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1. Notification was made on 30 September 1992 with a request for a certificate under Section 4(4) of the Competition Act, 1991 or, in the event of a refusal by the Competition Authority to grant a certificate, a licence under Section 4(2) in respect of a shareholders’ agreement and related agreements arising from the acquisition by the J.Walter Thompson Group Ltd. of shares in Donnelly Doyle Flynn Hanlon & Brannelly Ltd (DDFHB) and in Eastcastle Ltd.

2. The notification concerns a shareholders’ agreement entered into between James Donnelly, Padraig Doyle, Kenneth Flynn, Gerry Hanlon and Jerry Brannelly (as shareholders), J Walter Thompson Group Ltd (JWT) (as subscriber), WPP Holdings (Holland) BV (WPPH), DDFHB and Eastcastle Ltd, in relation to the subscription by JWT for 100% of a new class of share with weighted voting rights - ‘A’ Ordinary Shares - in both DDFH&B and Eastcastle Ltd. The resulting capital structure enables JWT to participate in 20% of the capital of each company. Two related agreements, namely, a royalty and licence agreement between JWT and DDFHB, and between JWT and Eastcastle Ltd, together with the revised Articles of Association of DDFHB and Eastcastle Ltd., were also furnished.

3.1 DDFHB Ltd. is a private company registered in the State which is engaged in business as an advertising agency. In 1991, the company had a turnover of £5.9m. At the date of the agreement it had an issued share capital of £85,000, divided equally between James Donnelly, Padraig Doyle, Kenneth Flynn, Gerry Hanlon and Jerry Brannelly. 99% of DDFHB’s issued Ordinary Share Capital is now owned by Lillington Limited, a company registered in the State. [1] DDFHB has two wholly-owned subsidiaries, namely, DDFHB Ltd, a non-trading company incorporated in the UK and Hentrin Ltd., a media company registered in Ireland. Hentrin Ltd has an issued share capital of £2, DDFHB and J Brannelly holding one share each.

3.2 Eastcastle Ltd. is also a subsidiary of Lillington Ltd. It is a private company registered in the State and is engaged as a TV production company producing cultural and promotional films and television commercials. In 1991 Eastcastle had a turnover of £377,670. At the date of the agreement it had an authorised share capital of £100,000 and an issued share capital of £105 in £1 ordinary shares, divided equally between James Donnelly, Padraig Doyle, Kenneth Flynn, Gerry Hanlon and Jerry Brannelly. Eastcastle is therefore related to DDFHB through a commonality of shareholders and directors. The current amount of shares issued by the company is as follows: 96 ordinary shares of £1 each and 40 ‘A’ Ordinary shares of £1 each. The issued Ordinary shares in the company are owned by Lillington Limted and the “A” ordinary shares are owned by JWT.

3.3 WPP Holdings (Holland) BV is an intermediate company in the WPP Group, whose ultimate parent is WPP plc. The WPP Group is the world’s largest advertising and marketing group having its registered office at 27 Farm Street London W1X 6RD England. WPP plc is the ultimate parent company of J. Walter Thompson group (JWT), WPP Holdings (Holland) BV and Ogilvy & Mather Group Limited. In 1995, WPP revenues reached stg£1.56 billion, with profits of stg£114m. Its JWT agency generated new billings of over £201m and the Ogilvy and Mather group net business worth £134m. WPP Ireland Ltd. is 99% owned by WPP Holdings (Holland) BV and, in turn, owns Ogilvy & Mather Group Limited. Ogilvy & Mather, in turn, wholly-owns, inter alia, Wilson Hartnell Advertising Ltd., Wilson Hartnell Public Relations Ltd, Bell Advertising Ltd, and Ogilvy & Mather Direct Ltd. A further subsidiary, Arena Productions Ltd, is engaged in film production . In 1995, the Ogilvy & Mather Group had a turnover of approx. £23m, and gross profits of £5.5m.

3.4 J Walter Thompson Group Ltd. has 167 offices in 37 countries. It is one of two advertising subsidiaries of the WPP Group (Ogilvy and Mather being the other). In 1996, JWT and its subsidiaries had a turnover of £257.4m with profits of £3.57m. [2] Prior to the notified agreement, JWT was not operating in the Irish market for advertising, marketing or PR business .

4.1 Advertising services are provided mainly to companies who wish to launch advertising campaigns to promote their products or services. There are a large number of alternative media available for firms wishing to advertise their products to consumers. In previous decisions, [3] the Authority has already identified that expenditure on advertising and marketing activities by advertisers can generally be divided between what is known as “above the line” and “below the line” expenditure. “Above the line” consists of expenditure on mainstream advertising media covering both display/space advertising (advertising media) and design production costs. The main stream advertising media are television, radio (local and national), newspapers (regional and national), magazines, cinema and outdoor. “Below the line” consists of expenditure on sales promotion, direct marketing and direct mail.

4.2 The Institute of Advertising Practitioners (IAPI) estimates that expenditure in the year to December 1997 on “above the line” advertising in the State was IR£356m [4] of which £197.8m (56%) was press advertising and £101.8m (28%) television advertising. The remaining £56.6m is made up of advertising expenditure on cinema, radio and outdoor media. According to the IAPI media spend by ad agencies represents 80-85 per cent of “above the line” expenditure while production and other advertising costs account for 15 per cent.

4.3 There are approximately 65 advertising agencies operating in the State. In its Decision No. 468 of 25 June 1996, [5] the Authority identified that the main advertising agencies in Ireland include McConnells, Wilson Hartnell, McCann Eriksson, Youngs and DDFHB (JWT). On a turnover basis Business and Finance identified the top 11 advertising agencies in 1998 as follows: [6]

4.4 McConnells is Ireland’s largest advertising agency with a turnover of £46.6m in 1998 and a market share of 13.1% of “above the line” expenditure. Ogilvy and Mather has a turnover of £21m and a market share of 5.9% for the same period. In this case, the market for the supply of advertising and associated services is not concentrated, as the top 4 agencies control only some 31.6% of the market. A HHI of 447.706 further supports such a conclusion (see table below).

4.5 As detailed turnover statistics are not readily available for this market, agency expenditure on media advertising can be a good indication of an agencies position in the market for advertising. [8]

4.6 Advertising expenditure in newpapers represents 56% of total media spend while television and radio combined represents a further 36%. Most of media advertising is placed through advertising agencies which operate on a commission basis. For example, of the 129.3m spent in 1997 on advertising in the 11 NNI newspapers, £75m came from advertising agencies and the remaining £57m from non-agency business, such as the classified and small ad sector [9]. McConnells holds the number 1 ranking in terms of advertising spend in newspapers with a £7.5m spend in 1997. The agency “league table” for advertising spend in national newpapers is as follows:

4.7 DDFHB is ranked eleventh with a spend of £1.8m. However, its fellow subsidiary, The Network (Ogilvy & Mather, including Bell Advertising and Wilson Hartnell) holds second place with a spend of £5.7m. The combined spend of DDFHB and The Network, therefore, would place the sister companies on an equal footing with McConnells in terms of expenditure in newspaper advertising.

4.8 Mc Connells is again the number one agency for combined advertising expenditure in television and radio. The top advertising agencies in terms of combined expenditure in television and radio advertising is as follows:

Source: RTE, 1997.

4.9 DDFHB is sixth in the agency league for TV and radio advertising spend, while The Network is eighth in the rankings. Clearly, DDFHB and The Network combined have a strong presence in terms of agency expenditure in these media.

4.10 The market for the supply of advertising and marketing services by advertising agencies is highly competitive, with significant competition from abroad. Recent events in the market demonstrate that the trend in the advertising market is towards international alignments and networks. Many international brands prefer to channel their advertising revenues through the same agency worldwide. For example, IBM decided in 1994 to dispense with 40+ agencies around the globe and centralise its advertising with Ogilvy and Mather Group Ltd. [10] Kelloggs also decided to centralise its media operations, consolidating from 6 agencies accross Europe to one. JWT Europe won the Kelloggs pan-European account; as a result, McConnells lost its £5m+ Kelloggs account in Ireland. Competition in the market for the supply of advertising services by advertising agencies is further evidenced by the frequent rotation of accounts. McConnells has won the Lotto account from Wilson Hartnell. Bell, while it has lost its Bank of Ireland account, has gained the An Post account.

4.11 Advertising services are also available from sources internationally. For example, in 1996 Bell Advertising lost its Guinness account, worth an estimated £5 million, to a foreign competitor, on the basis that Guinness was operating a “roster of agencies” for its accounts. [11] Moreover, companies have the option of doing their own direct advertising. In addition there are a number of freelance marketing consultants operating in the market. There are no barriers to entry in this market. No particular capital levels are necessary, and there are no licences required.

4.12 Although a company may decide not to have its media services, direct marketing and public relations services provided as an integrated package by one agency but have each service carried out separately by specialist agencies, the services (PR, marketing and media services) offered to clients are generally complementary. The Authority, therefore, considers that the relevant market in this case is the provision of advertising and associated services. The geographical market is at least the State.

5.1 The notified agreement was made on 29 August 1991, and proposed that JWT would take its stake in DDFHB and Eastcastle via a new separate class of share capital (‘A’ Ordinary Shares). On completion of the agreement, new Articles of Association were to be adopted by both DDFHB and Eastcastle, and the Authorised Ordinary Share Capital would be increased. In both cases, the holders of the ordinary shares would be entitled to 80% of the profits distributed in any financial period, and the holders of the ‘A’ ordinary shares to 20%.

5.2 All shares would carry one vote except that, in the case of DDFHB, one ‘A’ ordinary share would carry 50 votes. In each case, there would be certain restrictions on the right to remove directors. Finally, except as otherwise provided in the Articles of Association, the ordinary shares and the “A” ordinary shares were to rank pari passu in other respects.

5.3 The agreement also contained provisions to regulate the relationship between the original shareholders and JWT, and aspects of the dealings of each of them with DDFHB and Eastcastle.

5.4 The agreement also provided for warranties by the existing shareholders, as well as other standard completion arrangements. JWT and WPPH would each be entitled to appoint one director to each company, with each of the original shareholders similarly entitled.

5.5 The written consent of all shareholders would be required for many actions, e.g. any variation in terms of service of any director or senior employee, borrowings above set limits, loans to directors, material changes in the businesses of the companies, issue of share options or disposals of all or part of the companies' businesses etc. Moreover, no payment of dividends in excess of the permitted dividend could be made without written consent all round.

5.6 The agreement provided that all services provided to the companies by the shareholders would be on arms length terms, that the companies would comply with the reporting procedures of the WPP Group, that they would consult with JWT on strategic development matters, and not make acquisitions or enter into joint ventures without the unanimous approval of all shareholders. The companies would resolve issues concerning conflicts between their clients and those of JWT in such a manner as was deemed by JWT to be in the best interest of JWT, having regard, insofar as it was reasonably able, to the interests of the companies.

5.7 In the event of a transfer of shares, the Board could offer up to 16% to certain employees, while shares offered to members would have to be in proportion to the shares already held in the company. JWT shares could not be reduced below 20% of the company’s issued share capital. If more than 50% of the shares were offered for sale, JWT would have first option to acquire them. Any third person acquiring shares by transfer would have to enter into a deed of adherence to be bound by the agreement.

5.8.1 Clause 13 of the Agreement contained the following restrictive covenants -

"(1)(a) Each of the New Shareholders and each person or party who becomes a shareholder of the Company after the date hereof shall not, unless otherwise determined by unanimous consent of the New Shareholders, for so long as he shall remain a shareholder of the Company ("the First Restraint Period") and each of the Shareholders and each person who becomes a shareholder of the Company after the date hereof shall not, unless otherwise determined by unanimous consent of the New Shareholders, for a period of twelve months after ceasing to be a shareholder of the Company ("the Second Restraint Period") whether alone or jointly with another and whether directly or indirectly carry on be engaged or concerned in or (except as the owner for investment of securities dealt in on a stock exchange and not exceeding three per cent in nominal value of the securities of that class) be interested in any business in the Territory which competes with any business carried on by the Companies (or either of them) at that time in the Territory and during the 12 months prior to ceasing to be a Shareholder.

(b) Each Shareholder and each person who becomes a shareholder of the Company after the date hereof shall not for so long as he shall remain an employee of either of the Companies and for a period of 12 months after ceasing to be such an employee whether alone or jointly with another and whether directly or indirectly carry on or be engaged in or concerned with (except as the owner for investment of securities dealt in on a stock exchange and not exceeding three per cent in nominal value of the securities of that class) the provision of goods or services in the Territory of a kind provided or capable of being provided by the Companies to any person firm or company who at that time or in the 12 months prior to ceasing to be such an employee was a customer or client or in the habit of dealing with either of the Companies (or who at such time was to his knowledge negotiating with either of the Companies) in relation to all or part of its requirements for goods or services of kind provided or capable of being provided by the Companies.

(2) Subject to Clause 13(7) below each Shareholder and each person who becomes a shareholder of the Company after the date hereof shall not before the expiry of 12 months from the date on which he shall cease to be an employee or Shareholder (the already defined "Second Restraint Period") whether on his or her own account or otherwise and whether directly or indirectly deal or trade with solicit or entice the custom of (in relation to any goods or services supplied by either of the Companies prior to the date hereof) any person with whom the Companies have had dealings and who was a customer of either of the Companies at any time in the twelve month period before or during the First Restraint and the Second Restraint Period.

(3) Each Shareholder and each person who becomes a shareholder of the Company after the date hereof shall not before the expiry of the Second Restraint Period as defined in sub-clause 13(2) above directly or indirectly solicit or endeavour to entice away offer employment to or employ or offer or conclude any contract for services with any person who was employed by either of the Companies at any time before or during the First Restraint Period and the Second Restraint Period.

................................................................................................................................

(7) The restrictions contained in sub-clause 13(2) shall not prohibit a shareholder from continuing to deal with any person firm or company who is or has been a customer of the respective shareholder notwithstanding that such person firm or company is or has been a customer of or has had dealings with either of the companies.”

5.8.2 Clause 13(4) prevented the disclosure of confidential information “of a technical trade or other character” acquired in the course of ownership of shares or other involvement in the Companies’ affairs, while Clause 13(5) prevented the use of such information to the Companies’ detriment.

5.8.3 Finally, Clause 13(8) provided that JWT could require a shareholder to offer his shares to other shareholders, where it was satisfied that a shareholder had breached his obligations under Clause 13(1).

6.1 The agreement between JWT (as grantor) and DDFHB (as user) was made on 29 August 1991, an identical agreement also being made between JWT and Eastcastle Ltd. Under the agreement, JWT and DDFHB agreed to refer clients and use their mutual resources to develop their respective businesses. Moreover, JWT granted DDFHB the right to use the Names and Service Marks "J. Walter Thompson" and "JWT" in connection with its business. The party effecting the introduction or referral would be entitled to a royalty of 10% of the revenue attributable to the referral. The royalty would be calculated by reference to the actual currency in which the invoice was raised.

6.2 Under Clause 3 JWT granted DDFHB, for a period of 5 years, the right to use the name and service marks in connection with its business in the Territory but for no other purpose. The grant was subject to certain conditions, including the maintenance by DDFHB of certain standards of quality in relation to services and promotional material which JWT could inspect from time to time. Designs and material incorporating the name or marks must be approved by JWT. DDFHB, whenever it uses the service marks, must use accompanying wording to show that they are the service marks of JWT. DDFHB recognises that the name and marks are JWT’s property and agreed not to claim any other rights to them.

6.3 DDFHB agreed, if required by JWT, to enter into a registered user agreement. JWT agreed not to grant the right to another party to use the name or marks for the purpose of the business in the territory so long as DDFHB’s right continued in accordance with the agreement, and undertook to monitor the use of the Service Marks and the Name in the territory by persons other than the two of them (whether under licence or otherwise).

6.4 The user rights and the mutual obligations under the royalty arrangements were to continue for a fixed term of 5 years and thereafter until terminated by either party giving 12 months notice. The royalty arrangements could be terminated by either party in accordance with the provisions of the shareholders’ agreement or if the trade mark user agreement was terminated. The right to use the name or marks could be terminated under a number of provisions, including termination of the shareholder agreement or JWT's membership of the company, material breaches of the conditions of use or a major disposal of the business.

6.5 In both agreements, the Territory was defined as "the Republic of Ireland and Northern Ireland", while the business was defined as "the business of an advertising marketing and public relations agency carried on by the user".

7.1 DDFHB stated that it believed that the agreements should be granted certificates rather than licences, in that the restrictions do not restrict customers going elsewhere in the market place in any way whatsoever, nor do they restrict the Irish companies from seeking services or supplies elsewhere or seeking any business.

7.2 They added that, if the Authority could not grant a certificate, a licence should be granted, as the arrangements certainly did not impose on the undertakings concerned terms which were not “indispensable to the attainment of the objects”. They stated that it was always clear that the foreign companies would not participate with the Irish company, unless they were given the shareholding and the covenants restricting the Irish companies and the shareholders. The Irish companies saw them as beneficial to their development. There was no possibility at all that these agreements eliminated any competition in the market place as there was no concerted practice between advertisers in the market place in relation to the services offered by the Irish companies.

8. Section 4(1) of the Competition Act, 1991, prohibits and renders void 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.

9.1 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".

9.2 DDFHB is engaged for gain in the business of advertising agency and is therefore an undertaking. Eastcastle is engaged for gain in the production of TV commercials and is also an undertaking. James Donnelly, Padraig Doyle, Kenneth Flynn, Gerry Hanlon and Jerry Brannelly were the owners of DDFHB and Eastcastle and are therefore undertakings. JWT and WPPH are also engaged for gain in the business of advertising and are also undertakings. The notified agreement is an agreement between undertakings. The agreement has effect within the State.

10.1 Under the notified arrangements, a UK company, which was not engaged in the advertising business in the State, has taken a minority equity interest in two related Irish advertising companies, in return for which it grants the Irish companies the non-exclusive right to use the JWT name and service marks in the course of its Irish businesses. There is also a mutual agreement whereby each party will not compete within the territory of the other but that royalties will be payable in respect of business gained from clients introduced by one party to the other.

10.2 The net effect of the overall arrangements on competition within the State, the sole geographic area of concern to the Authority, is that by taking a shareholding in the Irish companies, JWT effectively agrees not to enter the Irish market. Since JWT was not operating in the Irish market before the agreements, the overall arrangements do not eliminate an actual competitor, but a potential one. There are a large number of firms operating in the Irish advertising and associated services market, some of which have links with UK or other foreign companies, and the arrangements do not affect the actual number of competitors on the Irish market.

10.3 The Authority has also considered whether the arrangements have an effect on potential competition in the Irish market, by way of the cumulative effect of JWT and Ogilvy and Mather. The WPP Group operates in the Irish market for advertising and associated services via two subsidiaries, JWT and Ogilvy and Mather Group Limited. Although the arrangements gave JWT its first presence in Ireland, Ogilvy and Mather had already been operating in the Irish market for advertising and associated services through its subsidiaries Bell Advertising and Wilson Hartnell (The Network).

10.4 When ranked by turnover or expenditure on newpaper, TV or radio advertising, McConnells is Ireland’s largest advertising agency. Individually ranked, JWT and Ogilvy and Mather are further down the league table of top advertising agencies. However, the combined entity of JWT/O&M would be on an equal footing with McConnells in terms of ad expenditure in newpapers.

10.5 In relation to turnover, JWT/O&M only approximate McConnells market share of 13.1%, leaving McConnells as the market leader. While the combined entity of JWT and Ogilvy and Mather is in a stronger market position than its component parts, it is not a dominant one. Moreover, the cumulative effects are unlikely to have any adverse effects on competition, as the market for the supply of advertising and associated services is not concentrated. Competition in this market is maintained by the existence of competition from abroad, the large number of agencies in the market and the willingness of clients to rotate their accounts. The Authority believes, therefore, that the cumulative effect of JWT/ Ogilvy and Mathers’ operations in the market for advertising and associated services do not prevent, restrict, or distort competition.

10.6 While use of the JWT name may help DDFHB to attract new business from UK clients, the use of this name is not essential for other companies to compete on the market. In these circumstances, the Authority considers that the overall arrangements, per se , do not contravene Section 4(1) of the Competition Act. However, while the overall arrangements may not offend, it is also necessary to examine the various provisions of the agreements in the light of Section 4(1).

Shareholders’ Agreement

10.7.1 As already mentioned, the shareholder’s agreement gives strong protection, vis-a-vis the future internal management and operation of the company, to the minority shareholder, JWT, and the issue arises as to whether this degree of protection affects competition.

10.7.2 On the EU front, the decision in the Philip Morris case [12] established that “an acquisition by one company of an equity interest in a competitor does not, of itself, constitute a restriction of competition. However, such an acquisition may serve to influence the commercial conduct of the companies in question so as to restrict or distort competition.” It was concluded that share acquisitions in competitors fall within Treaty Article 85 where they influence the market behaviour of the firms concerned so that competition between them is restricted. In this case, while there is no doubt that JWT has a strong degree of corporate control vis-a-vis DDFHB despite the relatively low level of its equity stake overall, the Authority is nevertheless satisfied that there is such strong competition in the market concerned that competition is not affected.

10.7.3 Under Clause 13.1(a) of the notified agreement, each of the New Shareholders (i.e. JWT plus the original shareholders) covenants not to engage in any business which competes with any business carried on by the Companies within the previous year, while remaining a shareholder and for a twelve-month period after ceasing to be a shareholder. In its decision on Cambridge-ACT/Imari [13], the Authority indicated that, in general, a restriction on parties in a business competing with it for so long as they remain part of the business, does not contravene Section 4(1). In a large number of previous decisions also, the Authority has consistently taken the view that, insofar as non-compete restrictions of this nature apply for a period after a disposal of shares they do not contravene Section 4(1) provided that the restrictions do not exceed what is necessary to enable the purchaser to secure the goodwill of the business which would, effectively, be sold by the disposal of shares.

10.7.4 In its decision on Capco Holdings Ltd. [14], it was noted that -

“The Authority has stated in previous decisions that a post-shareholding non-compete provision is not justified where the shareholding is a nominal one or is held for investment purposes. For purposes of clarity the Authority does not believe a post-shareholding restriction would be justified in this instance if an individual’s shareholding was 5% or less.”

10.7.5 In the present instance, it is clear, from the strong powers held by JWT under the agreement - including the right to nominate a director (with another nominated by its sister company WPPH), and an effective veto over many important decision-making powers of DDFHB and Eastcastle - that the shareholding concerned is not held for investment purposes.

10.7.6 JWT’s post-agreement holding of 22% in the capital of Eastcastle is clearly not a nominal one. As regards DDFHB, while JWT’s post-agreement holding was, on a strictly numerical basis, only 0.58% of the issued share capital, nevertheless if the measure used were the relative voting strengths of the shareholders, that holding is certainly not nominal, since it held 20% of the share voting rights.

10.7.7 In this instance, therefore, the Authority considers that the level of shareholding is not relevant to the consideration of the justifiability of the non-compete restriction.

10.7.8 In considering these restrictions more generally, the Authority has regard both to the duration of the restriction concerned and to its scope, including its geographical scope. Under the notified agreement, the non-compete restriction applies for a period of 12 months after the disposal of shares, which is within the period which the Authority generally finds acceptable. The scope of the restriction covers the whole of the State, as well as Northern Ireland; however, in the light of the country-wide nature of the market, the Authority does not consider that the scope of the post-agreement non-compete restriction contravenes Section 4(1). Restrictions in relation to Northern Ireland do not come within the scope of the Competition Act.

10.7.9 Under Clause 13.1(b), each of the New Shareholders covenants not to do business with any customers or clients of the Companies while remaining an employee of the Companies, and for twelve months thereafter. As the Authority has explained in its “Guide to Employee Agreements and the Competition Act” (15 September 1992), it considers that employees are not undertakings and therefore employee agreements are not within the scope of Section 4(1). The Authority does not, therefore, propose to deal with the application of this clause while the covenantor remains an employee of the company. The position changes, however, once an employee leaves an employer and seeks to set up his or her own business; he or she would then be regarded as an undertaking.

10.7.10 The Authority has previously accepted [15] that some restriction on soliciting customers, after termination of employment, could be necessary to protect the legitimate interests of the company. For example, the Authority has considered that a one-year post-employment restriction on the soliciting of those persons who were customers at the date of termination of employment was justifiable. In this case, therefore, the Authority does not consider that the scope of the post-agreement non-compete restriction contravenes Section 4(1).

10.7.11 Clause 13.2 of the notified agreement, which applies for 12 months after cessation as an employee or shareholder, prevents the former employee or shareholder from soliciting the custom of any person who was a customer of either of the companies (DDFHB or Eastcastle) at any time in the twelve month period before or during the First Restraint and the Second Restraint period. The First Restraint period is defined as the shareholding period while the Second Restraint period is defined as 12 months after cessation as shareholder. For the reasons outlined above in relation to Clause 13.1(b), the Authority does not consider that the scope of the post-agreement non-compete restriction in this case contravenes Section 4(1).

Royalty and Licence Agreements

10.8 In the context of the overall relationships among the parties, the Authority considers that the Royalty and Licence Agreements do not raise issues under Section 4(1) of the Competition Act.

11. In the Authority’s opinion, all of the parties to the notified shareholders’ and other related agreements are undertakings within the meaning of Section 3(1) of the Competition Act, 1991 and the agreements are agreements between undertakings. In the Authority’s opinion, the agreements do not have the object or effect of preventing, restricting or distorting competition in trade in any goods or services in the State or any part of the State.

12. 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 shareholders’ and other related agreements notified under section 7 of the Competition Act, 1991 on 30 September 1992 do not contravene section 4(1) of the Competition Act 1991, as amended.