e.g., serbia for certain financial and 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). Jurisdictions will often require some measure of negative (e.g., veto) control rights, to the extent that it may give rise to de jure or de facto control (e.g., turkey).

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 merger worldwide even though less than 10 per cent of each of the undertakings was attributable to Germany. Thus, it is critical from the outset for counsel to develop a comprehensive plan to determine how to navigate the jurisdictions requiring notification, even if the companies operate primarily outside some of the jurisdictions.

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, 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

Editor’s Preface

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environment, obtaining the approval of jurisdictions such as china and Brazil can be as important as the approval of the Us or EU. This book should provide a useful starting point in this important aspect of any cross-border transaction being contemplated in the current enforcement environment.

Ilene Knable GottsWachtell, Lipton, rosen & KatzNew YorkJuly 2012

256

Chapter 24

Ireland

Lorcan Tiernan and Sinéad O’Loghlin1

I INTRODUCTION

The Competition Act 2002 as amended (‘the 2002 Act’) sets out the statutory framework for merger control in Ireland. The Competition Authority (‘the Authority’) is the state body responsible, under Part 3 of the the 2002 Act, for the enforcement of merger control law in Ireland.

The Authority’s merger control function under the 2002 Act is to determine the competitive impact that a merger may have on competition in Ireland. The Authority will assess a merger to determine whether it is likely to ‘substantially lessen competition’ in markets for goods or services in the state.

The Authority has sole responsibility for non-media mergers and shared responsibility with the Minister for Jobs, Enterprise and Innovation in relation to media mergers. The Minister for Finance may intervene in a merger or acquisition involving a credit institution where the transaction is necessary to maintain the stability of the financial system in the state.

Mergers may fall within the scope of either the European merger control regime, or the Irish merger control regime. If the annual combined turnover of the undertakings concerned in a merger exceeds certain thresholds, then the transaction falls within the scope of the European Commission’s jurisdiction under the EC Merger Regulation (‘the ECMR’).2 If the merger falls below the turnover thresholds in the ECMR then national competition authorities may apply their respective legislation.

1 Lorcan Tiernan is a partner and Sinéad O’Loghlin is an associate solicitor in the Corporate and M&A Department of Dillon Eustace.

2 Council Regulation (EC) No. 139/2004.

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The obligation to notify under Part 3 of the 2002 Act applies to a proposed ‘merger or acquisition’ where the undertakings involved satisfy thresholds set out in the 2002 Act. Under Section 16(1) of the 2002 Act, a ‘merger or acquisition’ occurs if:a two or more undertakings, which were previously independent of each other

merge; orb one or more individuals or undertakings that control one or more undertakings

acquire direct or indirect control of the whole or part of one or more other undertakings (including the creation of a joint venture performing indefinitely all the functions of an autonomous economic entity); or

c the result of an acquisition by one undertaking of the assets (or a substantial part of the assets), including goodwill, of another undertaking, is to put it in a position to replace or substantially replace that other undertaking in the business or, as appropriate, the part concerned of the business it carried on before the acquisition.

The term ‘control’ is defined in Section 16(2) of the 2002 Act as the ability to exercise ‘decisive influence’ over the activities of an undertaking, whether such influence is conferred by the acquisition of securities or contract, or a combination thereof, or by any other means. In practical terms, this will be demonstrated by ownership of assets, or by rights or contracts that enable decisive influence to be exercised over the voting or decisions of the organs of an undertaking.

In respect of non-media mergers, the financial thresholds that trigger the mandatory obligation to notify are found in Section 18(1)(a) of the 2002 Act. Section 18(1)(a) provides that a merger or acquisition is notifiable where, in the most recent financial year:a the worldwide turnover of at least two of the undertakings involved in the

transaction is no less than €40 million;b two or more of the undertakings involved in the transaction carry out business in

any part of the island of Ireland;3 andc any one of the undertakings involved has turnover in the Republic of Ireland of

no less than €40 million.

Sections 18(1)(b) and 18(5) of the 2002 Act provide that the Minister for Jobs, Enterprise and Innovation may specify certain classes of mergers and acquisitions that must be notified to the Authority regardless of the thresholds set out in Section 18(1)(a) of the 2002 Act. The Minister has done so in relation to media mergers, which are defined in Section 23(10) of the 2002 Act as ‘a merger or acquisition in which one or more of the undertakings involved carries on a media business in the state’. In consequence, media mergers are treated separately under the 2002 Act.

The concept of ‘undertakings involved’ in the transaction, from a competition law perspective, will be those undertakings that will influence the competitive behaviour of the entity once the transaction has been completed. The term therefore, generally,

3 Ireland and Northern Ireland.

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258

covers the buyer and the target, and specifically does not include the vendor. This is because after the transaction has been completed, the vendor will no longer control the competitive behaviour of the business sold.

The term ‘carries on business’ is set out in an Authority Notice.4 This states that the Authority understands that term as including undertakings that either:a have a physical presence in the island of Ireland and make sales or supply services

to customers in the island of Ireland; orb without having a physical presence in the island of Ireland, have made sales into

the island of Ireland of at least €2 million in the most recent financial year.

While mergers or acquisitions that do not meet the jurisdictional thresholds set out above do not have to be notified, provision is made for voluntary notification to the Authority under Section 18(3) of the 2002 Act. Clearance by the Authority protects the parties involved from a subsequent challenge to the merger by the Authority or third parties under Sections 4 and 5 of the Act. Mergers that are voluntarily notified are subject to the same procedural rules as mergers to which the mandatory notification obligation applies.

The Authority’s guidelines for merger analysis5 set out a general rule for voluntary notification as follows:a consider notifying the Authority if the post-merger market share is above 40 per

cent on any reasonable definition of the relevant market;b do not notify if post-merger the market is not very concentrated; andc for in-between cases, cases where the assessment relies critically on market

definition or cases where a foreign entrant is involved, informal pre-notification discussions with the Authority are encouraged.

II YEAR IN REVIEW

Following a strong recovery in 2010, merger and acquisition activity in 2011 commenced in a similar vein. For the second year in a row, the Irish mergers and acquisitions market remained ahead of the lows experienced in 2009. The total number of deals recorded in 2011 was 187 with a total reported deal value of €7.38 billion. Overall in terms of volumes, 2011 saw a 5.1 per cent reduction in the number of deals from the 197 deals recorded in 2010.

Of the 187 deals in 2011, some 40 of these were notified to the Authority, a small decrease from the 46 filings made in 2010. However, levels still remain well above the 2009 lows. Of the 40 deals notified to the Authority, six involved extended review periods beyond the statutory one-month Phase I period. Interestingly, for the first time since the current statutory framework was introduced, no Phase II investigations were opened by the Authority in 2011.

4 Notification N/02/003.5 Notification N/02/004.

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For the first time, legislation introduced to remove banking mergers outside the remit of the Authority was invoked. In June 2011, the Minister for Finance certified that the acquisition by Allied Irish Bank of EBS Limited was necessary to prevent a serious threat to the stability of the Irish financial system. The deal was approved by the Minister for Finance on 27 June 2011 with no reference to the Authority.

Notable deals during the year included Alkermes’s €669 million acquisition of Elan Drug Technologies, Greencore’s €128.5 million acquisition of UK group Uniq and Kerry Groups’ €171.8 million acquisition of Cargill Flavour Systems. The trend of asset disposals by Bank of Ireland and Allied Irish Bank continued throughout 2011. This included the Irish government’s €2.3 billion investment in Irish Life and Permanent, the €1.1 billion investment by a group of institutional investors and fund managers, led by Fairfax Financial Holdings for a stake in Bank of Ireland and the €200 million disposal of Quinn Direct Insurance to Liberty Mutual and the Irish Bank Resolution Corporation Limited.

III THE MERGER CONTROL REGIME

Mergers coming within the scope of the 2002 Act must be notified in writing to the Authority within one month of the conclusion of a binding agreement or the making of a public bid. Failure to notify is a criminal offence pursuant to Section 18(9) of the 2002 Act, which may result in liability to fines for any ‘person in control’ of the undertaking who has failed to notify or who has failed to supply information required by the Authority in the specified time frame. A notifiable merger will be void if put into effect without notification or prior to a final decision of the Authority or prior to the lapse of the time period within which the Authority has to make its determination.

i Waiting periods and time frames

Ireland’s merger notification regime is mandatory. Mergers coming within the remit of the 2002 Act must be notified within one month of the conclusion of a binding agreement.

The 2002 Act provides for a two-phase examination process for the assessment of mergers.

In Phase I, the 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. The one-month period runs from the date of notification. If the Authority makes a formal request for information the time frame is suspended and the clock restarts on receipt by the Authority of the information requested.

During Phase I, the Authority can at any time discuss measures to lessen the effect of the merger on competition with the undertakings involved or third parties. In these discussions, any of the undertakings involved can submit alterations to the manner in which the merger will take effect, or propose alternative solutions. These proposals may form part of the Authority’s first-stage decision to approve the merger, in which case they are binding on the parties.

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The relevant one-month review period may be extended to 45 days where the parties and the Authority negotiate undertakings or commitments to secure measures which would ameliorate the effects of the merger.

At the end of Phase I, the Authority must inform the notifying undertakings and any other undertakings making submissions, that either:a the merger or acquisition can be put into effect because it will not substantially

lessen competition in Ireland; orb that it has decided to carry out a full Phase II investigation to assess the effects of

the proposed merger on competition.

If the Authority fails to do either within the time allowed, the merger or acquisition will be deemed cleared and can be put into effect.

If at the end of the Phase I investigation, the Authority is unable to form the view that the proposed merger will not result in a substantial lessening of competition, then a Phase II investigation is initiated.

A Phase II investigation involves a more detailed examination by the Authority.Phase II is an additional three-month period, in which the Authority is able to

conduct a more detailed examination of the transaction. This in effect means that the Authority has a total period of four months from the date of receipt of a notification (or receipt of further information requested by the Authority) to issue a determination on the merger.

The following procedure applies in a Phase II investigation:6

a The Authority informs the notifying undertakings and those who have made submissions that it intends to carry out a full Phase II investigation.

b The Authority issues a press release on the date of its determination to initiate the investigation and invites submissions from third parties within a specified time frame (generally 21 days, although this may be changed by notice on its website).

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

d If the Authority is not satisfied that the merger will not substantially lessen competition, it sends an assessment to the notifying undertakings, within this eight-week period. This assessment will outline the nature of the Authority’s concerns regarding the effect of the proposed transaction on competition.

e The undertakings involved may reply to the Authority’s assessment in writing within three weeks of its receipt. After the issuing of the assessment, the undertakings involved can access the file in accordance with the Authority’s criteria under its Procedures for Access to the File in Merger Cases. In essence this means that the notifying parties have a right to review the Authority’s file on the investigation.

6 The Competition Authority Procedural Guidelines ‘Revised Procedures for the Review of M&A’.

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f Within a week of providing the assessment, any party to the merger that wishes to make oral submissions must notify the Authority in writing that it intends to do so and the Authority then fixes a date to hear the submissions. Third parties who have furnished submissions may also be invited to make oral submissions at the sole discretion of the authority.

g The Authority may enter into discussions with undertakings involved with regard to the manner in which the merger may be put into effect and the undertakings involved may make proposals of measures that would ameliorate negative effects of the merger on competition. This must occur no later than three weeks after the assessment has been issued.

On completion of the Phase II investigation, the Authority is obliged to make one of the following determinations:a that the merger may be put into effect;b that the merger may be put into effect subject to certain conditions; orc that the merger cannot be put into effect.

The Authority must inform the notifying undertakings within four months of the date of notification or, if a formal request for information is made, from the date of receipt of a complete response. If the Authority fails to communicate a final determination to the parties within that period, the merger or acquisition will be deemed cleared and can be put into effect.

Additional procedures apply in respect of media mergers. If the Authority clears a media merger at the end of Phase I, the Minister for Jobs, Enterprise and Innovation may, within 10 days pursuant to Section 22 of the 2002 Act, direct the Authority to carry out a Phase II investigation. If, on completion of a Phase II investigation, the Authority clears a media merger, the Minister for Jobs, Enterprise and Innovation may, within 30 days (having regard to Section 23 of the 2002 Act), order that the media merger may or may not be put into effect. The Minister’s order must then be placed before each House of the Irish parliament, and if a resolution annulling the order is passed by either House of the Irish parliament within 21 days, the order is annulled. If the order is annulled, the Authority’s Phase II decision has effect.

ii Parties’ ability to accelerate the review procedure

There is no particular procedure available to accelerate the review process, although the Authority is amenable to requests for early clearance from the parties in certain circumstances. As noted previously, the Authority has shown a willingness to accelerate the review process in ‘rescue merger’ cases and in such cases, it may use its discretion to reduce the number of days for third-party submissions.

iii Third-party access to the file and rights to challenge mergers

The notifying parties are given access to the 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. This provides that access to the file in the context of merger review will remain limited to those undertakings to whom the assessment is addressed.

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Third parties do, however, have a right to comment on proposed mergers. Section 20(1)(a) of the 2002 Act provides that within seven days of receiving a notification, the Authority must publish a notice of receipt inviting third-party comment. The Revised Merger Procedures state that third parties who wish to make submissions regarding a merger must do so within 10 days of publication of the notice. The Authority may, however, change this time limit by notice on its website in individual cases, if the circumstances so require.

Section 20(1)(b) provides that the Authority may enter into discussions, at any stage of its investigation, with the undertakings involved or third parties, with a view to identifying measures that would ameliorate any adverse effects of a merger or acquisition on competition. Third parties can make submissions and may meet with case officers at any time in Phase I or Phase II if they can demonstrate a legitimate interest in the merger. Once the Authority has made its final determination, third parties have no right to appeal such to the courts under the 2002 Act.

iv Resolution of the Authority’s competition concerns, appeals and judicial review

The Authority can decide that a merger may be put into effect subject to specified conditions. The Authority may enter into discussions with the undertakings involved during both Phase I and Phase II investigations with a view to ameliorating any anti-competitive effects that may arise upon implementation of the merger. An undertaking involved may also submit proposals to the Authority in relation to the merger with a view to those proposals becoming binding on it in the event of the Authority adopting them as part of its determination. The Authority may also impose conditions on its determination after a Phase II investigation.

Section 26 of the 2002 Act provides that any person who contravenes a provision of a commitment or determination by the Authority or order of the Minister will be guilty of a criminal offence attracting both fines and imprisonment.

v Appeals and judicial review

The 2002 Act provides that any of the undertakings involved in a notified merger may appeal to the High Court against the decision of the Authority on a point of fact or law. This appeal must be made within one month of the date the undertaking is informed of the decision by the Authority. The High Court can annul, confirm or confirm with modifications the determination made by the Authority. A further appeal to the Supreme Court may only be made on a question of law. Third parties are not entitled to an appeal to the courts although they may be able to seek judicial review of the Authority’s decision.

In 2009, an appeal against a decision of the Authority to block an acquisition was upheld by the High Court. In the case in question, the Kerry Group had initiated an appeal against the decision of the Authority to block the proposed acquisition by Kerry Group plc of Breeo Foods Ltd and Breeo Brands Ltd. The Authority had concluded that the transaction would have resulted in a substantial lessening of competition, however, the High Court overturned this decision on the basis that the Authority’s prohibition was undermined by material error.

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The Authority initiated an appeal of the High Court decision to the Supreme Court in 2010 and made an application for priority hearing in 2010. This application was rejected and at the time of writing the appeal is still pending.

vi Concurrent review of mergers

While the Authority is the primary body responsible for monitoring and regulating merger control in this jurisdiction, there are two ‘special’ types of merger that are subject to special rules.

The first are media mergers. Under the Act, the Minister for Jobs, Enterprise and Innovation may specify a class of merger that must be notified to the Authority, irrespective of the turnover of the undertakings involved. Media mergers have been specified by the Minister as a class of merger that are compulsorily notifiable.

The definition of media merger was revised in 2007 by way of statutory instrument.7 These mergers are now defined as:a mergers in which at least two of the undertakings involved carry on a media

business in the Republic of Ireland; andb mergers in which one or more of the undertakings involved carries on a media

business in the Republic of Ireland and one or more of the undertakings involved carries on a media business elsewhere.

A ‘media business’ means a business involved in the publication of newspapers or periodicals consisting of substantially news and comment on current affairs, a business providing a broadcasting service, or a business providing a broadcasting services platform.

Media mergers are reviewable by the Minister and when the Authority receives notification of a media merger it has an obligation within five days of receipt to notify the Minister.

As mentioned previously, where the Authority determines at Phase I that a media merger may be cleared, the Minister can, despite the Authority’s determination, direct that it carry out a Phase II investigation. If the Authority clears the transaction following a Phase II investigation, the Minister has 30 days in which to clear, clear with conditions or prohibit the merger. The Minister’s decision will be based not only on competition concerns but also on the basis of public interest criteria which are set out in Section 23(10) of the 2002 Act.

The second type of ‘special’ merger are mergers that are subject to Section 7 of the Credit Institutions (Financial Support) Act 2008 (‘the 2008 Act’). This provides for the provision of a special merger regime in circumstances where the merger involves a credit institution and the Minister for Finance is of the opinion that the merger is necessary to maintain the stability of the financial system in the state. In those circumstances, it is the Minister for Finance and not the Authority who has power to determine whether or not the merger should be approved under the merger control provisions of the Act. Such mergers are notifiable to the Minister for Finance rather than the Authority and

7 SI 122/2007.

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may not be implemented without ministerial approval. This regime will be discussed further below.

vii Suspensory effect of review on the transaction

A notifiable merger cannot come into effect prior to the express or deemed clearance of the Authority. As such, the relevant transaction cannot come into effect until the Authority has made its determination, which may take up to four months depending on the level of review to which the merger is subject.

The usual practice is for the parties to a notifiable merger to agree that the merger will not be completed until approval has been obtained from the Authority. If the merger is put into effect prior to clearance, then the transaction will be void. It would seem, however, that the transaction may not be void indefinitely.

In Radio 2000/Newstalk 106, Radio 2000 acquired operational control of the target radio station before the transaction had been approved by the Authority. The Authority concluded that the relevant section of the 2002 Act (Section 19(2)) is designed to protect the Authority’s right of review and is not intended to render a merger void indefinitely and accordingly that a transaction that has been implemented prior to clearance by the Authority remains void only until such time as the Authority issues a clearance decision.8

IV OTHER STRATEGIC CONSIDERATIONS

i Coordinating with other jurisdictions

Section 46 of the 2002 Act provides that the Authority may enter into arrangements with competition authorities in other countries for the exchange of information and the mutual provision of assistance. The Authority also cooperates and shares information with the European Commission and is a member of the European Competition Network and the International Competition Network.

The Authority is currently the co-vice chair of the EU Merger Working Group. This working group was established in 2010 by the national competition authorities of the EU in order to exchange experience and foster greater cooperation between agencies in the area of EU merger control.

ii The Authority’s response to the economic downturn

The Authority has, during the economic downturn, used its discretion to accelerate the review procedure and reduce the number of days for third-party submissions in order to expedite the assessment process in dealing with rescue mergers. In Club Travel/Budget Travel,9 the Authority cleared the notified transaction within 17 working days. The review process was expedited as Budget Travel was in liquidation.

8 Determination M/04/003 of the Competition Authority.9 Notification M/10/003.

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Following the adoption of the 2008 Act, the banking sector is now subject to special rules in respect of merger control. This emergency legislation was adopted by the Irish parliament on 2 October 2008 in the midst of Ireland’s financial crisis. It essentially allowed financial support to be provided to Irish credit institutions but also changed the competition rules normally applicable to mergers to enable mergers substantially lessening competition nonetheless to be cleared on financial stability grounds.

Under this legislation a proposed merger involving an Irish-licensed credit institution or its subsidiary may be certified by the Minister for Finance where he believes that the transaction is necessary to maintain stability in the financial sector. Certified transactions that would otherwise be notifiable to the Authority pursuant to the merger control provisions of the 2002 Act are now notifiable to the Minister for Finance and the normal procedural rules of the 2002 Act are disapplied.

On receipt of a notification of a certified transaction, the Minister for Finance must consult urgently with the Minister for Jobs, Enterprise and Innovation, the Central Bank and the Authority. The Minister is not obliged, however, to follow any views or recommendations expressed by the Authority following such consultation. The Minister for Finance must make a decision as soon as is reasonably possible to either approve the certified merger or not. The Minister may approve the transaction if he considers that it will not substantially lessen competition. Even if it will so result, the Minister for Finance may clear the merger where this is necessary in order to (1) maintain the stability of the financial system in the state, (2) avoid a serious threat to the stability of credit institutions, or (3) remedy a serious disturbance in the economy of the state.

The new provisions should be read in conjunction with certain existing provisions in Part 3 of the 2002 Act, which will continue to apply. The definition of qualifying mergers and acquisitions in the 2002 Act continues to apply, as do the provisions on the requirements for and timing of notifications. There is no statutory right of appeal against a determination by the Minister, but the possibility of seeking judicial review remains open.

iii Changes to the Competition Authority

In 2008, the Irish government announced its plans to merge the Authority and the National Consumer Authority (‘the NCA’), which is the body charged with protecting consumer interests and enforcing consumer law in Ireland. Such a ‘merger’ would bring Ireland in line with the practices in the UK and the US where the Office of Fair Trading (‘the OFT’) and the Federal Trade Commission (‘the FTC’) each include a consumer policy remit as well as being responsible for competition policy.

Legislation in this area is due to be brought before the Irish government in 2012. The proposed Consumer and Competition Bill will be based on a draft scheme which was presented to the government by the Minister for Jobs, Enterprise and Innovation. The new Consumer and Competition Authority will be charged with performing the functions of both the Competition Authority and the National Consumer Agency and as such it is likely that the ‘new’ Authority will be required to accord consumer welfare greater prominence in the assessment of mergers.

On 3 October 2011, the Minister for Jobs, Enterprise and Innovation announced the appointment of Ms Isolde Goggin as chairperson of the Authority. Ms Goggin

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will also serve as chairperson-designate of the proposed Consumer and Competition Authority.

V OUTLOOK AND CONCLUSIONS

Merger notifications in Ireland have continued to rise following a significant lull in 2009 and this trend appears likely to continue in the long term. The financial services sectors saw the most M&A activity during 2011 and this is expected to continue in 2012.

The traditionally strong areas of medical and biotechnology accounted for a total of 14 per cent of the deals in 2011 demonstrating that Ireland’s reputation for innovation in these areas continue to be attractive to investors. These sectors are expected to remain strong in 2012 and beyond as Ireland moves towards a sustainable recovery.

Following on from an announcement by the Minister for Communications in 2011, a new regulatory regime for media mergers is expected to be put in place which would see exclusive responsibility rest with the Department of Communications for the review of both broadcasting and newsprint mergers.

It is recognised that the Irish government has committed to an active competition policy in its programme for government. While enforcement and government backing of competition policy has fluctuated throughout the years, the emphasis now being put on enhancing competitiveness is broadly welcome in the wider interests of the Irish economy.

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About the Authors

LorcAn TiernAn

Dillon EustaceLorcan tiernan has been a partner of Dillon eustace since 2000 and head of the firm’s Corporate and M&A department since 2004. Lorcan has written a number of articles in international publications and in legal textbooks and has lectured to the Institute of bankers in Ireland as well as to the Law society of Ireland. Mr tiernan is a graduate of university College Dublin and the university of London. he is a member of the International bar Association and is past chairman of the IFIA’s alternative investment committee as well as a member of FeFsI’s hedge funds working group. Lorcan is currently vice chair of the AbA’s international financial products and services committee.

SinéAd o’LoghLin

Dillon Eustacesinéad o’Loghlin is an associate solicitor in the Corporate and M&A department of Dillon eustace. sinéad is a graduate of the Law school of trinity College Dublin, The honorable society of King’s Inns and the Law society of Ireland. she specialises in corporate law with particular expertise in the areas of cross-border portfolio transfers, distribution law and competition law. sinéad advises on contractual and commercial issues across a broad spectrum of industry sectors, both for domestic and international clients. her specialism in eu law adds significant value to advice provided to the firm’s financial services and corporate clients. sinéad regularly publishes articles on various commercial law topics and has lectured in the Law school of trinity College Dublin.

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diLLon euSTAce

33 sir John rogerson’s QuayDublin 2Irelandtel: +353 1 6670022Fax: +353 1 6670042lorcan.tiernan@dilloneustace.iesinead.ologhlin@dilloneustace.iewww.dilloneustace.ie