State to seek feedback on changes to law on mergers

Since 2014, takeovers of firms with turnover of €3m need competition body’s approval

Tánaiste Frances Fitzgerald:  “With the Irish economy recovering, the issue of the appropriateness of the amended financial thresholds requires revisiting.” Photograph: Eric Luke

Tánaiste Frances Fitzgerald: “With the Irish economy recovering, the issue of the appropriateness of the amended financial thresholds requires revisiting.” Photograph: Eric Luke

 

The Government plans to begin seeking feedback on whether a shake-up of the Republic’s mergers laws has worked.

A change to the law in 2014 required takeovers involving businesses with a turnover of €3 million or more to get the Competition and Consumer Protection Commission’s (CCP) approval.

Before that, the regulator only had to be told of deals involving businesses with a turnover of €40 million or more. The change meant the number of transactions notified to the commission for approval increased sharply.

The Department of Business, Enterprise and Innovation plans to begin a consultation on the changes, introduced in the Competition and Consumer Protection Act 2014, to establish if they work.

The changes were meant to ensure that the regulator caught deals with an impact on competition in local and national markets for goods and services. When the Oireachtas passed the law, the then minister for jobs, enterprise and innovation, Richard Bruton, pledged to review its impact.

Tánaiste and Minister for Business, Enterprise and Innovation Frances Fitzgerald said that, based on experience to date, she believed the review was warranted. “In addition, with the Irish economy recovering, the issue of the appropriateness of the amended financial thresholds requires revisiting,” she said.

Impact on competition

Deals involving businesses whose turnover reaches or exceeds the threshold must be notified to the commission, which investigates them to establish if they have any impact on competition. It approves most transactions, but it has imposed conditions on several takeovers, mainly requiring they sell some element of the merged business, before allowing them to go ahead.

Solicitor Ronan Dunne, head of competition, regulated markets and EU law, with law firm Philip Lee, said the legislation appeared to be aiding the regulator in scrutinising mergers with the potential to hit competition in the Republic.

“The remit of the CCP is to catch transactions that might have an effect on local markets, and it seems to be doing that,” he said.

However, Mr Dunne pointed out that the changes introduced in 2014 have led to commercial property sales being notified to the commission, and questioned if that was necessary: “That is the only area where we appear to be out of kilter with the rest of Europe. ”

Along with the thresholds for notifying mergers and acquisitions to the regulator, the Government is also seeking views on the length of time taken for the commission to investigate transactions.

The CCPC has up to 30 working days for a “phase one” investigation, which is all that is required for most transactions notified to the commission. The department is also asking whether this should be changed.