The Competition (Amendment) Act 2022 (Act) was signed into law on 29 June 2022. The Act gives the two Irish competition authorities, the Competition and Consumer Protection Commission (CCPC) and the Commission for Communications Regulation (ComReg), significant additional enforcement powers as well as additional powers relating to mergers and acquisitions. In this regard, the Act implements Directive EU 2019/1 (ECN+ Directive). It is anticipated that the Act will commence on 1 August 2022.
In this article we look at the new powers relating to mergers and acquisitions.
Power to Review Below Threshold Mergers
The Act gives the CCPC the power to require parties to notify a below threshold transaction which, in the opinion of the CCPC, has an effect on competition in Ireland. This is a wide ranging power which the CCPC can exercise within 60 working days of the earlier of (i) the announcement of a public bid; (ii) the date on which the CCPC becomes aware that the parties have entered into the relevant agreement; or (iii) the date on which the transaction is put into effect. Once notified, the CCPC can review the transaction in the same way as an above threshold transaction.
The current financial thresholds for notification of a merger or acquisition in Ireland are combined turnover in Ireland of purchaser and target of at least €60 million; and turnover in Ireland of each of two or more parties of at least €10 million.
Power to Impose Interim Measures
For the first time, the CCPC is given the power to impose interim measures in respect of transactions that have been notified to it (including below threshold transactions) where it considers it appropriate to do so due to the risk that the transaction may have an effect on competition in Ireland.
Interim measures include requiring an undertaking to:
- refrain from taking any steps to implement the transaction;
- take steps to mitigate any steps already taken;
- impose obligations regarding the safeguarding of any assets or carrying on of activities;
- impose obligations preventing the undertaking from engaging in certain conduct, including selling assets, integrating IT systems, participation in a tender process, discontinuing products or exchanging commercially sensitive information.
Failure to comply with an interim order is a criminal offence and is subject to a fine of up to €250,000 and a daily default fine of up to €25,000.
Gun Jumping
The Act introduces a new gun jumping offence, ie where a transaction that should have been notified is implemented prior to clearance from the CCPC. The undertakings involved, and persons in control who knowingly or wilfully authorise or permit the implementation, are subject to fines of up to €250,000 and daily fines of up to €25,000. Previously, it was only an offence not to notify a notifiable transaction, but not to implement a transaction prior to approval from the CCPC.
Power to Unwind Transaction
The Act gives the CCPC the power to require a transaction which was completed without approval and which it believes substantially lessens competition in Ireland, to be unwound or dissolved or to take such steps to restore the situation as far as practicable.
TRANSITIONAL PROVISIONS
The Act applies to conduct since 4 February 2021, which is the date by which the ECN+ Directive should have been transposed into Irish law. Where an investigation relates wholly to conduct that took place before 4 February 2021 or where an investigation has been opened and is pending prior to commencement of the Act, the CCPC's previous powers will apply.
COMMENT
The Act places powerful new sanctions at the disposal of the CCPC and ComReg which are similar to powers held by other competition authorities in the UK and Europe. This increase in enforcement powers for breaches of competition law in Ireland has been long awaited and is to be welcomed. The theory is that changes in behaviour will only occur when effective deterrents, including the power to impose fines, exist.
The Act amounts to a sea change in Irish competition law and the scale and strength of the new powers, both in terms of merger control and competition enforcement, should not be underestimated. It is expected to lead to a much more active enforcement regime, though it may take time for some of the new enforcement powers to 'bite'. This is because the changes introduced by the Act only apply to conduct after 4 February 2021. In addition, due to the complexity of the Act, there are likely to be challenges to the exercise of these new powers.
The new merger control powers, for example the power to require notification of a below threshold merger, are likely to be exercised sooner, especially in a small economy like Ireland. Merging parties should carefully consider the competition risks of proposed transactions.
See also Significant New Competition Powers Introduced In Ireland – Ignore At Your Peril! and New Investigative Process for CCPC and ComReg