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GAZETTE
will now be notifiable to the
Minister for Industry and Com-
merce under the 1978 Act where
it results in the acquiring company
obtaining more than 2 5% of the
voting rights in another company;
previously, the threshold was 30%.
The Competition Act also intro-
duces a number of amendments to
procedures under the 1978 Act.
In addition, there is the possibility
that mergers and acquisitions,
including those which are notifiable
under the 1978 Act, might be con-
tested in the Courts on the basis of
Sections 4 and 5 of the Competition
Act. The relationship between the
t wo Acts is not clear and this issue
may not be fully resolved until
t es t ed in t he Courts. In the
meantime, lawyers will have to con-
sider the possibility that a tran-
saction, even one which is approved
by the Minister under the 1978 Act,
may be contested by a third party
in the courts. For example, the
acquisition of a minority share-
holding in a competitor may fall
within Section 4 (1) of the Act
whilst the acquisition of one com-
pany by another company which is
already in a dominant position may
raise issues under Section 5 of the
Act.
Comment
The Competition Act represents a
major development in Irish Law.
Traditionally, the market place in
Ireland has been regulated by law
to only a limited extent. This legis-
lative environment can only have
encouraged practices wh i ch may
now need to be reviewed in the
context of the new legislation.
JANUARY/FEBRUARY 1992
As to the likely application of the
competition rules, companies will
need to ensure that their agree-
ments and practices comply w i th
Sections 4 and 5 of the Act. At the
same time, companies can rely
upon the new legislation in order to
compete w i th their competitors.
For example, a new entrant to a
market dominated by one particular
company may use Section 5 in
an attempt to open up the market.
It has to be said, however, that the
lack of enforcement powers on the
part of the Competition Authority
may seriously unde rmi ne t he
effectiveness of the new legisla-
tion. Given the costs and time
constraints involved in High Court
litigation, the policy of enforcement
through the Courts may prove to be
ineffective. Experience at the EC
level might also suggest so. That
said, Irish business has entered a
new legislative era and companies
will need to ensure that they not
only comply w i th the new law but
also use it to their advantage where
appropriate.
•
"It has to be said, however,
that the lack of
enforcement
powers
on the part of the Competition
Authority
may
seriously
undermine
the effectiveness
of the
new
legislation"
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