"Given that Ireland is among the minority of EU member states that does not currently conduct any screening of FDI, primary legislation is required to close this regulatory gap"
Head of EU, Competition and Regulatory,
Starting with Irish merger control, how would you sum up activity in the past 12 months in
Consistent with global M&A activity, 2021 was a busy year for the Competition and
Our experience over the last year or so suggests that the CCPC's new simplified procedure (broadly, an expedited procedure for mergers where there is little to no overlap) is working very well. Average timeframes are coming in under 15 working days, which means that obtaining merger clearance in
The recent enactment of the Competition (Amendment) Act 2022 (the '2022 Act') has attracted significant press coverage in
You mention landmark transactions in the banking and financial services sectors. To what extent did the Irish merger review process impact the exit from the Irish market of
Interesting points of law argued during the case included, (i) the relevant counterfactual and whether KBC's exit was inevitable, (ii) the application of the EU priority rule in light of parallel transactions involving
The CCPC also issued its clearance of AIB's proposed purchase of
Has there been any innovative developments in established sectors that the CCPC has had to investigate recently?
The Synch mobile payments app was a joint venture between the large Irish retail banks (AIB, BOI, PTSB) to develop an instant mobile payment app which would also allow participation by other financial entities (such as
The CCPC cleared the transaction subject to a number of commitments designed to address the CCPC's innovation, foreclosure and coordinated effects concerns. For example, Synch is required to set out objective eligibility criteria for any banks or other financial institutions that wish to become participants in the Synch mobile payments service. Synch will also allow for interoperability, with licensees permitted to embed certain mobile payments functionalities within their own apps. The parties also agreed to put a specific governance structure in place and to implement safeguards to prevent the exchange or disclosure of commercially sensitive information (the latter being a commitments staple on the CCPC side).
In light of the highlighted merger investigations, or indeed more generally, are there specific points of practice or likely developments that may impact deal timing and which in-house practitioners should be aware of?
We mention above the issuance of extensive formal requests for information and a significant discovery ask of the parties. This has become a relatively regular feature of the Irish merger review landscape in complex cases, with a broad definition of 'documents' typically being utilised by our competition regulator - think ever greater costs and a significant internal resource commitment. It's worth noting, however, that formal requests for information are not reserved for complex cases and they can have a significant impact on timing. Such a request in Phase 1 for example stops the CCPC's clock, with time starting again once a full response to the request is confirmed by the CCPC.
Negotiating, agreeing and ultimately implementing commitments/remedies can also add significant time to a merger review process. Our experience, however, is that the CCPC has demonstrated both its practicality and flexibility in terms of its approach to commitments. For example, the CCPC appears more open to behavioural and access remedies (a feature of the BOI/KBC case) than many other EU competition regulators, but where such commitments can address the CCPC's competition concerns. Divestments still, however, remain a feature of our merger control regime, which is evident from recent cases such as
More generally, we await the introduction of Ireland's first investment screening regime for foreign direct investment ('FDI').
What do you see as the main features of the new Act that in-house practitioners should be aware of?
As touched on above, the CCPC will now have the power to compel the notification of transactions that do not meet the mandatory financial reporting thresholds. The ambit of this power is potentially very broad and with the CCPC having 60 working days within which to direct that a deal be notified to it. In short, the Act may well result in an increase in voluntary notifications of below threshold transactions in order to avoid the 60 working day CCPC intervention risk.
This new regime has been flagged as being particularly relevant for deals in the technology and pharma sectors, where targets may have great potential, but where revenues fall below the reporting thresholds. The new regime will also be relevant where, for example, small but concentrated markets are in play. Businesses in sectors other than technology and pharma should also be vigilant. The CCPC has previously reviewed below threshold transactions in cases such as Eason/Argosy and the CCPC's voluntary notification regime has also been utilised in the past by myriad businesses in below threshold transactions.
Gun jumping offences have also been expanded in the Act. Going forward, it will be an offence to put a transaction into effect where it has been notified, but before it has been approved by the CCPC. Further, the CCPC will have the power to initiate its own summary proceedings for gun jumping. To date, there has only been one criminal conviction for gun jumping recorded in the jurisdiction (
What are the recent trends in competition enforcement?
Prior to the enactment of the 2022 Act, Ireland was one of a very small number of European countries in which a business could only be fined if a court found that there had been a criminal breach of the competition rules. If an investigation did not reach a criminal standard, the CCPC was limited to seeking commitments from a business that it would cease the offending practice and/or obtaining a court injunction to prevent the business from repeating the practice. However, the 2022 Act transposes Directive EU 2019/1 (the ECN+ Directive) into Irish law and introduces a number of significant changes to the enforcement regime in
- Administrative fines - The Act allows the CCPC to impose civil fines up to a maximum of ?10m or 10% of worldwide turnover. It also allows the CCPC to impose civil fines for breach of a procedural requirement up to a maximum of ?1m or 1% of worldwide turnover;
- Criminal fines - The Act increases the level of criminal fines which can be imposed on companies and individuals for cartel offences up to the greater of ?50m or 20% of turnover;
- New bid-rigging offence - The Act introduces a new explicit cartel offence of bid-rigging and, in this connection, identifies a number of bid-rigging practices such as bid suppression, cover bidding and collusive tendering; and
- Leniency programme - The Act requires the CCPC to introduce a new leniency programme to enable it to grant leniency in exchange for disclosing participation in a cartel and cooperating with an investigation. The programme will run alongside the existing cartel immunity programme which is available in respect of criminal sanctions.
The Act applies to conduct after
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Mr
70 Sir
IRELAND
Tel: 1232 2101
Fax: 1232 3333
E-mail: Lisa.McLoughlin@matheson.com
URL: www.matheson.com/
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