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Jersey announces proposed changes to merger control thresholds

February 2012 - EU & Competition. Legal Developments by Ogier .

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The Jersey Competition Regulatory Authority (JCRA) has announced upcoming changes to Jersey's merger control thresholds. These thresholds determine when a merger or acquisition has to be approved by the JCRA before it can be implemented. Subject to the final approval of the States of Jersey, the new thresholds are expected to be introduced in the second half of 2012.

At present, Jersey's merger control thresholds are based on the transacting parties' share of supply of goods or services to Jersey customers.  It is proposed that the existing thresholds be replaced with a new two limb test that will require a merger or acquisition to be notified to the JCRA if:

  • the combined aggregated annual turnover in Jersey and Guernsey of all the undertakings concerned in the transaction is more than ÂŁ5 million; and
  • the annual turnover in Jersey of each of at least two undertakings concerned is more than ÂŁ2 million.

The turnover in question will be the turnover of the purchaser and the target (in a typical acquisition situation), the merging parties to a merger, or (typically) all parties to a joint venture, including in each case the turnover of the relevant party's corporate group. The JCRA has indicated that turnover will be calculated largely in accordance with established European practice, and will be based on direct sales to island customers; turnover resulting from sales made indirectly to island customers via wholesalers or distributors in the UK, for example, will not be attributed back to the original off-island supplier.

There will also be another test to cover so-called "creeping acquisitions" i.e. smaller, apparently separate transactions carried out over a period of time, which individually fall below the merger control thresholds but which together potentially lessen competition and are therefore worthy of scrutiny by the JCRA.

It is envisaged that a similar merger control framework will be adopted in Guernsey when its competition laws are introduced later this year.  Although, as always, the devil will be in the detail, it is hoped that this will make it easier for companies operating in both islands to know whether they need approval, particularly given the intended move away from the less objectively quantifiable 'share of supply' test.

The changes should also allow the JCRA to focus on more local matters by reducing the number of large international mergers needing to be notified. That said, going forward, parties to a proposed transaction based outside the islands who supply direct to island customers (through online sales, for example) will still need to be aware of the Channel Islands' merger control rules and their obligation to notify if the new thresholds are met.

For more information about the proposed competition law changes in Jersey and Guernsey, please contact Sara Johns.


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