Mergers & Acquisitions

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Part 4 of the Jersey Law and Part III of the Guernsey Ordinance deal with mergers and acquisitions.

The legislation provides that approval from CICRA must be obtained before certain mergers or acquisitions are executed. We may refuse to approve a merger or acquisition if we are satisfied that it would substantially lessen competition. In Guernsey, we are also required to satisy ourselves that the merger or acquisition will not be to the prejudice of consumers, the economic developement and well-being of the Bailiwick, and the public interest.

Jersey
The Competition (Mergers and Acquisitions) (Jersey) Order 2010 requires a merger or acquisition to be approved by us before being executed in three situations:

• Where it results in a share of supply or purchase of 25% or more being achieved, or increased. This threshold is intended to apply to ‘horizontal mergers', i.e. where the parties are existing competitors, and their combined shares of supply or purchase equal or exceed 25%. So, for example, where one competitor supplies 15% of a particular category of goods or services in Jersey, and the other supplies 10%, the parties would need to apply if they wished to merge.
• Where one party has a share of supply or purchase of 25% or more and the other has a 'vertical' relationship with that party (for example, as a supplier to or customer of that party). So, for example, if a company with a share of the supply of bricks in Jersey of 25% or more wished to merge with a house builder, this would require an application for approval.
• Where one party has a share of supply or purchase of 40% of more, the merger will require prior approval, unless it qualifies for either of the two exemptions to Article 4 of the Order, contained in Articles 4(a) and 4(b). This is designed to deal with a situation where there is no horizontal or vertical relationship between the parties, but where the merger may nevertheless raise competition concerns. These types of mergers are referred to as 'conglomerate mergers'. An example may be if a major electrical supplier was to merge with a major telecommunications supplier.

Guernsey
Section 13(1) of the Guernsey Ordinance provides that a merger or acquisition of a class or description prescribed by regulations of the Commerce and Employment Department is prohibited except with, and in accordance with, our approval. 

The Competition (Prescribed Mergers and Acquisitions) (Guernsey) Regulations, 2012 require a merger or acquisition to be approved by us before being executed if:

• the combined applicable turnover of the undertakings involved in the merger or acquisition arising in the Channel Islands exceeds £5 million, and
• two or more of the undertakings involved in the merger or acquisition each have applicable turnover in Guernsey which exceeds £2 million.

In Guernsey, where an acquiring business in a prospective merger or acquisition that meets the thresholds above is a credit or financial institution, it should, in the first instance, submit a Shortened Merger Application Form to allow us to undertake a preliminary review of the transaction.

The method of calculating turnover for the purposes of these thresholds is prescribed in The Competition (Calculation of Turnover)(Guernsey) Regulations, 2012.
 
Applications
The thresholds in Jersey and Guernsey are purely jurisdictional tests, and do not imply in any way that the merger is problematic from a competition or public interest point of view. We can only reach such a conclusion after undertaking an assessment  as to whether the merger would substantially lessen competition or, in Guernsey, whether the merger would be to the prejudice of consumers, economic development and well-being of the Bailiwick, or the public interest. 

We publish written reasons for all merger and acquisition decisions.

An application for approval should be made jointly by all the parties to a merger or acquisition, or a joint representative, using the Merger Application Form which is available as a pdf or a Word document.

A Shortened Merger Application Form, applicable where credit and financial institutions in Guernsey are party to a merger that meet the thresholds above and apply for a preliminary review of the merger, is available as a pdf or Word document.

For more information about the procedure for assessing an application for approval of a merger or acquisition see CICRA Guideline 6: Mergers & Acquisitions.

On 14 August 2012, CICRA issued determinations in respect of the time at which, and the form and manner in which, applications for approval of mergers can be made under the Guernsey Ordinance and the Jersey Law.

Fees
The legislation requires applicants to fund the work required to review mergers and acquisitions. The fees for preliminary review (only applicable in Guernsey), first detailed review and second detailed review are set out in CICRA Guideline 6: Mergers & Acquisitions, and in Guernsey, are prescribed by The Competition (Merger and Opinion Application Fees) (Guernsey) Regulations, 2012. Fees are reviewed on a regular basis.