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A decision made 23 December 2009 regarding: Proposed amendments to Merger Thresholds - Competition (Mergers and Acquisitions) (Jersey) Order 200-.

Decision Reference: MD-E-2009-0210
Decision Summary Title :	Proposed Amendments to Merger Thresholds – Competition (Mergers and Acquisitions) (Jersey) Order 2005		Date of Decision Summary:	23.11.2009
Decision Summary Author:	Legal & Intelligence Manager		Decision Summary: Public or Exempt? (State clauses from Code of Practice booklet)	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	n/a
Written Report Title :	Report Proposed Amendments to Merger Thresholds.doc		Date of Written Report:	30.10.2009
Written Report Author:	Legal & Intelligence Manager		Written Report : Public or Exempt? (State clauses from Code of Practice booklet)	Public
Subject: Proposed Amendments to Merger Thresholds – Competition (Mergers and Acquisitions) (Jersey) Order 200-
Decision(s): The Minister agreed that Paragraph 1(4) of the Competition (Mergers and Acquisitions) (Jersey) Order 2005 should be amended in the manner set out in the accompanying report and requested that the necessary law drafting work be undertaken.
Reason(s) for Decision: These proposed amendments will reduce the number of mergers and acquisitions that require notification to, and approval by, the JCRA under Article 20(1) of the Competition (Jersey) Law 2005 (the ‘Law’), therefore reducing regulatory compliance burdens in Jersey.
Resource Implications: There are no financial or manpower implications.
Action required: MD and Law drafting brief to be submitted to the Law Draftsman.
Signature: Senator A.J.H.Maclean		Position: Minister
Date Signed:		Date of Decision (If different from Date Signed):

Proposed amendments to Merger Thresholds - Competition (Mergers and Acquisitions) (Jersey) Order 200-

ECONOMIC DEVELOPMENT DEPARTMENT

Report: Proposed Amendments to Merger Thresholds – Competition (Mergers and Acquisitions) (Jersey) Order 2005

The Proposed Amendments to the Order

Both proposed amendments concern Article 1(4) of the Order, which currently provides:

‘A merger or acquisition is a merger or acquisition of a type to which Article 20(1) of the [Law] applies if one or more of the parties to the proposed merger or acquisition has an existing share of 40% or more of the supply or purchase of goods or services of any description supplied to or purchased from persons in Jersey.’

The proposed amendments would create two exemptions to Article 1(4):

The first (proposed Article 1(4)(a)) would create an exemption in situations where the undertaking being acquired has no existing share of supply or purchase of goods or services in Jersey, and does not own or control any tangible or intangible assets located in Jersey.

The second (proposed Article 1(4)(b)) would create an exemption in situations where the seller may have a 40% share of supply or purchase in a product or service in Jersey, but that 40% share of supply is not subject to the merger or acquisition.

Taken together, the addition of proposed Articles 1(4)(a) and 1(4)(b) would result in Article 1(4) of the Order reading as follows:

the undertaking or undertakings being acquired has or have no existing share of the supply or purchase of goods or services of any description supplied to, or purchased by, persons in Jersey, and otherwise own(s) or control(s) no tangible or intangible assets located in Jersey; or
as regards the seller only, the 40% share of supply or purchase is not subject to the proposed merger or acquisition, and provided that any non-competition, non-solicitation or confidentiality clauses included therein do no exceed a period of three years and are strictly limited to the products or services supplied by the undertaking being acquired.’

Reasoning Behind the Proposed Amendments

A. Proposed Article 1(4)(a)

Proposed Article 1(4)(a) would exempt the acquisition of undertakings located outside of Jersey, and with no Jersey assets or sales, by undertakings with a current 40% share of supply or purchase in Jersey.

B. Proposed Article 1(4)(b)

Proposed Article 1(4)(b) would exempt a merger or acquisition from reporting in situations where the seller may have a 40% share of supply or purchase in a product or service, but that 40% share of supply is not subject to the merger or acquisition.

Conclusion

Based on the reasoning set out above, we recommend that the Order be amended by including proposed Articles 1(4)(a) and 1(4)(b). Based on the broad support expressed by all JCRA consultees for these amendments, we would suggest that they be incorporated as soon as reasonably possible.