Punting for change
29 October 2001
The UK Department of Trade and Industry's (DTI) website states: "Ireland offers great potential for UK companies. It is our fifth-largest export market, taking a wide range of goods, worth £12.4bn, every year, or £45m every working day. Ireland is a major customer for products and services of all kinds, and is the only major world market where the UK is the dominant supplier. Every man, woman and child spends £3,422 on UK goods every year, the highest per capita spend on UK products in the world."
Given that Ireland is the UK's fifth-largest export market worldwide, it is not surprising that UK lawyers often have to take into account Irish competition and merger control law. But just as UK lawyers were getting used to the Irish regime - which was a precursor to the UK's own Competition Act 1998 - Irish law may be about to be radically amended.
At present, Irish law comprises two regimes: the Mergers Acts and the Competition Acts.
The Mergers Acts involve pre-clearance by the Minister for Enterprise Trade & Employment of certain transactions involving enterprises whose assets or turnover exceed relatively low statutory thresholds. These thresholds were drafted very broadly and appear to catch global transactions even where one of the parties does minimum business in Ireland.
Many commentators thought that the thresholds were too wide and too high. Nevertheless, many companies notify deals to the Irish minister so as to avoid any doubt about the legality of the deals - particularly from the perspective of Irish tax law, which is so attractive for many multinationals possessing Irish operations.
The Competition Acts involve rules comparable to the UK's Competition Act 1998, but with criminal sanctions on executives and undertakings. The Irish regime is embodied in a 1991 act, with an amendment in 1996. It involves notifications of anticompetitive arrangements and the control of abuses of dominance. Section 4 of the 1991 act reflects Article 81 of the European Commission Treaty, while Section 5 reflects Article 82.
In August this year, the Minister for Enterprise Trade & Employment announced that she was going to introduce legislation to repeal the Mergers Acts and Competition Acts and consolidate the two regimes, although with some quite significant changes. It is not certain whether the reform will proceed in the lifetime of the current parliament, which is due to end next summer at the latest; but if the reforms go ahead, they will be quite dramatic.
Mergers and acquisitions
The current regime is that transactions involving two or more enterprises, each with assets of more than IR£10m (£7.94m) or turnovers of more than IR£20m (£15.89m), must be notified to the Minister for Enterprise Trade & Employment for pre-clearance. The minister may refer some transactions to the Competition Authority for an opinion. Ultimately, the decision is one for the minister on the basis of common good (including competition).
The proposed regime would involve all transactions being notified to the Competition Authority except 'media' mergers, which would remain with the minister. Notifications would have to be made within one week of an agreement, but would be cleared quite quickly in either one or two phases. The test would be whether the transaction would significantly lessen competition rather than the EU Merger Control Regulation test which some commentators would favour.
Under the present regime, mergers and acquisitions may be challenged under the Mergers Acts and the Competition Acts. The proposed legislation aims to eliminate this 'double jeopardy'. Unfortunately, it does not do so completely, and some M&A deals could still be challenged on the basis of being an abuse of dominance.
The proposed Irish regime may try to pre-empt the changes which could be made at the EU level in terms of so-called 'modernisation'. Thus the new regime would involve the abolition of notifications at the Irish level.
It is probably unwise for Ireland to do this. There is no guarantee that the EU regime that may be ultimately adopted will be the same as that currently under discussion, and there is every risk that Ireland might be out of step with the eventual EU regime. (This is something that has already happened due to Ireland adopting a vertical restraints regime while the EU regime was still under discussion.)
The new law would explicitly protect whistleblowers in certain situations; this is welcome, provided it also punishes vexatious or mischievous whistleblowers.
The new regime would incorporate a whole series of presumptions to facilitate cases being brought in the courts. In some ways these are necessary to overcome some of the difficulties of applying an EU/US-type antitrust enforcement model in a common law environment.
Interestingly, the new regime would also facilitate the giving of expert evidence in civil and criminal trials by adopting some special rules.
The proposed reforms go some way towards resolving some of the problems which have emerged in the decade since the Competition Act 1991 came into force. However, there is a need for further reflection before the proposals that are currently on the table are adopted, otherwise, sadly, we will be looking at reform again in the not-too-distant future.
Vincent Power is a partner at A&L Goodbody and the author of the recently published Competition Law and Practice
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