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Introduction.

Legislation regulating the control of mergers in Ireland is contained in Part III of the Competition Act, 2002. These provisions came into force on 1 January 2003, replacing the old Mergers, Takeovers and Monopolies (Control) Act, 1978, as amended. As in many other jurisdictions the legislation provides that mergers involving firms above a certain size must be notified for official approval before they can be implemented. The 2002 Act also contains special provisions in respect of “media mergers”, i.e. mergers involving newspapers, radio and TV stations. National law does not apply where a merger is subject to the EU Merger Regulation.

Main Features of Irish Merger Legislation.

Section 18 of the Competition Act, 2002 provides that a merger or acquistion must be notified to the Competition Authority where:

  1. Each of two or more of the undertakings involved has a world-wide turnover of not less than €40m;

  2. Each of two or more of the undertakings involved carries on business in any part of the island of Ireland; and

  3. The turnover within the State of any one of the undertakings involved is not less than €40m.

The Minister may also specify that certain types of merger must be notified to the Authority and has availed of this provision to require that all media mergers must be notified. Failure to notify a merger constitutes an offence and the persons in control of the undertakings concerned may be liable to a fine of up to €3,000 on summary conviction or €250,000 on conviction on indictment.

Under Section 19 a merger that has been notified may not be put into effect until:

  1. The Authority has determined that it may be put into effect; or

  2. The Authority has made a conditional determination regarding the merger.

Within one month of the notification the Authority must make a determination that:

  1. in its opinion, the merger will not substantially lessen competition in the State and may therefore be put into effect; or

  2. it intends to carry out a more detailed investigation under Section 22 of the Act.

Under Section 22 the Authority has a further three months to conduct a more detailed investigation. At the end of that period it must make a determination that the merger:

  1. May be put into effect;

  2. May not be put into effect; or

  3. May be put into effect subject to certain conditions, i.e. a conditional determination.

In deciding whether or not to approve a merger the Authority is required to decide whether or not it will substantially lessen competition in any markets for goods or services in the State. The legislation includes provisions which allow the merging parties to propose adjustments to the transaction to address concerns of the Authority.

The Act provides that the Authority must publish the fact that a merger has been notified and invite third parties to submit comments. It also requires the Authority to publish its determinations. The new Act is therefore in stark contrast to the former legislation where the Minister was not required to publish the fact that a merger had been notified or to give any reasons for approving or blocking a merger.

Appeals.

Where the Authority blocks a merger the parties can appeal its decision to the High Court. Such an appeal must be made within one month of the Authority's decision. The Court may consider points of fact as well as points of law where it considers that the Authority's findings on a matter of fact were unreasonable. The Court is required “in so far as it is practicable” to hear and determine an appeal within two months of the appeal being made. It remains to be seen whether such appeals can be dealt with quickly enough to enable the merger to proceed in the event that the appeal succeeds. There is no appeal in the event that the Authority fails to block a merger that would reduce competition.

Special Rules for Media Mergers.

The Act contains special provisions in respect of “media mergers”, i.e. mergers involving newspapers, radio and TV stations. The Authority must forward details of such a merger to the Minister within five days of its being notified. If it decides after the stage one examination that the merger may proceed, it must inform the Minister of that decision and the Minister may nevertheless direct the Authority to carry out a second stage investigation. This seems a little odd. A direction from a Minister to conduct a second stage investigation, which the Authority had considered unnecessary, could be seen as an indication that the Minister did not like the result. Where it has conducted a second stage investigation and made a decision to permit or prohibit the merger, the Minister may also override such a decision. The important role played by the media in allowing for a diversity of views in a democratic society is the main reason for having special rules for media mergers. There is a risk, however, that politicians may be reluctant to stand up to powerful media groups.

Mergers and the Competition Acts.

It would appear that under the Competition Act, 2002, mergers that fall below the notification thresholds are subject to the provisions of Sections 4 and 5, i.e. the sections that prohibit anti-competitive agreements and abuses of a dominant position. The Act provides for a voluntary notification procedure for such mergers. The Authority issued a  Notice on 30th September urging firms to notify such mergers. Such mergers can only be prohibited if the Authority or a third party brings court proceedings.

Overview.

The Irish regime is broadly similar to EU Merger Control procedures under which the EU Commission has sole jurisdiction in respect of large EU wide mergers. The main difference between the two regimes is that the EU Regulation prohibits mergers which would create or strengthen a dominant position whereas the Irish Act prohibits those which would substantially lessen competition. Thus the Irish regime could prohibit certain mergers that might not be caught by the EU test. Under the Irish legislation the Competition Authority, like the Commission at EU level, is responsible both for investigating and deciding on mergers. This creates obvious concerns about the fairness of the process. Requiring the Authority to publish details of all mergers notified and to publish its decisions allows for an assessment of the quality of merger decisions.

© CompEcon Limited 2013.