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News & Publications - News Article
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| McCann FitzGerald review key trends in Mergers and Acquisitions in 2009 and forecast trends for 2010, January 2010 |
The number of merger transactions notified to the Competition Authority fell again in 2009, with notifications – generally required only for larger transactions involving companies with turnover of at least €40 million – down 30% on the previous year, according to a review of Irish merger control activity by leading law firm McCann FitzGerald.
Philip Andrews, Partner and Co-Head of McCann FitzGerald's Competition Group, said, 'The number of deals notified to the Competition Authority fell to 27 in 2009, the lowest number of deals notified to the agency since the current merger regime came into force in 2003. The review showed a 70% per cent reduction from the 2006 peak when 98 transactions were notified.'
According to Damian Collins, Partner and Co-Head of McCann FitzGerald's Competition Group, whose practice spans both Dublin and Brussels, 'The return to growth of the U.S. and some European economies in the third quarter of last year resulted in some increase in international merger activity with an associated increase in Irish notifications towards the year-end. The number of Irish deals remains down, however. Only 10 of the 27 deals notified to the Competition Authority in 2009 involved an Irish entity.'
He added, 'Despite the reduction in merger activity, a number of new trends were evident, particularly in relation to how the Competition Authority processed notifications for approval.' Following management changes at the Mergers Division, the Competition Authority streamlined the review process and increased the speed at which it clears uncontroversial deals, especially those – for instance the HMV/Zavi deal – involving distressed companies. Consistent with this trend, the average clearance time for "no-issue" deals was 22 days in 2009, compared to an average of 27 days for the period from 2003 to 2008.
Looking ahead, Mr Collins said that 2010 may be the year in which the Minister of Finance first relies on the Banking Mergers Exemption – whereby the Minister may certify a banking merger as necessary to maintain "the stability of the financial system in the State" and to avoid "a serious threat to the stability of that system" and thereby approve the deal without notification to the Competition Authority. Long-promised statutory reforms to the review process, particularly in respect of media mergers, are also expected.
In the longer term, Mr Andrews predicted that the High Court's annulment of the Kerry/Breeo prohibition in March 2009 would have far-reaching implications. For one thing, the Court's willingness to clear the deal without referring the matter back to the Authority may increase the incentives to appeal Authority prohibitions. In addition, the trenchant criticism by the High Court of the Authority's approach may well encourage the Authority to clear deals with commitments from the parties rather than risk High Court review.
Of the deals notified between in 2009, 21 (i.e., around 80%) involved acquisitions of a majority stake, and 6 related to joint ventures or acquisitions of joint control.
A breakdown of the industries involved is as follows:
Banking/Insurance: 22%
IT/Telecoms: 19%
Industrial (including energy): 11%
Food and Beverage: 11%
Media: 7%
Retail/Leisure/Travel: 7%
Construction/Building Supply: 4%
Pharma/Healthcare: 4%
Other: 15%
McCann FitzGerald's Competition, EU Law and Regulated Markets Group has acted in over 150 of the 447 transactions notified including many of the leading cases over the past seven years.
If you have any questions in relation to the above, please contact:
Philip Andrews
Partner and Co-Head Competition, Regulated Markets & EU Law Group
Direct dial: +353 1 611 9143
philip.andrews@mccannfitzgerald.ie
or
Damian Collins
Partner and Co-Head Competition, Regulated Markets & EU Law Group
Direct dial: +32 2 740 03 70
damian.collins@mccannfitzgerald.ie
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