This article appeared in the 2012 edition of The International Comparative Legal Guide to: Merger Control; published by Global Legal Group Ltd, London.
Welcome to the eighth edition of The International Comparative Legal Guide to: Merger Control. This guide provides corporate counsel and international practitioners with a comprehensive worldwide legal analysis of the laws and regulations of merger control. It is divided into two main sections: Four general chapters. These are designed to provide readers with a comprehensive overview of key issues affecting merger control, particularly from the perspective of a multi-jurisdictional transaction. Country question and answer chapters. These provide a broad overview of common issues in merger control in 54 jurisdictions. All chapters are written by leading merger control lawyers and we are extremely grateful for their excellent contributions. Special thanks are reserved for the contributing editors Nigel Parr and Catherine Hammon of Ashurst LLP, for their invaluable assistance. Global Legal Group hopes that you find this guide practical and interesting. The International Comparative Legal Guide series is also available online at www.iclg.co.uk .
Relevant Authorities and Legislation
1.1 Who is/are the relevant merger authorty(ies)
The Irish Competition Authority (the "Competition Authority") is responsible for the promotion and enforcement of competition law in Ireland. It is an independent body originally established under the Competition Act, 1991. The workings of the Competition Authority are now governed by the Competition Act, 2002, as amended (the "Competition Act"). Part 3 of the Competition Act, which came into force on 1 January 2003, governs Ireland's merger control regime. The Competition Authority has sole responsibility for non-media mergers and mergers not involving "credit institutions" necessary to maintain the stability of the financial system of the State. As regards media mergers, each of the Competition Authority and Minister for Jobs, Enterprise and Innovation (the "Minister") has a role in respect of media mergers. On 17 September 2011, the Minister for Communications, Energy and Natural Resources (the "Minister for Communications") announced that the Government had approved proposals for new legislation governing media mergers which will transfer responsibility for media mergers to the Minister for Communications. Draft legislation has not yet been published.
As regards mergers involving "credit institutions", in circumstances where the Minister for Finance considers that a merger or acquisition involving a credit institution is necessary to maintain the stability of the financial system in the State, then the power to determine whether or not the merger or acquisition should be approved will lie with the Minister for Finance and not the Competition Authority. Section 7 of the Credit Institutions (Financial Support) Act 2008 (the "Credit Institutions Act") provides that such mergers will be notifiable to the Minister for Finance, rather than the Competition Authority and that such mergers may not be implemented without Ministerial approval.
In early 2012 the Government is to introduce legislation to amalgamate the Competition Authority and the National Consumer Agency. The latter is the statutory body charged with defending consumer rights and interests through, inter alia, the enforcement of consumer law. It is possible therefore, in order to accommodate the National Consumer Agency's objectives, that the "new" Competition Authority may be required to accord consumer welfare greater prominence in the assessment of mergers.
1.2 What is the Merger legislation?
Ireland's merger control regime is governed by Part 3 of the Competition Act 2002 and the Credit Institutions Act 2008.
The Competition Authority has also published a number of helpful guidance notes including "Access to the File in Merger Cases" and "Revised Procedures for the Review of Mergers and Acquisitions".
1.3 Is there any other relevant legislation for foreign mergers?
Irish law contains no foreign investment control legislation.
1.4 Is there any other relevant legislation for mergers in particular sectors?
The acquisition of shares in financial services companies is subject to additional rules under Irish law. Directive 2007/44/EC (the "Directive") has been implemented in Ireland by the European Communities (Assessment of Acquisitions in the Financial Sector) Regulations 2009. These Regulations amend rules contained in the European Communities (Licensing and Supervision of Credit Institutions) Regulations 1992, the European Communities (Non- Life Insurance) Framework Regulations 1994, the European Communities (Life Assurance) Framework Regulations 1994, the European Communities (Reinsurance) Regulations 2006, the European Communities (Markets in Financial Instruments) Regulations 2007 and the European Communities (Undertakings for Collective Investments in Transferable Securities) Regulations 2011. The prior consent of the Central Bank of Ireland (the "Central Bank") is required in respect of the direct or indirect acquisition of shares which will result in a person holding more than 10 per cent of the capital or voting shares of such Irish authorised entities, including an (MiFID) investment firm (e.g. stockbroker), a UCITS management company or insurance company. In the case of an Irish authorised credit institution (bank), consent is required for the direct acquisition of 5 per cent or more of the voting rights. The approval of the Central Bank is also required for all such entities once a 10 per cent threshold is exceeded where further acquisitions would result in the holder owning more than 20 per cent, 33 per cent or 50 per cent of the shares in the company. Similar rules apply to "local" brokers and other intermediaries regulated by the Investment Intermediaries Act 1995. Other instances when the prior consent of the Central Bank is sought arise where the holding is less than 10 per cent but where the Central Bank considers it possible to exercise control or a significant amount of influence over the management of the entity in question. Such transactions must not proceed without the approval of the Central Bank and there is a prescribed assessment period as set out in the Directive (broadly 60 working days).
Transactions caught by Merger Control Legislation?
2.1 Which types of transaction are caught – in particular, how is the "concept" of control defined?
Under Section 16(1) of the Competition Act, a merger or acquisition is deemed to occur if:
two or more undertakings, previously independent of one another, merge;
one or more individuals or other undertakings who or which control one or more undertakings acquire direct or indirect control of the whole or part of one or more other undertakings;
the result of an acquisition by one undertaking (the "first undertaking") of the assets (including goodwill), or a substantial part of the assets, of another undertaking (the "second undertaking"), is to place the first undertaking in a position to replace (or substantially to replace) the second undertaking in the business or, as appropriate, the part of the business in which that undertaking was engaged immediately before the acquisition; or
a joint venture is created which performs, on an indefinite basis, all the functions of an autonomous economic entity.
Tests one, two and four outlined above replicate the tests set out in the European Union Merger Regulation ("EUMR"). The term "control" is defined in Section 16(2) in similar terms...