BUSINESS OPINION: The Irish Takeover Panel has not exactly covered itself in glory in the seven years since its inception. It is sad to say, but it has come to be seen as a somewhat ineffectual organisation, lacking the clout of its UK counterpart and namesake, writes John McManus

The area in which it has come in for the most criticism is probably in its handling of allegations that shareholders are colluding or acting in concert during takeovers.

A certain amount of this type of criticism is inevitable given the nature of what the panel does; adjudicate on whether company law is being followed during a takeover. Given its function there will always be a winning side and a losing side.

But what makes the criticism more pointed in the case of the Takeover Panel is that the alleged concert parties have never been on the losing side. The Takeover Panel has yet to investigate an allegation which meets the threshold of proof that it requires to find a that a concert party exists.

The standard of proof is high because the Irish panel is established by statute and is ultimately an arm of the State, Its rulings are open to judicial review and must be based on the sort of evidence you would expect to see offered in a High Court case.

Every time the panel makes a ruling it runs the risk of finding itself in court and unable to produce a smoking gun to back up its decision. This in turn opens up the prospect of damages claims from the parties to the takeover in question.

The UK takeover panel, by comparison, is not a statutory body and relies on peer pressure to ensure that its rulings are obeyed by the various banks and stockbrokers in London. Equally its rulings do not have to stand up in court in the way the Irish panel's do.

In order to get around this problem the Irish panel has the powers of a High Court Judge to compel people to give evidence under oath and also produce documents.

But in reality the panel's ability to exercise these powers is severely constrained because it is under pressure to make rulings quickly, usually within a matter of hours or days.

Its purpose, after all, is to provide a quick alternative to the courts when legal issues arise in takeover situations.

It may have the powers of the High Court but the panel does not have the leisure of High Court when it comes to exercising them. As a result, its ability to protect its decisions from legal challenge is significantly circumscribed, which must in turn put pressure on it to give the benefit of the doubt to defendants.

In fact, the Irish Takeover Panel has only fully exercised its powers and held a hearing twice in the last seven years. And even on these rare occasions it was still under considerable time pressures.

The first case was in 1998 when it examined the taking private of Fitzwilton by Sir Anthony O'Reilly and his brother-in-law Peter Goulandris.

The issue in this case was whether the independent directors of the company - who had recommended the offer - were compromised by their business and personal associations with Sir Anthony.

It is the type of allegation that if it was being dealt with by the courts in the normal way would take weeks, if not months. The takeover panel hearing took two days, a Friday and a Saturday with the finding announced the following Monday.

The panel found that there was no conflict of interest.

The second occasion is the current investigation into the role of two groups of shareholders in Gresham Hotels.

The shares holders are the Israeli-owned Red Sea Hotels, which has around 27.7 per cent, and Whiterain International which holds 11.6 per cent of the company on behalf of Hong-Kong businessman Mr Chairai Balrau. Their combined shareholding is over of the 30 per cent threshold after which a full bid must be made.

A full hearing into whether they are acting in concert is due to get underway this week and follows a complaint from Precinct, a consortium of Irish investors, which has bid for the company. The company itself has also made a complaint to the panel.

The decision to hold a hearing is significant in itself and indicates that the panel views the allegation as serious. What happens next will be interesting.