The Competition and Consumer Protection Commission ("CCPC") has published its annual Mergers & Acquisitions Report for 2022 (the "Report"), providing details and statistics regarding the M&A transactions examined by the CCPC in 2022.
◾ The CCPC's intervention rate increased in 2022 in respect of more complex transactions compared to previous years: amongst the 68 notifications in total in 2022, 30 requirements for further information, four Phase 2 merger assessments, four commitments decisions (at both Phase 1 and Phase 2) and one prohibition decision were issued (the first prohibition since 2008).
◾ The CCPC cleared over half of all notifications in 2022 under its Simplified Merger Notification Procedure ("SMNP") related to non-complex transactions.
◾ Looking ahead into 2023, the CCPC looks forward to the commencement of the Competition (Amendment) Act 2022 (the "2022 Act") which will introduce new and enhanced enforcement powers for the regulator including a new CCPC power to call in 'below threshold' transactions.
The key findings of the Report are outlined as follows:
◾ Notifications – The CCPC received a total of 68 merger notifications, representing a 16% decrease in notified mergers from 2021, which was 81. Notably, 37 notifications were made under the SMNP, or just over half of all notifications. Professional Services (including legal, accounting, consultancy, engineering, veterinary, etc.) was the most prominent sector, accounting for nine notifications. This was followed by Grocery – Retail & Wholesale with seven notifications, while Financial and Insurance Services and Energy & Utilities and Media each attracted six notifications.
◾ Determinations –The CCPC issued 70 determinations (or clearance decisions) during the year – 55 related to notifications made in 2022, with the remaining 15 relating to notifications carried over from 2021.39 determinations were issued under the SMNP accounting for 56% of all determinations in total.
◾ Extended Phase 1 and Phase 2 investigations – 18 investigations involved an extended Phase 1 review – seven of which were carried forward from 2021.
◾ Of the seven carried forward from 2021, one was determined in Phase 1 (M/21/068 Heineken / Comans) while six were subject to Phase 2 investigations (M/21/004 AIB / BoI / PTSB – Synch Payments JV; M/21/021 Bank of Ireland / Certain Assets of KBC; M/21/040 AIB / Certain Assets of Ulster Bank; M/21/071 Tesco Ireland / Joyce's Supermarkets; M/21/076 PTSB / Certain Assets of Ulster Bank; M/21/079 Uniphar / NaviCorp).
◾ Of the remaining 11 determinations that followed an extended Phase 1 review, Phase 1 determinations were made in respect of four (M/22/004 Exponent / Xeinadin; M/22/006 Glanbia Co-Op / Glanbia Ireland; M/22/007 Assa Abloy / Arran Isle; M/22/047 BWG / McCarrick Brothers Wholesale), three were withdrawn (M/22/015 East Cork Oil / Misty Lane; M/22/017 Linneaus Veterinary / Blackhall Facilities; M/22/037 Thorntons Recycling / Carducci Holdings (The City Bin Co.)), and four were still ongoing at the end of 2022 (M/22/040 Q-Park / Tazbell Services; M/22/044 AIB / Certain Mortgage (Tracker) Assets of Ulster Bank; M/22/049 Uniphar / LXV Remedies (Sam McCauley); M/22/052 Linneaus Veterinary / Blackhall Facilities).
◾ Formal commitments – These were required to secure clearance in four cases in 2022:
◾ M/21/004 – AIB / BoI / PTSB – Synch Payments JV involving behavioural commitments whereby (i) Synch has set out objective eligibility criteria for any banks or other financial institutions that wish to become participants in the Synch mobile payments service; (ii) Synch will allow for interoperability by providing access to a software development kit (SDK) component, allowing licensees to embed certain payment functionalities within their own apps; (iii) a governance structure has been implemented, including independent board members; and (iv) safeguards have been established to prevent the exchange or disclosure of commercially sensitive information.
◾ M/21/021 – Bank of Ireland / Certain Assets of KBC involving a hybrid commitment by Bank of Ireland to (i) make €1 billion in funding available to certain non-bank lenders through the purchasing of securities issued by them thereby increasing their funding capacity and reducing their cost of funding; (ii) make €1 million in funding available for distribution to companies involved in developing innovations relevant to the market for the provision of mortgages in the State; and (iii) address the effects of the transaction on KBC mortgage customers including honouring the fixed rate included in the existing terms and conditions and discount rates.
◾ M/21/071 – Tesco Ireland / Joyce's Supermarkets involving a structural commitment by Tesco Ireland to divest Joyce's Supermarket in Oranmore, Co. Galway as a going concern to a suitable purchaser, which will be subject to CCPC approval.
◾ M/22/047 – MWG / McCarrick Brothers Wholesale involving a hybrid commitment by BWG to prevent the exchange of competitively sensitive information between BWG, Stonehouse and / or GRSL.
◾ Phase 1 clearance timeframes – The average timeframe for Phase 1 clearance (excluding extended reviews) in 2022 was 17.9 working days (as compared with the statutory 30 working day period). The CCPC recognises the variance in timeframes, between 11 and 30 days, as depending on the complexity of the structure of the transaction and the nature of the competition issues involved.
◾ Media mergers – The CCPC reviewed and issued merger determinations in relation to five media mergers: M/22/008 Bauer / MCR; M/22/011 Isle of Man FM / 3FM; M/22/043 Viaplay / FreeSports & Premier Media; M/22/059 Bauer Media / Siteridge Limited (RedFM); M/22/060 Formpress Publishing (Iconic) / Mayo News.
◾ International mergers – The CCPC continued to engage in the European Competition Network, with the UK Competition and Markets Authority and with other authorities. From 1 January 2023, the CCPC will act as co-Chair of the ECN Mergers Working Group. The CCPC also joined referral requests under Article 22 of the EU Merger Regulation ("EUMR") in respect of M.10807 Viasat / Inmarsat and M.10966 Cochlear / Oticon Medical which are currently being reviewed by the European Commission.
◾ Ongoing developments – The Report also notes that changes to legislation are expected in 2023, in particular with the commencement of the 2022 Act which will make a number of notable changes to the current merger control regime, including a new CCPC power to call in 'below threshold' transactions. In this regard, the CCPC will publish updated Mergers and Acquisition Procedures in early 2023 to account for these changes.
Overall, the Report provides a helpful overview of the CCPC's merger activity in 2022, noting the key trends and points of contrast with the previous year as the economy recovers from the impact of the COVID-19 pandemic. Marking the twentieth anniversary of the Competition Act 2002, the Report also anticipates a new era for merger control with the commencement of the 2022 Act expected in early 2023.
Matheson's EU, Competition and Regulatory Group regularly advise on all aspects Irish and EU competition law and merger control and are on hand to offer our expertise and guidance.