Competition (Mergers and Acquisitions) (Jersey) Order 2010

Information about the publication of Ministerial Decisions

A formal published “Ministerial Decision” is required as a record of the decision of a Minister (or an Assistant Minister where they have delegated authority) as they exercise their responsibilities and powers.

Ministers are elected by the States Assembly and have legal responsibilities and powers as “corporation sole” under the States of Jersey Law 2005 by virtue of their office and in their areas of responsibility, including entering into agreements, and under any legislation conferring on them powers.

An accurate record of “Ministerial Decisions” is vital to effective governance, including:

demonstrating that good governance, and clear lines of accountability and authority, are in place around decisions-making – including the reasons and basis on which a decision is made, and the action required to implement a decision
providing a record of decisions and actions that will be available for examination by States Members, and Panels and Committees of the States Assembly; the public, organisations, and the media; and as a historical record and point of reference for the conduct of public affairs

Ministers are individually accountable to the States Assembly, including for the actions of the departments and agencies which discharge their responsibilities.

The Freedom of Information Law (Jersey) Law 2011 is used as a guide when determining what information is be published. While there is a presumption toward publication to support of transparency and accountability, detailed information may not be published if, for example, it would constitute a breach of data protection, or disclosure would prejudice commercial interest.

A decision made 27 April 2010 regarding: Competition (Mergers and Acquisitions) (Jersey) Order 2010.

Decision Reference: MD-E-2010-0071
Decision Summary Title :	Competition (Mergers and Acquisitions) (Jersey) Order 2010		Date of Decision Summary:	19.04.2010
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 for Mergers & Acquisitions Order 2010		Date of Written Report:	14.04.2010
Written Report Author:	Legal & Intelligence Manager		Written Report : Public or Exempt? (State clauses from Code of Practice booklet)	Public
Subject: Competition (Mergers and Acquisitions) (Jersey) Order 2010
Decision(s): The Minister made the Competition (Mergers and Acquisitions) (Jersey) Order 2010
Reason(s) for Decision: Pursuant to MD-E-2009-0210 the Order reduces 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: To notify the Greffier of the States and the Law Draftsman that the Order has been made and deliver the signed and sealed Order to the Publications Editor, States Greffe, for notification to the States.
Signature: Senator A.J.H.Maclean		Position: Minister
Date Signed:		Date of Decision (If different from Date Signed):

Competition (Mergers and Acquisitions) (Jersey) Order 2010

Report

MINISTER FOR ECONOMIC DEVELOPMENT

COMPETITION (MERGERS AND ACQUISITIONS) (JERSEY) ORDER 2010

Intention

The Order changes thresholds that determine which mergers and acquisitions must be notified to, and approved by, the JCRA under the Competition (Jersey) Law 2005 (the “Law”). The Order creates two new exemptions to these thresholds, which reduce the number of mergers and acquisitions requiring notification and approval.

This Order amends and replaces Competition (Mergers and Acquisitions) (Jersey) Order 2005.

Benefit:

The Order reduces compliance burdens in Jersey, as well as reducing the JCRA’s own internal workload with respect to mergers and acquisitions, without compromising the Law’s goal of preventing anticompetitive mergers and acquisitions.

Legal Framework

Article 20(1) of the Law requires that certain mergers and acquisitions receive the JCRA’s approval prior to their execution. The type of mergers and acquisitions that require notification to, and approval by, the JCRA, are detailed in the Order.

The Competition (Mergers and Acquisitions) (Jersey) Order was amended following JCRA advice predicate on a public consultation on this subject, June through to July 2009. The JCRA received three responses to the consultation – Mourant, Ogiers and Chamber of Commerce. Broad support was expressed by all consultees for the amended Order.

The Proposed Amendments to the Order

There are two amendments to the Order; both concern Article 1(4):

· The first (proposed Article 1(4)(a)) creates 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)) creates 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.

Reasoning Behind the Proposed Amendments

· 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.

· The central goal of this process is to reduce compliance burdens without compromising the Law’s intention of prohibiting those mergers and acquisitions which would substantially lessen competition in Jersey. There may be potential scenarios where the acquisition of a company with no current sales in Jersey, but with assets located in this jurisdiction, could raise potential competitive concerns. For example the acquisition of undertakings that holds intellectual property rights in Jersey, J Category Licences or Regulations of Undertakings permits, or leaseholds or real property rights, but have yet to commence their business operations.

The JCRA will keep the number of mergers and acquisitions reported to the JCRA under Article 1(4) under review, and propose further changes later if warranted.

· 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.

· It was originally proposed for this exemption to apply there must have been ‘no ancillary restraints1 between the parties concerning the proposed merger or acquisition.’ However, the requirement is more specific: mandating that for the exemption to apply, ‘any non-competition, non-solicitation or confidentiality clauses included therein do not exceed a period of three years and are strictly limited to the products or services supplied by the undertaking being acquired.’ The revised language limits the restriction to particular non-competition clauses only (not all ancillary restraints) and places a three year limitation on them. This proposed three-year limitation is based on the maximum period allowed for non-competition clauses under relevant EC guidelines.

· It is important to note that this restriction would not create an absolute prohibition to potentially longer non-competition periods between buyers and sellers for these type of mergers or acquisitions – they simply would not qualify for the exemption and would require notification to, and approval by, the JCRA under the Law as they do currently. This point will be clarified by the JCRA publication Mergers and Acquisition Guidelines.

RECOMMENDATION

It is recommended that the Minister signs, dates and seals the Order and the Order be returned to the States Greffe without delay.

1 An ‘ancillary restraint’ is an agreement associated with the proposed merger or acquisition that may restrict competition between the buyer and seller after the transaction is concluded. A typical example is a non-competition clause, i.e., an agreement by the seller not to compete in an identified market for a given period of time after the merger or acquisition.