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Gun Jumping Investigations: Implications for the Competition and Consumer Protection Commission
Ireland, in common with the European Commission and national competition authorities across the European Union, has recently shown an increased interest in gun jumping, the prohibited practice of implementing a transaction without having first obtained merger control clearance. In February 2018 the Competition and Consumer Protection Commission ("CCPC") confirmed that it had launched an investigation into suspected gun jumping by Armalou Holdings Limited (through its wholly-owned subsidiary, Spirit Ford Limited) of Lillis O'Donnell Motor Company Limited. This transaction appears to have taken place in December 2015.
Irish merger rules, like those of the European Commission, require that parties to qualifying transactions cannot implement them until cleared by the CCPC. While the commission can impose fines of up to 10% of turnover of companies proceeding with a merger without first obtaining clearance, in Ireland gun jumping is a criminal offence and the CCPC can fine companies, on conviction on indictment, up to €250,000 (with a maximum daily default fine of €25,000).
To date, the CCPC has been reluctant to pursue criminal penalties and, where gun jumping has occurred (eg, INM/Greer Publications and Radio 2000 / Newtalk), it has been satisfied with the parties simply submiting a late notification of the transaction. However, the European Commission has been encouraging national competition authorities (including the CCPC) to follow its lead in taking a harder line on gun jumping.
In light of the latest developments at European level, it will be interesting to see whether the CCPC adopts a hardline approach and imposes penalties in future cases. For parties to prospective mergers in Ireland, recent Irish and EU developments should serve as a careful reminder to check merger filing obligations early on in deal planning to avoid regulatory risk at a later stage and to ensure that preparatory steps to bring a merger into effect do not themselves constitute gun jumping. Further, when conducting due diligence of a prospective Irish target, parties should ensure that all necessary merger clearances for previous acquisitions by that target have been obtained.
This article is co-authored by Ronan Scanlan, Associate Solicitor and Simon Shinkwin, Solicitor in the EU, Competition Law and Regulatory Group.
This article first appeared in the International Law Office Competition and Antitrust newsletter, 10 May 2018.