3.7 Is there any prohibition on completing the transaction before clearance is received or any compulsory waiting period has ended? What are the risks?

A merger, which comes within the jurisdictional tests described above, must not be implemented before clearance has been obtained or the compulsory waiting period has ended. Section 19(1) provides that a notifiable merger shall not be put into effect until the Competition Authority has determined it may be put into effect or the relevant time periods (described in question 3.6 above), have elapsed without the Competition Authority making a determination. Section 19(2) of the Competition Act provides that a notifiable merger which is put into effect prior to a clearance determination is void. Completing prior to clearance (i.e. where clearance is ultimately given) is not a criminal offence. However, contravention of a Competition Authority decision blocking a concentration or allowing it subject to conditions does amount to a criminal offence punishable by fines and imprisonment.

The Competition Act does not state whether a transaction which is completed prior to clearance is rendered void for all time, or merely until such time as the Competition Authority makes a clearance determination. In May 2003, the Competition Authority issued a Press Release on alleged "gun jumping", stating that "parties must be very careful to ensure they maintain separate and independent operations until the Competition Authority has made its determination". In that case, the Competition Authority conducted an investigation and ultimately found that implementation had not in fact taken place so no breach of the pre-merger waiting period had occurred.

The point was considered in detail by the Competition Authority in March 2004. In Radio 2000/Newstalk 106, Radio 2000 acquired operational control of the target radio station before the transaction had been approved by the Competition Authority. The Competition Authority concluded that the Section 19(2) of the Competition Act is designed to protect the Competition Authority's right of review and is not intended to render a merger or acquisition void indefinitely. The effect is that a transaction which has been implemented prior to clearance remains void until such time as the Competition Authority issues a decision approving the transaction. While this practical approach provides much needed clarity to merging parties on the issue of "voidness", it is somewhat at odds with a previous statement by the Competition Authority that it views "gun jumping" as a very serious matter and will give high priority to investigating allegations that merging parties have put a transaction into effect before expiry of the mandatory waiting period. A further mechanism employed by merging companies completing a transaction prior to clearance is to provide the Competition Authority with "hold separate" undertakings. In Noonan Services Group Limited/Federal Security Group and Stena/DFDS, the merging companies informed the Competition Authority that they would "hold separate" until clearance was issued by the Competition Authority. While the Authority will nonetheless take the view that a breach of the Competition Act has occurred, to date it has not taken any action against the parties in such circumstances.

3.8 Where notification is required, is there a prescribed format?

The Competition Authority introduced a revised standard form for notifications (Form M), effective from 1 September 2005, which consolidates and replaces the previous Forms M1 and M2 (available at www.tca.ie ). All parts of the Notification Form must generally be completed unless expressly waived by the Competition Authority in pre-notification discussions. In particular, the requirement to complete question 4 of the Notification Form (which relates to overlapping products and/or services) may be waived by the Competition Authority, and the parties may be exempted from completing some or all of question 4, where there is no overlap or the overlap is de minimis.

In general, it is not necessary to have pre-notification meetings with the Competition Authority, unless the merger has particular competition concerns, or the overlap is de minimis and the parties are seeking an exemption from responding to some or all of question 4. It is possible to engage in "pre-notification discussions" with the Competition Authority prior to the conclusion of a binding agreement, where the parties can show a bona fide intention of proceeding with the transaction. This may be evidenced by, for example, a letter of intent signed by the parties. Pre-notification discussions offer the possibility to discuss jurisdictional and other legal issues as well as those outlined above in relation to completion of the Notification Form. However, the Competition Authority states that it is not bound by any comments made in the course of such discussions. Pre-notification discussions are also subject to conditions of strict confidentiality.

3.9 Is there a short form or accelerated procedure for any types of mergers?

No. The procedure is the same for all mergers. However, parties can petition the Competition Authority to speed up the process by reducing or eliminating the period for third party notice under Section 20 of the Competition Act. The Competition Authority has demonstrated a willingness to accommodate the specific circumstances of individual mergers by expediting the review process, for example, the HMV Ireland/Zavvi merger was cleared in nine days due to insolvency concerns. However, the Competition Authority is unlikely to use such accelerated procedures save in the most exceptional of circumstances.

3.10 Who is responsible for making the notification and are there any filing fees?

The obligation to notify is on all of the "undertakings involved" in a transaction (this does not include the vendor), although in practice most notifications are submitted jointly. The filing fee is currently €8,000 and is payable on filing.

4 Substantive Assessment of the Merger and Outcome of the Process

4.1 What is the substantive test against which a merger will be assessed? Are non-competition issues taken into account?

Section 20(1)(c) of the Competition Act provides that the substantive test for assessment is "whether the result of the merger or acquisition would be to substantially lessen competition in markets for goods or services in the State" (the "SLC test"). The Competition Authority interprets the SLC test in terms of consumer welfare and, in particular, whether a merger would be likely to result in a price rise to consumers. The Competition Authority has published a Notice in respect of guidelines for merger analysis (Notice in Respect of Guidelines for Merger Analysis, (N/02/004), 16 December 2002), in which it comments in detail on the approach it takes in applying the SLC test in assessing transactions. This approach is based to a significant extent on economic analysis. While the Competition Authority initiated a consultation on this Notice last year, no new Notice has yet been issued.

In assessing market concentration, the Competition Authority applies the Herfindahl-Hirschmann Index of Concentration ("HHI"), which involves adding the squares of the market shares of all market participants pre- and post-merger and calculating the extent to which the merger will give rise to changes (the delta). The Competition Authority uses the level and the change in the HHI as a screen for deciding whether to intensify its analysis of effects on competition.

In assessing market power the Guidelines on Merger Analysis state that the Competition Authority considers, inter alia: (i) the market structure – degree of concentration, relative market shares, unilateral and co-ordinated effects, vertical integration issues, etc.; (ii) the likely effect of the merger on the behaviour of the merged entity; (iii) the likely reaction of competitors and customers; and (iv) countervailing buyer power. The Competition Authority also has regard to barriers to market entry and efficiencies, including in very limited circumstances, the "failing firm defence". The Competition Authority places emphasis on issues such as market concentration, capacity and capacity utilisation, pricing trends and practices, barriers and incentives to entry and expansion, and countervailing buyer power. The Competition Authority is still somewhat circumspect of arguments based on efficiencies and there is a high burden of proof on merging parties to demonstrate that claimed efficiency gains are a direct and specific result of the merger, are sufficient in magnitude to outweigh any anti-competitive effect, and are clearly verifiable, quantifiable and timely.

The Competition Authority undertakes an economics based analysis, particularly in complex cases. It regularly appoints outside economic experts to assist it in Phase II cases, and even in Phase I cases in some circumstances.

The Competition Authority has blocked three mergers since the introduction of the Competition Act: IBM/Schlumberger, Kingspan/Xtratherm and Kerry/Breeo.

The Kerry/Breeo merger was blocked by the Competition Authority on 29 August 2008 after a full Phase II investigation. According to the Competition Authority, the transaction would substantially lessen competition in the markets for the production, supply and distribution of rashers, non-poultry cooked meats and processed cheese. In particular, the Competition Authority believed that in those markets there would be, post-merger, no credible alternative brands capable of constraining the merged entity from permanently raising the price of the relevant products. Further, the Competition Authority considered that private, own-brand labels were not credible or close competitors to branded products. Finally, the Competition Authority rejected the parties' claims that retailers could exercise sufficient buyer power or that the merger would lead to significant efficiencies. In March 2009 the High Court annulled the decision of the Competition Authority prohibiting the merger and in April 2009, the Competition Authority initiated an appeal to the Irish Supreme Court against the ruling of the High Court. It is likely that the Supreme Court will hear the appeal later this year.

If a merger involves a credit institution and the Minister for Finance exercises his jurisdiction under Section 7(2) of the Credit Institutions Act, he may approve the merger if he takes the view that (i) it will not result in an SLC in markets for goods or services in the State; or (ii) even if the merger will result in an SLC, the merger is necessary having regard to: (a) maintenance of the stability of the financial system in the State; (b) the need to avoid a serious threat to the stability of credit institutions; or (c) the need to remedy a serious disturbance in the economy of the State. The Minister for Finance has exercised this power once, when he approved the proposed acquisition by Allied Irish Banks plc (AIB) of EBS Building Society (EBS) on 26 May 2011. In approving the AIB/EBS merger the Minister for Finance indicated that he made his decision on the basis that the result of the acquisition will not give rise to an SLC and because there was no realistic alternative which would ensure that competition from EBS would be preserved.

4.2 What is the scope for the involvement of third parties (or complainants) in the regulatory scrutiny process?

Section 20(1)(a) of the Competition Act provides that, within seven days following receipt of notifications, the Competition Authority is obliged to publish a notice of receipt inviting third party comment. The Revised Merger Procedures state that third parties who wish to make submissions about a merger must do so within ten days of publication of the notice. The Competition Authority may however change this time limit by notice on its website in individual cases, if circumstances so require.

Section 20(1)(b) provides that the Competition Authority may enter into discussions, at any stage of its investigation, with the undertakings involved or third parties, with a view to identifying measures which would ameliorate any adverse effects of the merger or acquisition on competition. Third parties can make submissions and may meet with case officers at any time in Phase I or Phase II if they can demonstrate a legitimate interest in the merger and the Competition Authority can actively request views of third parties in Phase I. Phase II investigations provide another opportunity for third parties to make submissions and comment and the Competition Authority is likely to actively seek third party views and request that third parties respond to questions and provide the Competition Authority with documentation as requested. Pursuant to Section 31, the Competition Authority may invoke its powers to summon witnesses, including third parties, to appear before it to be examined on oath and to produce documents.

The Competition Authority's document on Access to the File in Merger Cases, which came into effect on 1 March 2006, states that access to the file in the context of merger review will remain limited to those undertakings to whom the assessment is addressed (see question 3.6 above). Third parties have no right to appeal merger determinations to the courts.

4.3 What information gathering powers does the regulator enjoy in relation to the scrutiny of a merger?

The Competition Authority has considerable information gathering powers. The main source of information for the Competition Authority in merger control cases is the information submitted with the notification form and subsequently by the notifying parties. However, the Competition Authority publishes notice of receipt of notifications on its website and welcomes submissions from any third parties including competitors, customers and consumers, as well as seeking views and information both formally (under witness summons) and informally. The Competition Authority will usually undertake its own "market investigation" contacting customers, suppliers and competitors for their views and sometimes engaging in market surveys etc. The Competition Authority also places a high degree of reliance on parties' internal documentation. In a number of cases (Grafton/Heiton and HJ Heinz Company/HP Foods Limited), it has pointed out that internal documents, prepared by undertakings in their ordinary course of business, provide a strong and clear indication as to where an undertaking views itself in an industry.

The Competition Authority may also make a formal written request to the notifying parties to provide further information within a specified time period pursuant to Section 20(2). Failure to comply with a formal request within the time period specified by the Competition Authority is a criminal offence pursuant to Section 18(9) (see question 3.3 above for details of fines).

Pursuant to Section 31, the Competition Authority may do any or all of the following: issue a witness summons; examine under oath; and/or require production of a document. Failure to comply with any of the above is a criminal offence and if found guilty a person is liable on summary conviction to a fine of up to €3,000, or to imprisonment for a term not exceeding six months, or both. The Competition Authority also invokes its powers to summon witnesses (whether from the notifying parties, or third parties) to appear before it to be examined on oath, or to produce documents in cases where it considers the information requested to be important to its analysis.

Section 45 of the Act gives the Competition Authority "dawn raid" powers i.e. authorised officers have the power to enter and search business premises and vehicles as well as the private dwellings of directors, managers or members of staff. Authorised officers of the Competition Authority may include and/or be accompanied and assisted on dawn raids by members of the Garda Síochána.

Dawn raid investigations are carried out pursuant to a warrant of the District Court. During the dawn raid, authorised officers may inspect, copy, seize and/or retain for a given period books, documents and records relating to the business, or take appropriate steps to preserve them. Authorised officers may also question directors or employees about the carrying on of the business or any other information they may reasonably require. Obstructing an authorised officer is a criminal offence.

On a dawn raid an authorised officer is entitled to require officers or staff of the undertaking concerned to provide any information he may require in regard to the activity carried on by the business. As set out above, the Competition Authority may also summon witnesses to appear and examine them under oath. Where a witness is examined on oath by the Competition Authority the procedure is the same as for a witness of the High Court including the privilege against self-incrimination.

4.4 During the regulatory process, the provision is there for the protection of commercially sensitive information?

When submitting a notification, notifying parties are invited to identify commercially sensitive information that they believe should remain confidential, together with reasons why the information should be classified as confidential. The Competition Authority considers all reasonable requests to maintain confidentiality. The Competition Authority also allows the notifying parties an opportunity to make submissions on deletion of possible confidential information from the public version of its determination. Third parties, including complainants, are also offered the opportunity to protect information which amounts to a business secret or is otherwise confidential.

Where the Competition Authority intends to reject a claim of confidentiality, it will inform the relevant person or undertaking in writing of its intentions and reasons and set a time limit within which such undertaking may inform it in writing of its views.

Information which is already known outside the undertaking making the claim will not normally be considered confidential. Also information that has lost its commercial importance, due for instance to the passage of time, can no longer be regarded as confidential. As a general rule, turnover, sales and market share data which is more than five years old is no longer considered confidential.

The provisions of the Freedom of Information Act, 1997 as amended (the "FOI Acts") have applied to the Competition Authority since 1998. The FOI Acts allow public access to information held by the Competition Authority, which is not routinely available from other sources.

5 The End of the Process: Remedies, Appeals and Enforcement

5.1 How does the regulatory process end?

The Competition Act provides for a "determination" to be issued in all cases. The Competition Authority must inform the notifying parties and any other third parties who have made submissions, within one month of the "appropriate date" whether it has determined that the merger or acquisition will not substantially lessen competition in markets for goods or services in Ireland, or that it intends to carry out a full Phase II investigation. The "appropriate date" is the date of receipt of the notification or, if the Competition Authority requests further information from the parties in writing within one month of receipt of the notification, one month from the date the Competition Authority receives the requested information. It also publishes its determination on its website at the earliest possible date thereafter (and in any event no later than two months from the date of the determination).

If, within eight weeks of its decision to conduct a full Phase II investigation, the Competition Authority is satisfied that the merger will not substantially lessen competition in the market, it may determine that the merger may be put into effect.

When having considered all the relevant information, evidence and submissions, the Competition Authority forms a view of whether there will be a substantial lessening of competition, it will at the end of the three-month Phase II period, provide a written determination that the merger may be put into effect, blocked or cleared subject to conditions. Pursuant to the Revised Merger Procedures, on the date the Competition Authority makes its determination, it will publish a notice of the making of such a determination on its website. As discussed in the response to question 3.6 above, it is important to note that the Competition Authority has requested that new legislation on mergers extends the period of time allocated for Phase II investigations.

5.2 Where competition problems are identified, is it possible to negotiate "remedies" which are acceptable to parties?

The Competition Authority may discuss divestment, undertakings or other measures with notifying parties during the course of the examination of the merger. Pursuant to Section 20 of the Competition Act, such commitments may be accepted in either Phase I or Phase II. In Phase I, where such undertakings are discussed, forty-five days will be allowed for the Phase I review period. However, while the parties can volunteer commitments in Phase I, the Competition Authority may only impose conditions on its determination after a Phase II investigation. Once commitments have been agreed with the Competition Authority, they become binding on the party which gives them and are ultimately published by the Competition Authority as part of its determination.

The Competition Authority can seek to enforce any such commitments or conditions by injunction in any court of competent jurisdiction and, under Section 26 of the Competition Act, any person who contravenes a provision of a commitment or determination of the Competition Authority or order of the Minister will be guilty of a criminal offence attracting both fines and imprisonment.

5.3 At what stage in the process can the negotiation of remedies be commenced? Please describe any relevant procedural steps and deadlines?

Sections 20(1)(b) of the Competition Act provides that the Competition Authority may enter into discussions with the undertakings involved in the merger or acquisition or with any individual or any other undertaking with a view to identifying measures which would ameliorate any effects of the merger. Sections 20(3) of the Competition Act provides that the negotiation of remedies or commitments may be commenced at any stage of a Phase I or Phase II investigation.

5.4 If a divestment remedy is required, does the merger authority have a standard approach to the terms and conditions to be applied to the divestment?

Because the provisions of the Competition Act require mandatory pre-notification of all mergers or acquisitions falling within its scope and that implementing a merger prior to clearance is void, a divestment remedy is not normally required. However, in the event that a non-notifiable merger was put into effect or a notified merger still implemented, and the Authority found the transaction to be anticompetitive it could seek to use the provisions of Section 4(1) of the Act and seek the Court's declaration that any such transaction was an agreement that had as its object or effect the restriction of competition so that it is void or seek to enforce any determination blocking a merger which ultimately proceeds.

5.5 Can the parties complete the merger before the remedies have been complied with?

As explained above, implementation of a merger prior to clearance is void. Therefore, the question of completion prior to fulfilment of remedies will depend on the nature of the conditions imposed by the Authority in the case in question.

5.6 How are any negotiated remedies enforced?

Once commitments have been agreed with the Competition Authority, they become binding on the party which gives them and are ultimately published by the Competition Authority as part of its determination. Binding commitments may be enforced by the Competition Authority by High Court injunction and breach of a binding commitment is also a criminal offence. A person who fails to comply with a commitment may be liable to a fine of up to €10,000 or to imprisonment for up to two years or both a fine and imprisonment.

5.7 Will a clearance decision cover ancillary decisions?

A merger clearance decision by the Competition Authority covers not only the notified transaction itself, but also any arrangements constituting restrictions which are directly related and necessary to the implementation of the merger, and which are referred to in the notification. Sections 4 and 5 of the Competition Act specifically provide that putting a merger into effect, together with "any arrangements constituting restrictions which are directly related and necessary to the implementation of the merger and are referred to in the notification" shall not be prohibited by Sections 4(1) or 5(1). Merger notifications are the only occasion on which such restrictions can be "notified" to and cleared by the Authority, so there is an incentive to refer to them in the notification.

On 1 July 2002, the Competition Authority published a Notice in respect of agreements involving a merger and/or sale of business. The Notice states that an ancillary restriction must be limited in terms of its duration, geographic coverage and subject matter to what is necessary to secure the adequate transfer of goodwill. The Notice applied from 1 July 2002 to 1 January 2003. Although no new guidance has since been issued under the Competition Act, ancillary restrictions were considered by the Competition Authority in Musgrave Limited/Express Checkout. In that case, the Competition Authority objected to the terms of non-compete restrictions on the vendor as originally notified. The provisions in question restricted the vendor, inter alia, from competing with the target supermarket businesses anywhere in Ireland, from soliciting customers or suppliers of the targets for any purpose, and from soliciting its employees for any purpose, for a period of two years after completion. The parties subsequently gave a voluntary commitment to the Competition Authority to revise the restrictive covenants to a prohibition on the above activities for the purpose of any competing business in the respective geographic areas of the target companies for a period of two years.

5.8 Can a decision on merger clearance be appealed ?

Yes. Parties to a merger may appeal a decision of the Competition Authority prohibiting a merger or imposing conditions to the High Court on a point of fact or law. A special accelerated appeals process applies. The appeal must be made within one month of the Competition Authority's decision. The High Court should then issue its decision within two months, if practicable. Given that the High Court may be asked to revisit issues of fact, it may be difficult to meet this aspirational deadline. A further appeal on a point of law only may be made to the Supreme Court. The Competition Act provides no right of appeal against a decision to clear a merger and third parties are not given a right of appeal. In September 2008, the Kerry Group successfully appealed the decision of the Competition Authority to block its acquisition of Breeo before the High Court. While the transaction subsequently went ahead, the Competition Authority has initiated an appeal of the High Court decision to the Supreme Court. The outcome of the appeal is still awaited at the time of writing.

5.9 Is there a time limit for enforcement of merger control legislation?

Section 19(1)(a) of the Competition Act states that a merger shall not be put into effect until the Competition Authority has so determined. Section 19(2) of the Act states that any such merger or acquisition which purports to be put into effect is void. There is no time limit in this regard. (See question 3.7 above for more details.) Section 18(9) of the Competition Act provides that a person in control of an undertaking which has failed to notify the Competition Authority or failed to provide required information within a specified time period is guilty of an offence. Summary proceedings must be brought within six months. However, there is no time limit for bringing proceedings on indictment.

6 Miscellaneous

6.1 To what extent does the merger authority in Ireland liaise with those in other jurisdiction ?

Section 46 of the Competition Act permits the Competition Authority to enter into arrangements with competition authorities in other countries for the exchange of information and the mutual provision of assistance. In relation to the exchange and use of confidential information, Section 46(3) provides that the Competition Authority shall not furnish any information to a foreign competition body unless it requires and obtains from that body an undertaking in writing by it that it will comply with terms specified in that requirement, being terms that correspond to the provisions of any enactment concerning the disclosure of that information by the Competition Authority. In effect, parties may give a waiver to enable the Competition Authority to engage with other officials from other competition authorities in a meaningful way.

The Competition Authority is in regular contact with regulatory authorities in other jurisdictions in relation to merger control. The Competition Authority is also a member of the International Competition Network and the European Competition Network.

6.2 Please identify the date of which your answers are up to date

21 October 2011.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.