While the proposed changes to the Irish merger control thresholds would reduce the number of mergers notified in Ireland, the impact of Irish merger control will continue to be felt in a number of ways.
The Irish Government has proposed that Irish merger control thresholds for the notification of acquisitions to the Competition and Consumer Protection Commission (CCPC) should be increased (as set-out in S.I. No. 388 of 2018 – Competition Act 2002 (Section 27) Order 2018.
This follows a recommendation by the Department of Enterprise, Business and Innovation (Department) contained in its September 2017 "Consultation on a review of certain provisions under the Competition Act 2002, as amended, relating to merger and acquisitions" and the subsequent responses to that Consultation.
Assuming that the proposed Irish merger control notification thresholds are confirmed (i.e. by the Irish Parliament) and then (as expected) they take effect on 1 January 2019, the new thresholds for a compulsory notification to the CCPC would be as follows:
(i) the aggregate turnover in Ireland of the undertakings involved is at least €60m (up from the current €50m threshold); and
(ii) the turnover in Ireland of each of 2 or more of the undertakings involved is at least €10m (up from the current €3m threshold).
Factors driving the Department's recommendation to increase the Irish merger control thresholds included:
The improvement in economic conditions in Ireland
The increase in the number of merger notifications to the CCPC which appeared to have either limited nexus with Ireland or an insubstantial effect in Ireland (and which followed the previous lowering of the thresholds in November 2014 under the Competition and Consumer Protection Act 2014)
The burden on business resources in making the notifications
The uncertainty of the outcome of the notification process (though this concern is overstated given the frequency with which mergers are cleared in Phase 1)
Cost of notification (including the €8,000 Statutory notification fee)
The unnecessary notification of asset acquisitions (including in the property sector)
The trend toward more focused criteria for the mandatory notification of mergers across the world (as promoted by the OECD and the International Competition Network).
The expectation is that this increase in Irish merger control thresholds will significantly reduce the number of merger control notifications to the CCPC and more of those mergers that are notified to the CCPC will have a substantive competition issue to be resolved. For example, the Department estimated that if the proposed changes had been in effect in 2016 then the number of notifications to the CCPC would have been reduced by over 37%. The Department concluded that none of the cases which would have been excluded over the period 2015/2016 raised any serious issues of competition concerns in Ireland.
However, a number of comments on the likely effect of the proposed changes to the Irish merger control thresholds and on Irish merger control generally:
As the turnover of businesses increases in Ireland due to the positive economic environment then there will still probably be numerous notifications to the CCPC (though the less relevant deals will no longer need to go through the notification process)
Businesses will have to carefully review whether their below-threshold mergers could still be candidates for a competition law investigation by the CCPC – the CCPC frequently queries below-threshold mergers and this has resulted in merging parties making a "voluntary" notification to the CCPC for merger control approval to avoid the CCPC taking action against such deals on the basis that they would substantially lessen competition in a market in Ireland (including resulting in commitments given to obtain CCPC approval)
The conditions for a media merger notification to the CCPC and to the Department of Communications, Climate Action and Environment are unchanged (essentially turnover is not relevant to whether or not a media merger is notifiable)
The Department had considered amending the time period for CCPC review but has decided against it (i.e. there remains a 30-working-day Phase 1 review (extendable) and a 4 month combined Phase 1 and Phase 2 review (also extendable))
While Germany and Austria have recently introduced a "transaction value” threshold for mandatory notification in their merger control regimes (essentially to control digital company acquisitions or start-ups with high market value but insignificant turnover), no such change has been (or is proposed to be) made to the Irish merger control notification conditions.