Adverse Consequences of Failure to Notify Mergers
The July edition of the Gazette (p26ff) carried an article written by Rosemary O’Loughlin of the mergers division of the Competition Authority, warning of the consequences of the failure to notify the authority of a merger or acquisition, which is required to be notified under the provisions of part 3 of the Competition Act 2002.
Practitioners are encouraged to read the article in full, but it is worth reiterating its salient points.
A transaction that must be notified to and cleared by the authority may not be implemented until cleared and, if implemented without prior clearance, is void.
Apart from the obvious consequence of title to an acquired business or entity not having passed to the acquirer, there are many other possible adverse consequences arising from a merger or acquisition being rendered void.
If a breach of the obligation to notify was wilful, then any person who knowingly and wilfully authorised or permitted the breach is liable to a fine of up to €3,000 (plus a daily default fine of up to €300) on summary conviction, and up to €250,000 (plus a daily default fine of up to €25,000) on conviction on indictment.
Obviously, if the failure to notify the transaction was due to negligent advice on the part of any of the legal advisers involved, they may face negligence claims.
It is important, therefore, that practitioners involved in such transactions should be aware of the criteria for their notification to the Competition Authority. Practitioners should also be aware that if they are involved in a ‘media merger’ (as defined in the Competition Act 2002) this must be notified to the authority regardless of whether the financial and other criteria set out in section 18(1) of the act are met.
While the Competition Authority’s article did not refer to the voluntary notification of a merger or acquisition where the criteria for a mandatory notification are not met, in cases where a merger or acquisition could give rise to competition concerns, practitioners should consider whether a voluntary notification of the transaction should be made to ensure that it is not prohibited by section 4 or section 5 of the act.
For further information concerning the review of nonnotifiable mergers and acquisitions, practitioners should refer to the Competition Authority’s notice in respect of the review of non-notifiable mergers and acquisitions (decision no N/03/001 of 30 September 2003). Further information in relation to mergers generally is available on the authority’s website: .