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01 November 2018
On 3 October 2018 Minister for Business, Enterprise and Innovation Heather Humphries laid the Competition Act 2002 (Section 27) Order 2018 before the Houses of the Oireachtais. This will have the effect of increasing the financial thresholds for M&A requiring a notification to the Competition and Consumer Protection Commission (CCPC). This is the first time that a minister has used their powers under Section 27 of the Competition Acts from 2002 to 2017. The order has been approved by the Houses of the Oireachtas (the Irish Parliament) on 23 October 2018.
Previously, notification was required by the CCPC where the aggregate turnover in the state of the undertakings involved was over €50 million and the turnover in the state of at least two of the involved undertakings exceeded €3 million. Under the new regime, effective from 1 January 2019, these financial thresholds have increased to €60 million and €10 million respectively.
The CCPC's practice, like that of the EU Commission, has been to determine whether it has jurisdiction on the date of conclusion of a binding agreement or announcement of a public bid. Therefore, it is expected that any binding agreement concluded or public bid announced prior to 1 January 2019 will remain subject to the old financial thresholds.
The new thresholds under the order follow a public consultation process launched by the Department of Business, Enterprise and Innovation (DBEI) in September 2017, reviewing the existing financial thresholds. The DBEI noted a number of perceived burdens that had arisen for businesses in light of the existing financial thresholds which triggered merger notification. In particular, it recognised the resource implications for businesses in preparing and submitting a merger notification and the uncertainty it could create in a business transaction in circumstance where the merging entities may not have a strong nexus to Ireland.
The DBEI noted that when compared internationally, the Irish financial thresholds were considerably lower than other similar jurisdictions. The DBEI highlighted that in 2015 there were 78 merger notifications, with 67 merger notifications in 2016. By increasing the financial threshold to €10 million in respect of the individual undertakings the DBEI noted that this would reduce this number of merger notifications by 38% (for the years 2015 and 2016). Moreover, none of these mergers that would now fall outside the scope of the financial thresholds appear to have raised any serious issues of competition concerns for the CCPC. This increase in notification trend appears to have continued in 2017 and 2018 and there has been almost a 50% increase in notifications in the first half of 2018 as compared with the first half of 2017.
The new financial thresholds are to be welcomed and will reduce the number of mergers that are captured by the CCPC notification requirement. This will allow the CCPC to better allocate its resources and to focus on the larger mergers (with more of an Irish nexus) and result in fewer business costs when it comes to smaller Irish transactions.
For further information on this topic please contact Helen Kelly or Kate McKenna at Matheson by telephone (+353 1 232 2000) or email (firstname.lastname@example.org or email@example.com). The Matheson website can be accessed at www.matheson.com.
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