There was a notable decline in the number of mergers and acquisitions notified to the competition watchdog in 2022 as the pandemic deal-making boom showed further signs of cooling off.
In its annual M&A report, the Competition and Consumer Watchdog Commission (CCPC) said a total of 68 mergers were sent to the authority for approval, down 16 per cent on 2021.
Fuelled by central bank crisis interventions to cut interest rates and widespread Government support for companies hit by the pandemic, markets remained buoyant in 2021, providing company with easy access to cheap debt for deals. Some of that momentum reversed in 2022 against the backdrop of increasing economic uncertainty as central banks tightened monetary policy in response to soaring inflation.
Nevertheless, 2022 was “a very significant year for mergers in Ireland”, said CCPC member Brian McHugh.
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“Although the total number of notified mergers was lower than 2021,” he said, “we saw increasingly complex mergers notified, as evidenced by the unprecedented number of mergers which were subject to phase two merger investigations.”
All deals involving company’s with annual aggregate turnover of more than €60 million must be referred to the CCPC. The regulator is then required to conduct a phase one review of the proposed transaction to determine whether it would lead to a substantial lessening of competition in the market, with potential negative effects for consumers.
Some 7 notifications required a more extensive phase two investigation in 2022 compared with five in 2021, one of which was withdrawn.
Among the most noteworthy proposals that the CCPC cleared last year were Bank of Ireland’s deal for €9 billion of KBC Bank’s assets and AIB’s purchase of €4.4 billion of Ulster Bank’s commercial loan assets. Both deals were approved by the regulator subject to a number of remedies while Permanent TSB’s acquisition of Ulster Bank assets valued at €7.6 billion also got the green light.
Mr McHugh said: “In publishing its banking decisions, the CCPC took the opportunity to raise concerns in relation to the overall competitiveness of the banking sector in Ireland and has continued to engage with the Department of Finance and the Central Bank on these matters. The CCPC also gave careful consideration within the merger review process on how to mitigate the impact on consumers and SMEs through remedies where appropriate.”
Last year was also notable for being the first year since 2008 that the CCPC had rejected an acquisition proposal outright.
On foot of a full investigation, the CCPC determined that Dublin-listed healthcare services group Uniphar’s proposed multimillion-euro acquisition of pharmacy solutions business NaviCorp “may not be put into effect on the grounds that the result of the proposed acquisition will be to substantially lessen competition in markets for services in the State”. Uniphar subsequently said the deal would not proceed.
“For only the fourth time since 2002, a decision was made to prohibit a proposed acquisition. In other cases, significant commitments were secured from the parties involved to ensure any competition concerns were allayed,” Mr McHugh said.
He said the commission is looking forward to the implementation of the Competition (Amendment) Act, which is set to overhaul the merger review process and “enhance our ability to ensure open competitive markets that work in the interests of consumers, businesses and all of Irish society”.
