The Competition Authority has warned companies not to "jump the gun" and complete mergers before the authority has given its clearance, writes Emmet Oliver.
In a statement the authority said it recently investigated an allegation that a company - believed to be Ryanair - had engaged in "gun jumping" by taking control of the airline Buzz prior to the expiry of the statutory waiting period.
However, after investigating the matter it found that no breach had occurred in the case. But yesterday it released a warning to all companies about the issue. It pointed out that several serious cases of "gun jumping" had taken place in other jurisdictions.
Under the Competition Act, mergers cannot be completed until the authority provides clearance or until a legislative time limit or waiting period has expired.
"If the parties are found to have breached the pre-merger waiting period, i.e. gun jumping, then the transaction will be deemed void," said the authority.
"As the Competition Authority has recently taken on the role of assessing mergers, it is concerned to clarify its views on this issue and ensure that industry and its legal counsel are aware of the rules," said a statement.
It said a "dramatic" example of gun jumping would be if a company took control of another company prior to the expiry date. However, it said exchanging sensitive information or implementing "co-ordinated strategies" would also pose serious issues for the authority.
It said its recent investigation demonstrated that parties must be careful to ensure they maintain separate and independent operations until the authority has made its determination.
"If the parties are allowed to behave as if a merger has already occurred before the Competition Authority has made its assessment, consumers may suffer higher prices and its very difficult to undo that kind of damage later," said Mr Terry Calvani, acting director of the authority's mergers division.
At present three potential deals are before the authority. The purchase of Smurfit Communication's Irish Post by Thomas Crosbie Holdings; a joint venture between Koninklijke Philips Electronics and Accton Technology Corporation; and DHL's acquisition of Airborne Inc's parcels and documents business
Companies involved in mergers must notify the authority, and during the waiting period interested parties are allowed to make submissions.
When there are negative views, the companies proposing the merger are normally told of the nature of the concerns expressed (but not necessarily the identity of the person expressing the views). They are then given an opportunity to comment. Interested parties are given further opportunity to make submissions if a merger notification goes to what is known as phase two of the process.
