Irish CCPC clears acquisition subject to a duty to brief, and even notify, the CCPC of future “below-threshold” deals
Ireland's Competition and Consumer Protection Commission (CCPC) has cleared an acquisition of six companies in the nursing home sector subject to commitments by the buyer to:
- inform the CCPC of all future transactions in a particular county (i.e., County Kildare) during the following two years even if those transactions were not compulsorily notifiable under the Competition Act 2002
- notify voluntarily such transactions to the CCPC even if the transactions were not notifiable compulsorily (i.e. fell below the sales/turnover thresholds for compulsory notifications) where the CCPC directs that there should be a notification
The Orpea/ FirstCare acquisition was approved subject to these interesting conditions.
Ireland operates a pre-clearance merger review regime under Part 3 of the Competition Act 2002 (2002 Act). If transactions (i.e. mergers and acquisitions within the meaning of the 2002 Act) involve businesses with turnovers (i.e. the value of sales) above the statutory thresholds in the 2002 Act then the transactions must be notified compulsorily to the CCPC – these are so-called compulsory notifications and constitute the vast majority of notifications to the CCPC.
It is also possible to voluntarily notify a transaction to the CCPC where the turnover thresholds are not met but where, for example, the notifying party wants to ensure that the proposed transaction is valid and does not "substantially lessen competition" (SLC) but such transactions are rare.
The Orpea/FirstCare Case
On 6 July 2021, in Orpea/FirstCare, the CCPC cleared the proposed acquisition by Orpea S.A (through its subsidiary Orpea Care Ireland Limited) of sole control of six companies trading under the name of FirstCare. The transaction had been notified to the CCPC on 10 May 2021 and approved on 6 July 2021 so the matter was dealt with expeditiously given that it was decided in under two calendar months and had involved an extended preliminary (i.e. Phase 1) investigation by the CCPC.
The CCPC had identified potential concerns regarding Orpea’s position in the provision of residential care and nursing home services in County Kildare following implementation of the notified deal and any potential future expansion in this area by Orpea. County Kildare is an administrative region in Ireland contiguous to Dublin City and County with a population of around 222,000 people and 1,695 square kilometres out of a national population of 4.9m people and national area of 70,293 square kilometres respectively so it represents about 4.5% of the national population and 2.4% of the national land area.
The CCPC said in a statement on 8 July 2021 that to address the potential competition concerns identified, Orpea submitted a proposal to the CCPC under section 20(3) of the 2002 Act. These proposals, remedies or commitments are designed to eliminate the competition concern.
The Proposal submitted by Orpea included a commitment by Orpea that for a period of two years commencing from the date of the CCPC's Determination if Orpea enters a legally binding agreement to, directly or indirectly, acquire control (for the purposes of section 16(1) of the 2002 Act) over any residential care and nursing home in County Kildare (a “Possible Transaction”) then Orpea will inform the CCPC of the Possible Transaction, and voluntarily notify the Possible Transaction to the CCPC before it is put into effect, pursuant to section 18(3) of the 2002 Act should it be directed to do so by the CCPC. The CCPC believed that that the binding commitment offered by Orpea was appropriate and effective in addressing the identified potential competition concerns.
The case is interesting on a number of levels:
- it shows that even with commitments, cases can be dealt with relatively quickly by the CCPC
- the merger notification regime can be used as a means by which the CCPC monitor competition developments in the marketplace
- the commitment was relatively short (two years) and narrow (confined to a single county out of Ireland's 26 counties) but the CCPC regarded it as sufficient
- speaking generally and not on the specifics of this case, making such a commitment does not prevent a business which gives such a commitment from bidding for targets which could emerge during the two-year period but adds the complication of informing the CCPC and possibly notifying the CCPC of such a transaction; one would imagine that if the informal review by the CCPC were to be lengthy, it could be as easy to notify the deal to get the clock running. The informal review process can provide a useful safety valve for the potential purchaser but a complication for a potential vendor of a business in such circumstances because the potential purchaser might face a notification process which some other (or even all other) bidders might not have to face
- ultimately, this type of behavioural commitment, which has been used by the CCPC on a number of occasions, is a practical and pragmatic mechanism to address potential competition concerns which the CCPC may have about a particular merger or acquisition.
For more information on this topic please contact Dr Vincent Power, Partner or any member of A&L Goodbody's EU, Competition & Procurement team.
Date published: 9 August 2021