Irish Competition Authority Decisions

1. Arrangements for the acquisition by Irish Potato Marketing Limited (IPM) of 50% of the shares in Donegal Potatoes Limited (DPL) from the liquidator of North Donegal Potato Producers Society Limited (North Donegal Producers) were notified to the Competition Authority on 28 November, 1994. IPM already owned the remaining 50% of the shares in DPL. The notification requested a certificate, or in the event of a refusal by the Authority to grant a certificate, a licence.

2. The notification relates to an agreement, dated 22 November 1994, between IPM and the liquidator of North Donegal Producers for the acquisition by IPM of 50% of the shares in DPL. The remaining shares in DPL were already owned by IPM. The arrangements were notified to the Minister for Enterprise and Employment under the provisions of the Mergers Acts but were deemed not to be notifiable under that Act.

3. The parties to the agreement are IPM and the liquidator of North Donegal Producers. IPM is a society registered under the Industrial and Provident Societies Act 1893. It is engaged in the business of exporting seed and maincrop table potatoes. DPL is a licensed potato merchant. North Donegal Producers is a potato growers co-operative which is currently in liquidation. The liquidator is Mr. Patrick Keating a Chartered Accountant.

4. DPL is a licensed potato merchant while IPM is engaged in the exporting of seed and table potatoes. The market is therefore that for seed and table potatoes. Although IPM is engaged in exporting potatoes the agreement concerns both the domestic and export market. Given the nature of the agreement it was not necessary to undertake any detailed analysis of the potato market.

5. The agreement relates to the sale by the liquidator of North Donegal Producers of 50% of the shares of DPL to IPM which already owned the other 50%. The agreement contained no restrictive clauses.

6. Section 4(1) of the Competition Act states that ´all agreements between undertakings, decisions by associations of undertakings and concerted practices which have as their object or effect the prevention, restriction or distortion of competition in trade in any goods or services in the State or in any part of the State are prohibited and void.'

7. Section 3(1) of the Competition Act defines an undertaking as ´a person being an individual, a body corporate or an unincorporated body of persons engaged for gain in the production, supply or distribution of goods or the provision of a service.' The parties to the present agreement are IPM and the liquidator. IPM is engaged for gain in the marketing of potatoes. The liquidator is also engaged for gain in his capacity as liquidator. The present arrangements therefore constitute an agreement between undertakings whereby IPM has acquired the 50% shareholding in DPL which it did not previously own.

8. The Authority emphasises, however, that the prohibition in Section 4(1) relates only to agreements between undertakings ´which have as their object or effect the prevention, restriction or distortion of competition within the State or any part of the State'. In the Authority's opinion the notified agreement clearly has no implications for competition within the State or any part thereof. An undertaking which already owns 50% of the shares in another undertaking merely acquires the remainder of the shares from the liquidator. The arrangements will have no affect on the number of parties operating in the relevant market. They involve no restrictive provisions. It is not at all clear to the Authority why such an agreement was ever notified. The Authority has previously stated that:

'It is clear to the Authority that the intention of the Act is not to prohibit all business agreements, nor to require that all agreements be notified to the Authority.' The Authority would emphasise the point that the Competition Act does not require parties to obtain its approval for every commercial agreement entered into.

9. In the Authority's opinion, IPM and the liquidator of North Donegal Producers are undertakings within the meaning of Section 3(1) of the Competition Act, and the notified arrangements for the acquisition by IPM of 50% of the shares in DPL constitutes an agreement between undertakings. In the Authority's opinion the agreement does not offend against Section 4(1) of the Competition Act, 1991.

10. The Competition Authority has issued the following certificate:

The Competition Authority certifies that in its opinion, on the basis of the facts in its possession, the agreement of 22 November 1994 for the acquisition of 50% of the shares in Donegal Potatoes Limited by Irish Potato Marketing Limited (IPM) between Irish Potato Marketing Limited (IPM) and Mr. Patrick Keating, the liquidator of North Donegal Potato Producers Society Limited (North Donegal Producers), (CA/32/94), notified to the Competition Authority on 28 November, 1994 under section 7(1), does not offend against section 4(1) of the Competition Act, 1991.

For the Competition Authority

Patrick Massey

Member

22 December, 1994.