Competition Authority blocks Kingspan’s acquisition of Xtratherm

On 26 October 2006, the Competition Authority announced its decision to block Kingspan’s proposed acquisition of the Leanort Group (Xtratherm) following a four-month long investigation.  The Competition Authority believes that the transaction would have substantially lessened competition in the manufacture and provision of insulation materials in Ireland.

Leanort is a holding company for British-based companies Hytherm and Xtratherm which produce insulation materials. The Kingspan Group is based in Ireland and produces construction materials, including insulation materials. Both companies manufacture and supply insulation products in Ireland.

This is the second time that the Competition Authority has blocked a proposed merger since the entry into force of the merger control provisions of the Competition Acts 2002 and 2006 (Competition Act) in January 2003.  The other transaction to be blocked by the Competition Authority was the proposed acquisition of a subsidiary of Schlumberger by IBM in October 2004.

The Competition Authority is required under the Competition Act to publish its determination relating to this transaction on or before 25th November 2006.

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Competition Authority investigation of Topaz’ acquisition of Statoil

The Competition Authority did not meet the one month deadline in which it is obliged, under the Competition Act, to decide whether or not to clear a merger or whether to instigate a detailed Phase II investigation.  The oversight occurred in relation to the acquisition of Statoil Ireland Limited by Topaz Energy Group Limited which was notified to the Competition Authority on 12 July 2006.  This means that Topaz and Statoil can put their merger into effect without any restrictions by the Competition Authority.

Following the notification, the Competition Authority conducted its preliminary Phase 1 investigation which had included a formal request for further information from the parties, an assessment of third party submissions, a survey of competitors and customers of the parties and an extensive research of the oil industry, including site visits to oil terminals in Dublin and Galway.  As a result of this investigation, the Competition Authority identified three areas of competition concern, namely (i) terminalling and wholesale supply of refined petroleum products in Connacht; (ii) the operation of motor fuel retail stations in one Dublin area; and (iii) another matter in relation to which the Competition Authority could not provide any details due to commercial sensitivity. (However, the Competition Authority did note that this issue was ultimately resolved by Topaz in discussions with the Competition Authority.)

To address these concerns, Topaz proposed several remedies to the Competition Authority as part of its investigation.  These include a terminalling and throughput agreement at its existing Galway terminal with a major independent oil importer and an (as yet) unidentified solution relating to retail stations in Dublin.  Following the missed deadline by the Authority, Topaz voluntarily agreed to adhere to these proposals.  On 13 October, the Competition Authority announced that it was satisfied that its outstanding competition concerns of the transaction had been satisfactorily resolved by these proposals.

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Competition Authority approves Coillte’s acquisition of Weyerhaeuser Europe following full investigation after a Phase 2 investigation

On 10 November 2006, the Competition Authority announced that it had approved the proposed acquisition of Weyerhaeuser Europe Limited by Coillte Teoranta. The approval follows a previous announcement by the Competition Authority on 21 September that it planned to carry out a Phase 2, investigation of the proposed acquisition. The Phase 2 investigation was announced after a preliminary Phase 1 investigation, had been unable to conclude that the transaction would not substantially lessen competition in the manufacture and supply of wood products in the State.

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Commission launches consultation on draft guidelines regarding jurisdictional issues in EU merger control

On 28 September 2006, the Commission launched a public consultation on a draft set of guidelines clarifying the Commission’s current practice regarding jurisdictional issues in EU merger control.  The consultation will last until 1 December 2006. It is planned that new guidelines will be adopted in early 2007.

The new draft notice consolidates the current four jurisdictional notices adopted by the Commission in 1998 under the old Merger Regulation, takes into account recent judgments of the European courts, the Commission’s case practice and changes introduced by the new Merger Regulation (139/2004) in relation to jurisdictional issues.  For example, the draft notice clarifies when several transactions constitute a single notifiable concentration under the Merger Regulation.

The draft Notice will replace the current four jurisdictional Notices, namely the Notices on the concept of concentration, full-function joint ventures, undertakings concerned and on the calculation of turnover.  The aim of the new Notice is to give up to date and user-friendly guidance to parties to enable them to establish whether or not a concentration is notifiable to the Commission under the new Merger Regulation.

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Commission decides that Spain has breached EC Merger Regulation in relation to E.ON/Endesa merger

On 26 September 2006, the Commission announced that it had adopted a decision finding that Spain had breached Article 21 of the EC Merger Regulation by virtue of the conditions imposed by the Comisión Nacional de Energía (CNE) (the Spanish energy regulator) on E.ON's bid for Endesa.

The Commission gave two reasons for its decision. First, the Spanish energy regulator’s decision was adopted and entered into force without prior approval by the Commission, and  secondly, the Spanish energy regulator subjected E.ON’s acquisition of control over Endesa to a number of conditions that are contrary to EC Treaty rules on free movement of capital and freedom of establishment.

The decision by the Commission effectively means that Spain is required to withdraw the conditions imposed on the E.ON merger.

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Sony and Bertelsmann appeal against removal of Sony/BMG merger clearance

Sony Corporation and Bertelsmann AG have lodged a joint appeal with the European Court of Justice against the Court of First Instance’s ruling annulling the Commission's clearance for the merger of their recorded music divisions. In its July 2006 ruling the Court of First Instance said that the Commission had failed to effectively demonstrate that a combined Sony/BMG would not create a dominant position. The Court of First Instance’s ruling effectively required the Commission to carry out a fresh investigation.

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