- 19 December 2018
- Posted by: Paul Keane
- Categories: Commercial Law, Corporate Transactions
Merger Control – what you need to know
Some mergers and acquisitions must be notified to the Competition and Consumer Protection Commission (“CCPC”). In this article, we look at the notification process under the Competition Act, 2002.
- Why is it important?A merger or acquisition which is notifiable and put into effect without clearance is void.Failure to make a compulsory notification to the CCPC is an offence which can result in a fine of up to €250,000.
- Does your transaction fall within the definition of a Merger or Acquisition?The following types of transactions may fall within the definition:-
- Mergers – where two or more undertakings, previously independent of one another, merge.
- Acquisition of control – where one or more individuals who already control one or more undertakings, or one or more undertakings, acquire direct or indirect control of the whole or part of one or more other undertakings.
- Acquisitions of assets – an acquisition of assets that constitutes a business to which turnover can be attributed. This includes good will.
- Joint ventures – the creation of a joint venture to perform, on a lasting basis all the functions of an autonomous economic entity.
- Does your transaction trigger a Mandatory Notification?A notification must be made to the CCPC, in respect of a Merger or Acquisition, if, in the most recent financial year:-
- the aggregate turnover in the State of the undertakings involved is not less than €50,000,000, and
- the turnover in the State of each of two or more of the undertakings involved is not less than €3,000,000.
It is important to note that the CCPC has interpreted the word “undertakings” as including, for the buyer, the entire group of undertakings involved and for the seller, the turnover of the target business only.
These financial threshold could be met, for example, in a property transaction where the rental income of the building exceeds the financial threshold of €3 million and the turnover in the State of the undertakings involved exceeds €50 million. This may arise with commercial properties such as hotels or office blocks.
- Is it a Media Merger?Different rules apply to a merger or acquisition where the undertakings carry on a media business. There is no financial threshold to be met for a Media Merger.
- Do any exceptions apply?There are some exemptions under the competition legislation which include:-
- Where a receiver or liquidator acquire control;
- Intra-group restructurings;
- Where control is acquired solely as a result of a testamentary disposition, intestacy or the right of survivorship;
- The acquisition of voting securities for investment only on a temporary basis.
Limited exceptions are also provided for credit institutions.
- Should you consider making a Voluntary Notification?The legislation makes provision for a Voluntary Notification. This is advisable where the merger would be likely to substantially lessen competition in any market in Ireland.You may chose to make a Voluntary Notification if, for example, the turnover of the undertakings involved is particularly close to the thresholds.
This allows the parties to get the comfort of legal certainty within a fixed period of time.
- Timing of a Notification to CCPCA notification must be made to the CCPC before the merger or acquisition is put into effect and may made after any of the following applicable events occur:-
- one of the undertakings involved has publicly announced an intention to make a public bid or a public bid is made but not yet accepted;
- the undertakings involved demonstrate to the CCPC a good faith intention to conclude an agreement or a merger or acquisition is agreed;
- in relation to a scheme of arrangement, a scheme document is posted to shareholders.
For further information on the above, please contact Paul Keane at firstname.lastname@example.org