Search News & Insights
Media Merger Regime: Four Years Later - What you Need to Know
The Irish media merger regime has a long history and remains a complex part of the Irish regulatory law and politics. Irish regulators show a keen interest in any media merger and, following historical concern regarding media ownership concentration (beginning in the 1970s), the Competition and Consumer Protection Act 2014 (“2014 Act”) created a special Irish regulatory process for media mergers administered by the Irish Minister for Communications, Energy and Natural Resources (“Minister”). As explained below, the Irish media merger regime requires many transactions to be notified to the Minister, including acquisitions of non-Irish media businesses, and requires parties to respect a standstill obligation which typically lasts for more than two months (for a Phase 1 review) or even nine months (for a Phase 2 review).
Given the recent sharp increase in mergers of Irish and global media businesses, reflecting dramatic levels of decline in ‘traditional’ media consumption and ‘e-substitution’ leading to pressure to consolidate, the Irish media merger regime is affecting all corners of the industry and transactions focused on all corners of the globe.
This article provides a reminder of the Irish media merger rules, the 2014 Act and some key issues faced in practice:
Reminder of the Irish Media Merger Rules under the 2014 Act
What transactions are notifiable?
The jurisdiction test under the 2014 Act is met and a transaction is notifiable to the Irish Minister where ‘two or more undertakings involved carry on a media business’ and at least one of these is in Ireland.
A ‘media business’ includes the following activities (key words in bold):
- publication of newspapers or periodicals consisting substantially of news and comment on current affairs including the publication of such newspapers or periodicals on the internet;
- transmitting, re-transmitting or relaying a broadcasting service;
- providing any programme material consisting substantially of news and comment on current affairs to a broadcasting service; or
- making available on an electronic communications network any written, audiovisual or photographic material, consisting substantially of news and comment on current affairs, that is under the editorial control of the undertaking making available such materials.
The ‘media business’ definition covers certain digital media businesses, such as an online-only news service. However, the unclear meaning of terms such as ‘broadcasting service’ and ‘editorial control’ leaves uncertainty about coverage of certain online streaming and social media businesses.
The ‘media business’ definition does not cover certain traditional media businesses, such as an entertainment-only channel that is not self-broadcast and rather is licensed to third party broadcasters.
‘Carrying on a media business’ means:
- having a physical presence (including a registered office, subsidiary, branch, representative office or agency) and making any sales to customers in the jurisdiction; or
- making sales in the jurisdiction of at least €2 million in the most recent financial year.
What is the relevant legal test?
The Minister will determine whether or not the transaction will be ‘contrary to the public interest in protecting the plurality of media in the State’. The 2014 Act outlines ‘relevant criteria’ in applying this test and the Minister’s approach is further outlined in his guidelines and published determinations.
What does the process entail?
Notifying the Minister will be the second step in a two-step process for clients, whereby at step one antitrust approval is issued by either the CCPC or the European Commission.
A standard notification form and guidelines for merging parties are published by the Minister.
Pre-notification meetings to discuss a draft notification form are standard and parties can seek waivers from information requirements before submitting a final notification form.
The Minister may re-start the clock following receipt of a final notification form by issuing a formal information request.
Following the Minister’s determination, the following documents are generally published:
- The Phase 1 Examination Document;
- The Opinion of an Advisory Panel (if applicable); and
- The Report and Recommendation of the Broadcasting Authority of Ireland (if applicable).
Under the 2014 Act, a media merger must have an approval before it is put into effect.
What are the relevant timelines?
Whoever must submit the antitrust notification must also notify the Minister within 10 working days of antitrust approval and may notify at any point between the first and the tenth working day. From the 10th working day after antitrust approval, the Minister has 30 working days to conduct a Phase 1 review. As stated above, that period can be re-started by the Minister if he deems the notification to be incomplete and issues a formal request for information.
There is a relatively low legal threshold for opening a Phase 2 review, the Minister must only have formed the view that the deal may contravene the relevant legal test. Where a Phase 2 review is opened, a referral will be made to the Broadcasting Authority of Ireland (“BAI”) who have 80 working days to make a recommendation and may work alongside an Advisory Panel comprising independent experts. Following a BAI recommendation, the Minister has an additional 20 working days to make a decision. Like in Phase 1, all statutory timelines can be extended where a formal request for information is issued.
What are the penalties for non-compliance?
It is an offence for any ‘person in control of an undertaking’ to fail to notify the Minister of a media merger, for which fines can be imposed of up to €250,000 plus €25,000 per day.
In addition, any notifiable transaction which purports to be put into effect prior to Ministerial approval is void as a matter of Irish law. The practical effect of this is unclear, in particular where the transaction is not governed by Irish law, the acquired assets are outside of Ireland or a notification is subsequently submitted. Notwithstanding the standstill obligation, we are aware of a number of transactions which completed prior to Ministerial approval but ultimately received all necessary Irish regulatory approvals.
To date, there has been no Irish court action by the Minister on an alleged breach of the 2014 Act.
Experience of the 2014 Act: Four Years On
As of 1 November 2018, 22 Irish media mergers have been reviewed by the Minister. The Minister has opened one Phase 2 investigation (INM / Celtic Media, on which Matheson advised), and issued a formal request for information in 23% of mergers.
*In INM/CNML, both parties consented to withdrawing the transaction following a protracted Phase II media merger investigation by the Minister.
Key Issues in Practice
It can be a lengthy process: The regulatory process and standstill period for a notifiable media merger will always be lengthy as the 2014 Act provides that the statutory timeline for the Minister’s review commences after (and cannot not run in parallel) the necessary antitrust approval process. In particular, a Phase 2 media merger review can be lengthy and mean that the overall timeline is 9 months or longer. However, there are indications that Phase 2 reviews by the minister will be rare, noting that the recent Irish Times / Irish Examiner media merger (resulting in a 3 to 2 merger in the national quality newspaper market) was cleared by the minister during a Phase 1 process.
Focus on online content: A growing eagerness by the Minister to focus on online activities as well the governance and ethos of the merging entities can be observed in recent determinations.
Concerns need not be ‘merger-specific’: The Minister considered the implications of Brexit in its 2017 decision in Sky plc & Twenty-First Century Fox, Inc (on which Matheson advised) notwithstanding submissions by the parties that Brexit was irrelevant and ‘not a result of the media merger’.
Limited Procedural Rights in Phase 2 scenario: Parties confronted with Phase 2 mergers can feel at a disadvantage in certain respects, such that (i) the Minister is entitled to appoint an Advisory Panel to opine on the transaction without any opportunity for the parties to comment on its constitution or engage with it, and (ii) the decision to open Phase 2 can be made without warning or an opportunity to comment.
Change in publicity protocol: An interesting development has been the increased transparency surrounding media mergers since 2017. The Minister now publishes a non-confidential version of a detailed decision which is on average 40 pages in length. Further, the Minister has made Freedom of Information disclosures of non-confidential versions of notification documents to the Irish press, leading to multiple news reports.
This article was co-authored by EU, Competition and Regulatory partners, Helen Kelly and Kate McKenna and associate, Simon Shinkwin and was first published by the International Law Office on 23 November 2018.