A leading car dealer must pay €2,000 to charity after pleading guilty to breaking competition law by failing to get the regulator’s approval to take over a rival.
Spirit Ford owner Armalou Holdings faced the first prosecution of its kind yesterday for buying rival Lillis-O'Donnell Motor Company in 2015 before getting the Competition and Consumer Protection Commission's (CCPC) approval.
Judge Anthony Halpin ordered Armalou to pay €2,000 to Dublin charity Little Flower Penny Dinners and imposed the Probation Act for one year after the company pleaded guilty to six breaches of mergers law.
Since 2014, parties must notify takeovers or mergers involving businesses with a yearly turnover of €3 million or more to the CCPC for approval before they can go ahead. Armalou’s sales in 2015 were €157 million.
Failure to do this, known as “gun jumping”, is a crime for which offenders can be fined between €3,000 on summary conviction and up to €250,000 if they are tried on indictment, that is before a jury.
Armalou took over Lillis-O’Donnell in December 2015. The pair agreed the deal in early 2014, but had to wait for more than a year for banks to agree to restructure the businesses’ loans.
In the interim, competition law changed, reducing the threshold for notifying transactions to the regulator to €3 million. Armalou maintained that there was a misunderstanding between its lawyers and financial advisors over which notification threshold applied.
The CCPC's deputy director in charge of criminal enforcement, Joseph Walser, confirmed to the Dublin District Court that a third motor dealer told the commission of the Armalou-Lillis-O'Donnell transaction in late 2017. The commission began an investigation and interviewed the company's directors under caution in January last year.
In February 2018, the companies notified the deal to the CCPC, which cleared the transaction on the basis that it posed no threat to competition in any market for goods and services in the State.
Mr Walser agreed that the company had co-operated fully with the investigation and had complied with the obligation to notify the deal to the CCPC once it learned of the law.
Saying that a charitable donation was the best remedy, the judge noted that it was an “inadvertent rather than a wilful breach” of mergers law, which is designed to protect consumers.
“The CCPC advised that the transaction did not affect competition nor did it distort the market in this particular field,” he said. He added that Armalou had not come to the authorities’ attention before this.
Speaking afterwards, CCPC chairwoman Isolde Goggin warned that there was potential for considerable harm to the market if transactions were allowed to go ahead without approval.
“Today’s hearing is a strong reminder to businesses and legal practitioners that failing to notify a notifiable transaction is a criminal offence and it is essential that merging parties comply,” she said.
Armalou Holdings owns the Spirit chain of motor dealers in Dublin and OHM group, which imports and distributes Jaguar and Land Rover cars in the Republic . The court adjourned a similar hearing, involving Lillis-O'Donnell owner Airfield Villas Ltd, to May 3rd next.