The Competition and Consumer Protection Commission (CCPC) has published its Mergers and Acquisitions Report for 2021 (Report). The Report provides an overview of merger control activity in Ireland during 2021. We have distilled the main takeaways from this Report below.
Irish merger control regime
The Irish merger control regime is a mandatory regime modelled on the EU system. Mergers or acquisitions which exceed the following financial thresholds must be notified to the CCPC for review:
- the aggregate turnover in Ireland of the undertakings involved in the most recent financial year is not less than €60 million; and
- the turnover in Ireland of each of two or more of the undertakings involved in the most recent financial year is not less than €10 million.
The parties must suspend completion of the transaction until clearance from the CCPC has been obtained (or the timeframes for the CCPC’s review have expired). Failure to notify a proposed transaction to the CCPC is a criminal offence.
The CCPC must complete its review within statutory time frames. The ordinary time frame for a review at the initial Phase 1 is 30 working days while the CCPC has an additional 90 working days to undertake a more detailed, Phase 2, investigation. Both time limits can be extended in certain circumstances.
KEY STATISTICS IN 2021
- 81 transactions were notified to the CCPC, an increase of 98% by comparison to 2020 and the highest number of notifications since the new financial tresholds were introduced in 2019
- The most prominent sectors were financial and insurance services (12 notifications)
- 74 determinations were issued, 3 of them with commitments (up from 1 in 2020):
- M/20/005 - ESB/Coillte (JV)
- M/21/016 - Pandagreen / Exomex
- M/21/024 – Orpea / FirstCare
- 14 transactions required an extended Phase 1 investigation, compared to 15 in 2020. 2 of these were cleared with commitments:
- M/21/016 - Pandagreen / Exomex; and
- M/21/024 – Orpea / FirstCare
- There were 5 Phase 2 investigation compared to 2 in 2020:
- 1 was withdrawn by the parties (M/20/003 – Link Group/Pepper)
- 1 was cleared with commitments (M/20/005 - ESB/Coillte (JV))
- 3 are ongoing (M/21/004 – AIB/BoI/PTSB – Synch Payments JV, M/20/021 – Bank of Ireland/Certain Assets of KBC and M/20/040 – AIB/Certain Assets of Ulster Bank)
- The CCPC made one referral under Article 22: (M.10262 Meta (Formerly Facebook)/Kustomer)
- The CCPC did not prohibit any mergers
- The average time to issue a non-extended Phase 1 determination was 20.2 working days, down from 22.9 in 2020. The shortest time period was 11 working days
- The CCPC reviewed 35 merger notifications under the simplified merger notification procedure (SMNP). 32 determination were issued, with an average time of 12.9 working days, compared to 13.4 in 2020
Media mergers must be notified regardless of the turnover of the parties involved. A media merger is one where at least one of the parties carries on a media business in Ireland. In 2021, 5 media mergers were notified to the CCPC, compared to 3 in 2020. None of these media mergers involved an extended Phase 1 investigation and none required commitments to be entered into.
ISSUES TO NOTE
While the CCPC did not prohibit any transactions during 2020, a number of clearances were subject to structural and behavioural commitments by the parties being entered into.
In M/20/005 - ESB/Coillte (JV), the CCPC considered a proposed joint venture between ESB and Coillte for the development of renewable energy generation assets (principally onshore wind farms), primarily located on Coillte-owned land, and the generation and sale of electricity. The CCPC identified competition concerns related to the potential exchange of competitively sensitive information between the JV, ESB and third parties which could give rise to adverse effects on competition in the potential market for the development, construction and operation of onshore wind farms in the State and the potential exchange of competitively sensitive information between Coillte, the JV and ESB regarding third parties seeking access to Coillte-owned land for the purposes of developing and constructing an onshore wind farm in the State.
Following a Phase 2 investigation, the CCPC accepted joint behavioural commitments by the parties to prevent directors appointed to the proposed JV by ESB potentially having access to and exchanging competitively sensitive information between ESB and the proposed JV. Commitments were also imposed on Coillte to prevent the exchange of information between Coillte and the proposed JV in relation to Coillte's third party land customers.
In M/21/016 - Pandagreen / Exomex, the CCPC identified a concern in relation to the supply of waste collection services to individual commercial and industrial waste customers in certain towns where there was a horizontal overlap in the activities of the parties. Following an extended Phase 1 investigation, the CCPC approved a structural commitment to divest to Padraig Thornton Waste Disposal Limited, trading as Thorntons Recycling, the customers to whom Pandagreen supplies individual commercial and industrial waste collection services in certain areas of Co. Louth.
In M/21/024 – Orpea / FirstCare, the CCPC identified a potential competition concern in relation to the market for residential care and nursing home services in County Kildare where the combined market share of the parties post transaction is approx. 25-30%. The CCPC was concerned that any future acquisitions by Orpea of additional residential care and nursing home(s) in the area may not be notifiable, given the size of other competitors, and would therefore not be reviewable by the CCPC. Following an extended Phase 1 investigation, the CCPC accepted a behavioural commitment by Orpea to inform the CCPC of any acquisition of residential care or nursing home in Co. Kildare for a period of 2 years from the date of determination and to voluntarily notify the acquisition to the CCPC before it is put into effect, if directed to do so by the CCPC.
CHANGES TO MERGER NOTIFICATION PROCEDURE
From 1 December 2021, the following changes to the merger notification procedure came into effect:
- Electronic format: All merger notifications (including all supporting documentation) must be submitted electronically
- Timeframes: Notifications must be made between 9am and 3pm, Monday to Friday (excluding public holidays)
- Incomplete notifications: Where the notification and all supporting documents are not received by 3pm, the date of receipt of the notification will be the next working day
- Information Requirements: Notifying parties must provide contact details for their top twenty largest customers, suppliers and competitors (unless conditions for use of the simplified merger notification procedure are met)
MERGER REMEDIES REVIEW 2003-2021
A review of merger remedies for the period 2003 – 2021 provides the following key statistics:
- 36 mergers have been cleared with commitments (3.27% of all merger decisions)
- 66.7% involved behavioural remedies, 25% involved structural commitments and 8.3% required both structural and behavioural remedies. Structural remedies require the sale of one or more businesses, physical assets or other rights while behavioural remedies modify or constrain the future conduct of merging firms. Behavioural remedies were far more common in Phase 1 merger reviews (76.2%) while the split of remedies between behavioural and structural remedies was more equal in Phase 2 merger reviews
- Half of all behavioural commitments have consisted of ring-fencing commitments to prevent the flow of competitively sensitive information held by the target business about its competitors. Other commitments have included the obligation to notify the CCPC of future acquisitions, even if the transaction is not notifiable (20%) and access remedies (11%), for example access to information or technology of the merged entity by third parties.
- Out of the 36 mergers approved with commitments to date, 24 commitments have been completed while 12 continue to apply. 6 of these have defined expiry dates lasting up to 5 years and 6 will remain in force until certain ownership/shareholdings change.
PROGNOSIS FOR 2022
The CCPC is currently investigating four transactions in the banking sector, three of which are related to the announced departures of Ulster Bank and KBC from the Irish market:
- M/21/004 – AIB/BoI/PTSB – Synch Payments JV, a proposed joint venture between AIB, Bank of Ireland, Permanent TSB and KBC for the purpose of implementing a new industry-wide mobile payment system service, Synch Payments DAC. The JV was notified on 8 April 2021 and Phase 2 was announced on 8 December 2021
- M/21/021 – Bank of Ireland/Certain Assets of KBC involving the acquisition of some of KBC's assets by BOI. These assets are believed to be €9 billion worth of loans. The transaction was notified on 16 April 2021 and Phase 2 was announced on 20 October 2021
- M/21/040 – AIB/Certain Assets of Ulster Bank. This transaction involves the acquisition of some of Ulster Bank's assets by AIB. These assets are believed to consist of Ulster Bank's €6.5 billion tracker loan book. The transaction was notified on 30 July 2021 and Phase 2 was announced on 31 December 2021
- M/21/076 – PTSB/Certain Assets of Ulster Bank. This transaction involves the acquisition of some of Ulster Bank's assets by Permanent TSB. These assets are believed to consist of non-tracker mortgages and physical bank branches. The transaction was notified on 22 December 2021
The CCPC has commenced Phase 2 investigations in relation to three of these transactions to date in order to establish if they could lead to a substantial lessening of competition in the State. It will be interesting to see how these investigations will progress as the determinations of the CCPC could have a lasting impact on the competitiveness of the Irish banking sector.
Beauchamps EU, Competition & Procurement team
The EU, Competition & Procurement team at Beauchamps has extensive experience advising on all aspects of competition law, including merger control. For more information or to discuss any competition law related issues impacting your business, please get in touch with Dorit McCann or your usual Beauchamps contact.