On 18 October, the Houses of the Oireachtas (the Irish Parliament) approved legislation (SI No 388/2018) increasing substantially the financial thresholds at and above which mandatory notification of a transaction is required to the Competition and Consumer Protection Commission (CCPC) in Ireland.
From 1 January 2019, only mergers where the acquirer and target each generate €10 million (or more) and together generate €60 million (or more) of turnover in Ireland will trigger mandatory notification.
Smaller deals no longer require mandatory notification
In uncertain times, this is some welcome news for businesses, including private equity funds, looking to enter or expand their footprint in Ireland in 2019. Until now, even modest deals (including acquisitions of individual bars, hotels, pharmacy chains and other retail stores), where no material overlaps arise, have been delayed by the requirement to notify. In some cases, this has delayed closing by at least four weeks to as much as 14 weeks (where the CCPC has required additional information from the acquirer or the market).
Calculating your ‘turnover’
Looking forward, funds seeking clarity as to whether their acquisition will require notification to the CCPC will need to closely scrutinise their own turnover, and that of the proposed target, in Ireland.
In that regard, two points remain key:
- In common with the approach of the European Commission, funds will need to include all turnover generated by all portfolio companies over which that fund has decisive influence to determine whether the individual and aggregate thresholds are satisfied. This may include companies in which the fund holds a minority interest, with veto rights and / or significant board representation and requires careful analysis, particularly where there are multiple general partners.
- Where the target or the fund’s own portfolio companies include financial institutions with activities in multiple states, the CCPC will expect turnover to be allocated by location of the end-customer (rather than on a ‘branch basis’, as is the approach in Brussels and most other EU member States). As always, when mapping out where pre-clearance will be required, transactions involving multiple jurisdictions will need to take account of such divergences between countries in their approach to geographic allocation of turnover.
Confidentiality issues remain
Funds should be aware that the CCPC will seek to publish details of the transaction on its website on receipt of the notification and has previously sought to publish the names and turnover of the fund’s portfolio companies. The CCPC has however been willing to consider redactions of parts of a fund’s structure (including the names and turnover of individual portfolio companies) where such information is not relevant to its assessment of the transaction. Therefore, upfront engagement with the CCPC on confidentiality is advisable.
Beware ‘call in’ risk
Finally, even where a transaction does not meet the new mandatory thresholds, the CCPC still retains (in common with other jurisdictions such as the UK) a right to investigate where the deal could impact competition (for example, in 2017, Kantar Media’s acquisition of NewsAccess, a business with turnover below the then threshold of €3 million, but leading to a 3:2 in that market, was investigated by the CCPC and cleared subject to commitments). Such a scenario will remain exceptional but should be borne in mind where a fund already has interests in the same market in Ireland.
Ultimately, this move is a welcome one and will reduce the burden on businesses, including private equity funds, in acquiring businesses with modest turnover in Ireland.