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knowledge 19 October 2018 |

Increase in Merger Notification Thresholds to take effect January 2019

The Irish merger notification financial thresholds under the Competition Act 2002, as amended, will be increased effective 1 January 2019. From that date, a merger or acquisition will be subject to mandatory merger review if, in the most recent financial year, (i) the aggregate turnover in Ireland of the parties involved in the transaction is €60 million or more, and (ii) two or more parties involved in the transaction each have turnover in Ireland of €10 million or more.

This change follows a Department of Business, Enterprise and Innovation consultation on the operation of the current financial thresholds, which were introduced  in 2014 with a view to focusing the Irish merger control regime on those transactions with a strong nexus to Ireland. The current thresholds mandate merger clearance where, in the most recent financial year,

(i) the aggregate turnover in Ireland of the parties involved in the transaction (typically the acquirer and target) is €50 million or more, and

(ii) two or more parties involved in the transaction each have turnover in Ireland of €3 million or more.

The introduction of these thresholds in October 2014 resulted in a significant increase in the number of deals requiring merger approval from the Competition and Consumer Protection Commission (CCPC). In 2014, just 10 mergers required clearance - this jumped to 78 mandatory notifications in 2015 and this year there have been 84 notifications to date. The increase is linked, in particular, to the low individual turnover threshold (just €3 million), which has led to many commercial property and small business acquisitions requiring approval where they previously would have fallen outside of the merger regime. The Department’s consultation highlighted that the 2014 thresholds created a “perceived burden for business” in terms of resources spent during the merger notification process, uncertainty regarding the outcome of the CCPC process and the financial cost of notifications.

To address this, the notification thresholds will increase on 1 January 2019. The required aggregate turnover in Ireland of the parties involved will increase from €50 million to €60 million, and the required individual turnover in Ireland (of each of two or more parties) will increase from €3 million to €10 million. A CCPC analysis of the impact of these changes showed that they would have resulted in total of 51 fewer notifications across 2015 and 2016 combined, and that none of these cases would have raised any serious competition concerns in Ireland. 

All of this is good news for business - the individual threshold of €10 million should serve to remove acquisitions of small businesses from the purview of the Irish merger control regime and the reduction in the demands on the CCPC’s resources is positive for those deals still falling within scope.

This document has been prepared by McCann FitzGerald LLP for general guidance only and should not be regarded as a substitute for professional advice. Such advice should always be taken before acting on any of the matters discussed.