Number of M&A Deals Notified to Ireland’s Competition and Consumer Protection Commission Falls in 2016

  • Decrease of 14.1% in M&A deals notified to Ireland's Competition and Consumer Protection Commission (CCPC) in 2016 compared to 2015
     
  • Decrease of 28.57% in the number of media mergers notified to the CCPC in 2016 compared to 2015

2016 saw a reduction in the number of transactions notified to the CCPC, according to the Review of Irish Merger Control in 2016, published by A&L Goodbody's EU, Competition & Procurement Group.

The Review confirms a 14.1% decrease in the number of M&A deals notified to the CCPC in 2016 compared to 2015. 67 deals were notified to the CCPC in 2016, representing a reduction of 14.1% on the 78 deals notified in 2015. There was a similar trend in the context of media mergers – while seven media mergers were notified to the CCPC in 2015, this number fell to 5 in 2016.

Two transactions were the subject of an extended Phase 1 assessment by the CCPC (Independent News & Media Holdings Ireland Limited / CMNL Limited and Bon Secours Health System / Barringtons Hospital) compared to 5 in 2016. Similarly, only one transaction was the subject of a Phase II review (PandaGreen / Greenstar) compared to two in 2015. Binding commitments were offered by the notifying parties in both PandaGreen / Greenstar and Bon Secours Health System / Barringtons Hospital in order to secure merger clearance from the CCPC.

The most active sectors for M&A deals notified to the CCPC during 2016 were Commercial Property, Hotels and Food & Drink.

Dr. Vincent Power, Partner and Head of EU, Competition and Procurement at A&L Goodbody comments: "There was a definite drop in merger notifications to Ireland's CCPC in 2016 over 2015: a drop of 14.1% from 78 in 2015 to 67 in 2016.

The drop may well have been related to the uncertainty generally generated by Brexit because the drop was very notable in the fourth quarter with a drop from 26 to 19 (i.e. 26.92%).

However, too much should not be read into the drop in 2016 as the current regime entered into force on 31 October 2014 so a substantial comparative data set is not available. Despite the drop, the number of notifications made in 2016 was still the highest between 2008 and 2014 but there was a different regime.

The abolition in 2014 of the obligation to make a notification within one month of signing a deal has had mixed results.  Some businesses have taken a number of months to notify deals but the majority of businesses notify deals quickly (often on the day of signing or within a few days of signing). Businesses may not complete or close their deal until they get clearance so it is in their interest to notify early.

There was no prohibition by the CCPC of a deal this year.  This is not unusual and the statistics are in line with international practice. For example, the EU prohibited only one deal in 2016 - its first since 2013. That deal related to mobile telecoms in the UK (Hutchison 3G UK / Telefónica UK). Curiously, even if Brexit proceeds, the EU would still have power to block certain deals relating to the UK even after it leaves the EU - meaning Brexit does not mean Total Brexit."

Alan McCarthy, Partner in the Group, observes: "For the second year running, a complex merger control transaction (i.e. PandaGreen / Greenstar) was resolved with the merging parties committing to the CCPC to divest businesses so as to secure a Phase 2 approval. Offering divestiture commitments can have a material commercial impact on merging parties but also offers a solution where the CCPC is unable to resolve concerns with a transaction under the Irish merger control rules.

2016 also saw merging parties in one transaction offering commitments to the CCPC to secure a Phase 1 approval and avoid a possibly protracted Phase 2 analysis by the CCPC. This is another option under the Irish merger control rules which can short-circuit an otherwise potentially lengthy process.

It is notable that two transactions relating to private healthcare services were notified to the CCPC this year.

The CCPC accepted a late notification in one transaction in 2016 and required the merging parties to hold their businesses separately until the CCPC reached its decision. This is quite novel in Irish merger control practice and may indicate the CCPC's approach to such deals in the future.

Determinations issued by the Department of Communications, Climate Action and Environment on media mergers in 2016 did not contain details as to why they would have no adverse impact on media plurality in Ireland – it is to be hoped that 2017 might see greater detail provided in media merger determinations."

Anna-Marie Curran, Partner in the Group, notes: "The trend we observed in 2015 of a high number of commercial property deals requiring notification to the CCPC has continued in 2016 with a total of 15 commercial property and hotel transactions being notified to the CCPC. This represents the highest proportion of notified transactions from any one sector and is particularly notable given that these types of one off asset acquisitions do not generally raise competition issues. For example, the CCPC has observed that the availability of alternative hotel accommodation, consumers' ability to switch to alternative accommodation and the possibility of further entry and expansion in the hotel sector all act as competitive constraints on hotel accommodation providers. Given the CCPC's analysis, it is unlikely that these types of transactions will give rise to a substantial lessening of competition in this sector and there is merit in considering whether commercial property transactions should be subject to a mandatory notification regime in the first instance."

Notable deals notified in 2016 included:

  • PandaGreen / Greenstar
     
  • Bon Secours Health System / Barringtons Hospital
     
  • Independent News & Media Holdings Ireland Limited / CMNL Limited

For full details on the report, please see our Review of Irish Merger Control in 2016.

For further information please contact a member of our EU, Competition & Procurement Team.