While 2021 remains marked by uncertainty due to the ongoing impact of the COVID-19 pandemic, it is set to be another busy year for the Irish merger control regime. The impact of Brexit (see points 1-4 below), the current practice and policy approaches of the Irish Competition and Consumer Protection Commission (CCPC) and the types of deals it is expected to review (see points 4-8 below) and a number of potentially significant legislative developments (see points 8-10 below) will have a significant impact of the review of M&A deals with an Irish market nexus in the coming year.
Within this context, the 10 key Irish merger control trends for 2021 are as follows:
- Uptick in CCPC notifications due to the ‘Brexit bonus’ – following the end of the Brexit transition period on 31 December 2020, the UK aspects of transactions are no longer covered by the exclusive jurisdiction of the European Commission (Commission) under the ‘one-stop-shop’ mechanism under the EU Merger Regulation (EUMR) and will instead be subject to the separate and parallel jurisdiction of the UK Competition and Markets Authority (CMA) alongside EU or EU national level jurisdiction. As a practical matter, this also means the exclusion of UK turnover for the jurisdictional purposes under the EUMR which is expected to lead to a reduction in the number of EUMR notifiable mergers and, conversely, an increase in the number of national EU filings, including before the CCPC, especially in the context of transactions involving parties with primarily UK and Irish operations.
- Greater number of parallel EU national level merger reviews – the increased number of national EU filings will mean a greater number of parallel reviews and close cooperation by the CCPC and other EU national authorities and the CMA. While the CCPC will continue to be able to liaise and exchange information regarding parallel investigations with other EU national authorities within the European Competition Network, the CCPC and the CMA can no longer automatically liaise with each other following Brexit and until a formal cooperation agreement is entered into. Parties and their advisors will therefore need to consider granting confidentiality waivers to facilitate discussions and the exchange of information between the CCPC and the CMA.
- Possibility of increased ‘upward’ referral requests to the European Commission – where a deal is not notifiable to the Commission (in particular, due to the exclusion of UK turnover as a result of Brexit) but is instead notifiable in three EU Member States, parties may want to consider the possible benefits of making an ‘upward’ referral request to the European Commission under Article 4(5) EUMR, for example where it may be more efficient for the Commission to review a deal or the Commission may be better placed to do so. While the relevant national authorities may object to a referral request depriving them of jurisdiction, the CCPC has tended not to do so historically consistent with the approach of other EU national authorities. National authorities themselves may also make a referral request to the Commission, although such requests are not common and the CCPC in particular has not done so in the past.
- Expected increase in complex merger reviews before the CCPC – the number of deals with potentially significant substantive issues before the CCPC is expected to increase, due to both the increased number of CCPC filings as a result of Brexit as well as the anticipated increase in opportunistic M&A plays in the current environment that may lead to further consolidation in the Irish market. In preparing for such complex reviews before the CCPC, parties and their advisors will need to have regard for procedural and timing differences under the Irish regime in order to align with processes in other jurisdictions, in particular the possibility of an ‘extended’ Phase 1 process of up to 4 months in the event of a formal CCPC request for information under section 20(2) of the Competition Act 2002 (as amended) (Act) and the usual lengthy Phase 2 process of a further 6 months or longer.
- New Phase 2 investigations expected – while it carried over both of its Phase 2 investigations from 2020 (ie, Link/Pepper and ESB/Coillte) into the new year, both investigations have now ended and the CCPC currently has no Phase 2 investigations. While this may be a welcome ‘breather’ for now (in particular, in view of the CCPC’s preparations for its new competition enforcement powers), the increased number of complex merger reviews due to Brexit and opportunistic M&A plays as described above will naturally lead to the possibility of one or more new Phase 2 investigations being opened in the coming months enabling an in-depth CCPC review of transactions that present significant substantive issues.
- The CCPC remedies practice will come into renewed focus – the expected increase in complex merger reviews before the CCPC will also give rise to the possibility of negotiating remedies with the CCPC in order to address preliminary competition concerns and secure early clearance. In considering possible remedies solutions, the CCPC’s historically more flexible remedies practice will become relevant, noting that the CCPC has been more willing to accept ‘behavioural’ remedies (eg, ring-fencing obligations, ‘access’ remedies) in both ‘horizontal’ and ‘vertical’ mergers than requiring divestment remedies in all cases.
- Continued application of the CCPC’s new simplified procedure – following its introduction in July 2020, the CCPC’s new simplified procedure for transactions presenting no substantive issues was fully embraced by parties and the CCPC alike which is set to continue into 2021. The new simplified procedure has proved particularly attractive for non-strategic or pre-‘bolt-on’ M&A and PE deals in the Irish market and the CCPC’s latest statistics based on the six clearances from July to December 2020 demonstrate that parties can secure clearance for such ‘no issues’ deals in less than 3 weeks.
- Voluntary notification of ‘below threshold’ transactions – the CCPC’s increased vigilance of ‘below threshold’ transactions that are not subject to mandatory notification but which raise potential issues is set to continue in 2021. Deal parties are increasingly subject to informal requests for information by the CCPC which may result in a CCPC request to notify such deals under section 18(3) of the Act (noting that the CCPC can otherwise open an ‘own-initiative’ competition investigation under sections 4 or 5 of the Act). Where the CCPC reviews such deals, it typically requests that the parties provide an undertaking not to implement the transaction and can otherwise seek an injunction to restrain implementation before the Irish courts. The Government is also considering proposals to enable the CCPC directly to make an interim order restraining implementation that were subject to the recent public consultation to which Matheson responded.
- Potential ‘gun-jumping’ issues remain in the spotlight – this clearly remains a focus for CCPC consistent with ongoing trends across the EU and internationally. While there has still only been one successful prosecution to date for the Irish ‘gun-jumping’ offence of failing to notify before clearance under sections 18(9) and 18(10) of the Act, the Government is considering proposals that would enable the CCPC to seek summary prosecution directly without the involvement of the State prosecutor (Director of Public Prosecutions) in order to simplify and increase enforcement of perceived ‘gun jumping’ offences (which was subject to the same public consultation referenced above to which Matheson responded).
- Expected introduction of the new Irish foreign investment regime – the Department for Enterprise, Trade and Employment is currently finalising draft legislation for the possible introduction of a new foreign investment or FDI screening regime, as mandated by the EU Investment Screening Regulation that became operational in October 2020 and established an information sharing and cooperation framework across EU Member State authorities. The legislation establishing the new Irish regime is expected to be adopted as early as the end of H1 2021, although this could easily be delayed until H2 2021 or beyond. While the exact scope of the new FDI regime and whether it will give rise to additional mandatory notification requirements in certain instances remains as yet unclear until the draft legislation is published, the CCPC is likely to have a role in administering the initial review under the new FDI regime, alongside the general merger control and media merger regimes.