In the first criminal prosecution of its type in Ireland, Armalou Holdings Ltd pleaded guilty in Dublin Metropolitan District Court on 8 April 2019 to illegally putting into effect a business merger, without first obtaining the necessary regulatory approval – a practice known as ‘gun-jumping’.
Under Irish competition law, mergers or acquisitions reaching certain financial thresholds in the State must be notified to the Competition and Consumer Protection Commission (CCPC).
Failure to do so is a criminal offence under Irish law, and the transaction is deemed void.
The offence can arise where merging parties either:
Fail to notify a notifiable transaction, before putting it into effect, or
Notify such a transaction, but begin to put it into effect before obtaining clearance from the CCPC.
Joseph Walser (CCPC’s deputy director in charge of criminal enforcement) informed Dublin District Court that a third motor dealer had told the commission about the Armalou-Lillis-O’Donnell transaction towards the end of 2017.
The CCPC then began an investigation into a suspected failure to notify it about the acquisition of Lillis-O’Donnell Motor Company Ltd by Armalou Holdings Ltd, through its wholly-owned subsidiary, Spirit Ford Ltd. Armalou Holdings also owns OHM group, which imports and sells Jaguar, Land Rover, Volvo and Skoda cars in the Republic.
In February 2018, the companies notified the deal to the CCPC. The transaction was cleared on the basis that it posed no threat to competition in any market for goods and services in the State.
After an extensive investigation, the CCPC referred a file to the Director of Public Prosecutions, which focused on the parties’ conduct in failing to notify a notifiable transaction before putting it into effect.
Donation to charity
Armalou Holdings pleaded guilty to six charges arising out of its failure to notify the CCPC of the transaction prior to putting it into effect on 3 December 2015.
Judge Anthony Halpin was satisfied that Armalou Holdings was unaware of its obligations, and that it was not a wilful breach of the law.
In those circumstances, he indicated that he would apply the Probation Act 1907 if Armalou Holdings made a charitable donation of €2,000 to a specified charity.
Airfield Villas Ltd (formerly known as Lillis-O’Donnell Motor Company Ltd), a co-accused, was granted an adjournment until 3 May 2019.
Reacting to the decision, Isolde Goggin (CCCP chairperson) said: “The CCPC’s role is to assess mergers and acquisitions in advance to determine whether a transaction could significantly lessen competition in the relevant markets.
“Where a proposed merger or acquisition requiring notification is put into effect, without submitting a notification to the CCPC, that merger is void.
If transactions are allowed to progress without the CCPC’s approval, there is considerable potential for irreparable harm to be done to the market and, therefore, to consumers, and this could lead to higher prices and less choice.
For this reason, the merger regime in Ireland is extremely important,” she said.
The CCPC warned that the judgment was a strong reminder to businesses and legal practitioners “that failing to notify a notifiable transaction is a criminal offence and it is essential that merging parties comply”.