The Merger Control Review: United Kingdom


Mergers qualify for review under the UK rules if they meet a test relating to the turnover of the target or, alternatively, a 'share of supply' test. Where the UK turnover of the target exceeds £70 million, the turnover test will be satisfied. The share of supply test will be satisfied where the merger creates an enlarged business supplying 25 per cent or more of goods or services of any reasonable description or enhances a pre-existing share of supply of 25 per cent or more. On 11 June 2018, new jurisdictional thresholds came into force on national security grounds for certain defined sectors involving the development of military and dual-use (i.e., civilian and military) equipment and systems, as well as parts of the advanced technology sector.2 For these sectors, the turnover threshold is lowered from £70 million to £1 million and the share-of-supply test is met if the pre-merger share of supply of the target is 25 per cent or more (irrespective of whether that share is increased).

The Competition and Markets Authority (CMA) has the power to carry out an initial Phase I investigation, and has a duty to refer any qualifying transaction for a detailed Phase II investigation where it believes that the merger could give rise to a substantial lessening of competition. Phase I decision-making is undertaken by the senior director of mergers or another senior CMA official, while Phase II decision-making is undertaken by an independent panel drawn from a pool of senior experts in a variety of fields.

Remedy undertakings in lieu of a Phase II reference may be accepted by the CMA. The CMA's in-depth Phase II investigation may lead to a prohibition decision, a decision that the transaction should be allowed to proceed subject to undertakings, or an unconditional clearance.

Notification under the UK system of merger control is 'voluntary' in the sense that there is no obligation under the Enterprise Act 2002 (EA) to apply for CMA clearance before completing a transaction. The CMA may, however, become aware of the transaction through its market intelligence functions (including through the receipt of complaints) and impose interim orders preventing or unwinding integration of the two enterprises pending its review. There is a risk that it may then refer the transaction for a Phase II investigation, which could ultimately result in an order for divestment.

In certain limited circumstances (where the merger raises a defined public interest consideration), the UK system allows the relevant Secretary of State to intervene in relation to mergers. Currently, public interest considerations are limited to national security, quality and plurality in the media, accurate presentation of news and free expression in newspaper mergers, and the maintenance of stability in the UK financial system.3

The CMA has published detailed non-binding guidelines on jurisdictional issues and its procedures for the review of mergers.4

The Competition Appeal Tribunal (CAT) may review decisions made by the CMA or the Secretary of State in connection with a reference, or possible reference, of a merger. An appeal lies, on a point of law only, from a decision of the CAT to the Court of Appeal and requires the leave of either the CAT or the Court of Appeal.

Year in review

i Workload

The number of Phase I merger decisions made by the CMA in the 2019–2020 financial year (63) was similar to the preceding financial year.5

Of the 63 cases decided during the year, 38 were cleared unconditionally, representing around 60 per cent of cases, significantly fewer than the 73 per cent in the preceding year. Thirteen cases were referred for Phase II review, which is around 20 per cent of cases, similar to the preceding year. Undertakings in lieu of a reference (UILs) were accepted in eight cases, an increase on the two acceptances in the preceding year, but fewer than the peak of 12 in the 2017–2018 financial year.

A total of five Phase II decisions were published by the CMA in the 2019–2020 financial year, down from eight published in the previous year. Two were unconditional clearances and one was granted clearance subject to divestiture remedies. The CMA prohibited two mergers during 2019–2020, an increase from the one case it prohibited in 2018–2019.6 Four cases were cancelled or abandoned, one more than in the preceding year.

Overall, the CMA intervened (i.e., prohibited or accepted remedies) in around 16 per cent of cases in the 2019–2020 financial year, which is around three times the rate of intervention from the European Commission over a similar period. The higher intervention rate can be explained by the voluntary nature of the UK merger control regime, which means that parties may elect not to notify transactions that do not give rise to significant competition issues.

ii Interim measures

The CMA has powers to impose interim measures to freeze or unwind integration and prevent pre-emptive action, including in relation to anticipated mergers at Phase I (see Section This ensures that, while notification is voluntary in the United Kingdom, the CMA is able to prevent action being taken that would result in irreversible damage to competition. The CMA imposed initial enforcement orders in 19 Phase I cases in the 2019–2020 financial year. Interim orders were imposed in two Phase II cases in the financial year.7 The CMA granted a total of 70 derogations from initial enforcement orders in the financial year, an increase from the 51 derogations granted in the previous year.8 The CMA published new guidance on the use of interim measures in merger investigations in June 2019.9

In February 2019, the CMA issued its first ever unwinding order in relation to the completed acquisition by Tobii AB of Smartbox Assisted Technologies and Sensory Software Limited, following the breach of an interim order issued to prevent pre-emptive integration during Phase II. In August 2019, the CMA issued its first unwinding order during a pre-notification period in relation to the acquisition by Bottomline Technologies of Experian's Payments Gateway business.10 Two penalty notices were imposed for breaches of interim measures,11 and three penalties were imposed for incomplete responses to statutory information requests.12

iii Information requirements and timetables

The CMA merger notice requires a large amount of information. The CMA therefore strongly encourages parties to make contact in advance of notification to seek advice on their submission, not only to ensure that the notification is complete, but also to lessen the risk of burdensome information requests post-notification.

One of the key features of the UK regime is the existence of a statutory 40-working-day timetable at Phase I. The CMA recognises that this presents its own challenges, in particular balancing the need to obtain as much information as possible upfront (before the clock starts running) against the burden such information requests may place on businesses. The CMA has also acknowledged the need to take care that pre-notification discussions do not extend for longer than is appropriate. The CMA aims to start the statutory clock within 20 working days (on average across all cases) of submission of a substantially complete draft merger notice. The average length of the total pre-notification period was 37 working days in the 2019–2020 financial year, up from 33 working days in the previous year and a 25 per cent increase over the past two years.13 The CMA has emphasised that pre-notification will be quicker the more complete the draft notification is, including draft annexes containing internal documents and contact details.

While the CMA has indicated its willingness to adopt a reasonable approach to assessing what type of information will be required for a complete notification, it also retains the power to 'stop the clock' where the parties have failed to comply with the requirements of a post-notification formal information request (see Section III.iv). The CMA suspended the statutory timetable in one Phase I case during the 2019–2020 financial year.14

During the 2019–2020 financial year, the average length of Phase I was 37 working days, compared with 36 working days in the preceding year.15 The average length of a 'significant' merger investigation by the CMA (defined as from deal announcement to either the Phase II decision or UIL acceptance) was just over nine months, which was significantly shorter than a comparable investigation by either the European Commission (15.6 months) or the US Federal Trade Commission (11.9 months) over a similar period.16

The covid-19 pandemic has placed significant pressure on the CMA's ability to deal with its caseload. While the CMA intends to continue progressing its cases, it has announced that it may extend statutory time frames where necessary.

iv An expansive approach to jurisdiction?

In the 2019–2020 financial year, the CMA has asserted its jurisdiction based on the share of supply test in a number of high-profile foreign-to-foreign mergers. In two notable cases, the parties contested the CMA's ability to assert jurisdiction on that basis. In Roche/Spark Therapeutics, the target company was not engaged in the commercial supply of any goods or services in the UK and did not generate any turnover in the UK. Nevertheless, the CMA asserted jurisdiction on the basis of the combined share of the parties of employees working on activities related to the development of certain novel treatments in the UK. In Sabre/Farelogix, although the CMA found that the target had 'no material turnover in the UK', it asserted its jurisdiction on the basis of the supply of certain services to British Airways that facilitated the indirect distribution of airline content to travel agents in the UK.17

The CMA specifies in its guidance that the share of supply test is not an economic assessment and that therefore the group of goods or services to which the jurisdictional test is applied need not amount to a relevant economic market, which can aggregate intra-group and third-party sales even if these might be treated differently in the substantive assessment. This guidance provides the CMA with considerable flexibility to assert its jurisdictions in mergers where a UK nexus may not be immediately apparent.

v Public interest intervention notices

As noted in Section I, where a merger raises a defined public interest consideration, the UK system allows the relevant Secretary of State to intervene in relation to mergers. To do so, the Secretary of State will issue a public interest intervention notice prior to the CMA issuing its decision on reference.

The 2019–2020 financial year saw intervention notices issued on national security grounds in respect of four transactions: Connect Bidco/Inmarsat, Advent International/Cobham, Aerostar/Mettis Aerospace and Gardner Aerospace/Impcross. In the first two cases, the Secretary of State accepted undertakings from the parties in lieu of referring the merger to the CMA for a Phase II investigation. Both Aerostar/Mettis Aerospace and Gardner Aerospace/Impcross were abandoned by the parties.

The 2019–2020 financial year also saw two intervention notices issued in respect of newspaper mergers. In June 2019, the Secretary of State for Digital, Culture, Media and Sport issued a notice in respect of an acquisition of a minority interest in the companies controlling the Evening Standard newspaper. However, the CAT upheld an application by the parties that the time limit for the Secretary of State to make a reference in respect of the transactions had in fact expired. In January 2020, the Secretary of State issued another public interest notice in the case of DMG Media/JPIMedia, which involved the acquisition of the i UK national newspaper and website. In March 2020, the Secretary of State announced that no concerns arose in that case and the CMA subsequently cleared the merger at Phase I.

vi Brexit

The UK left the EU on 31 January 2020. Pursuant to the agreement governing the UK's exit from the EU, a transition period is in place from that day until 11pm on 31 December 2020. During the transition period, the operation and functions of the CMA are largely unaffected. The CMA published guidance on the functions of the CMA under the Withdrawal Agreement, including its effect on merger control, in January 2020.18 See Section IV.ii for an explanation of how the UK and EU merger controls will interact during and beyond the transition period.

The merger control regime

i Threshold issues

Under the UK system, a 'relevant merger situation' (i.e., a transaction potentially qualifying for review) occurs when two or more enterprises have ceased to be distinct. This can occur either through common ownership or common control. Common ownership involves the acquisition of an enterprise so that two previously distinct enterprises become one. Common control involves the acquisition of at least one of the following: de jure or legal control (a controlling interest); de facto control (control of commercial policy); or material influence (the ability to make or influence commercial policy).

The concept of material influence has been drawn widely by the UK competition authorities. For example, the breadth of the concept can be seen in JCDecaux/Concourse where the Office of Fair Trading (OFT) found that, even in the absence of an equity stake, material influence had been acquired by virtue of an option to appoint two out of three board members and the ability to restrict the target's capability for expansion.19

A merger situation will qualify for review if it meets the turnover test or the share of supply test (see Sections I and II). If the CMA believes that it is or may be the case that the merger has resulted or may be expected to result in a substantial lessening of competition in a UK market, then it will refer the merger for a Phase II investigation.

In general, a completed merger will no longer qualify for a Phase II reference four months after the date of implementation of the merger. Time will not begin to run, however, until the 'material facts' of the merger (i.e., the names of the parties, nature of the transaction and completion date) have been made public or are given to the CMA (if neither occurs prior to completion). Time will not run where UILs are under negotiation, where the parties are yet to comply with an information request from the CMA, or where a request has been made by the United Kingdom for review of the transaction by the European Commission in accordance with Article 22(3) of the EU Merger Regulation (EUMR) (see the European Union chapter for details of this procedure). The four-month period may also be extended by agreement between the CMA and the merging enterprises, but for no more than 20 days.

ii Substantive test

In its assessment of mergers, the CMA considers whether the transaction may be expected to give rise to a substantial lessening of competition. At Phase I, a reference must be made if it is or may be the case that a merger may give rise to a substantial lessening of competition (known as the 'realistic prospect' threshold), while at Phase II a 'balance of probabilities' threshold applies.20 As a result, it is relatively common for mergers to be referred to Phase II and subsequently cleared unconditionally.

The CMA has adopted substantive assessment guidelines21 that illustrate, in particular, the shift away from traditional merger control analysis, which proceeds from the definition of the relevant product and geographical markets to measure post-merger levels of concentration, towards a more direct assessment of competitive effects, taking into account factors such as differentiated products, closeness of competition and price sensitivity of customers. For example, the CMA will often use margin and switching data (commonly based on customer surveys) to estimate the upward pricing pressure arising from a merger. For these purposes, the CMA published revised guidance in May 2018 on the design and presentation of customer survey evidence in merger cases.22 The CMA has also published commentary on the assessment of retail mergers.

iii Counterfactuals

The CMA applies different approaches at Phase I and Phase II to assessing the merger counterfactual. At Phase I, the transaction is generally measured against the prevailing conditions of competition (unless it is unrealistic to do so or there is a realistic counterfactual that is more competitive than the pre-merger conditions of competition). At Phase II, the CMA will measure the transaction against the 'most likely scenario'.

The most notable situation where the CMA may use a counterfactual different to the prevailing conditions of competition is in a failing firm scenario. However, in practice, it is often difficult to argue for its application, especially at Phase I. The CMA considered the failing firm test in two cases in the 2019–2020 financial year. The CMA rejected the defence at Phase I in Danspin/Lawton Yarns but accepted it in its Phase II provisional findings in respect of Amazon/Deliveroo in light of a deterioration in Deliveroo's financial position as a result of covid-19.

iv The notification procedure

An application for clearance is made using the formal merger notice.23 The initial period within which the CMA must make a decision whether to make a reference is 40 working days from the first working day after the CMA confirms to the parties that the merger notice is complete. This initial period may be extended where the parties have failed to comply with the requirements of a formal information request under Section 109 of the EA, where the Secretary of State has served a public interest intervention notice, or where the European Commission is considering whether to accept a request from the United Kingdom for the merger to be referred to Brussels under Article 22(3) of the EUMR.

As noted in Section II.iii, the CMA encourages parties to enter into pre-notification discussions at an early stage both to ensure that the notification is complete and to avoid as far as possible the need for extensions to the statutory timetable. Pre-notification discussions also help the CMA to determine any jurisdictional issues (e.g., whether the CMA is best placed to review the case or whether a reference to the European Commission should be sought under the EUMR – see Section IV.ii) and whether a case is likely to give rise to any substantive issues that might trigger its duty to refer.

It is possible for the parties to request that the CMA 'fast-tracks' a merger reference where there is evidence that an in-depth review is likely to be required. This option may be attractive to parties in cases where a reference appears inevitable, as it allows for Phase I of the review process to be truncated.

The CMA levies substantial filing fees in respect of the mergers it reviews, with fees of between £40,000 and £160,000 depending on the turnover of the target business.

v Informal advice

Where there is evidence of a good-faith intention to proceed and there is a genuine competition issue, prior to submitting a merger notice or initiating pre-notification discussions, it may be possible to obtain informal advice from the CMA as to whether it is likely to refer the merger for a Phase II investigation. There is no standard timetable for the provision of informal advice, but where it is intended that the advice will be given following the conclusion of a meeting, the CMA will endeavour to schedule that meeting within 10 working days of receipt of the original application. The resulting advice is confidential and does not bind the CMA.

vi Interim measures

As outlined above, the CMA has powers to impose interim measures to freeze or unwind integration and prevent pre-emptive action. Financial penalties may be imposed for breaches of such measures (capped at 5 per cent of the aggregate group worldwide turnover). If there are relatively high risks of pre-emptive action or concerns about compliance with the interim order, the CMA also has the power to require a monitoring trustee to be appointed to ensure compliance with the interim orders.

The CMA guidance on the use of interim measures in merger investigations sets out the circumstances in which measures will typically be imposed; the form that the measures will typically take; the type of derogations that the CMA is likely to grant; and the timing for their implementation.24 The CMA will normally make an order where it has reasonable grounds to suspect that two or more enterprises have ceased to be distinct (i.e., in respect of completed mergers) and will normally do so almost immediately.

Given that the risk of pre-emptive action is generally much lower in relation to anticipated mergers, the CMA has noted that it would typically engage with parties before making an order in those circumstances. Of the 19 interim enforcement orders imposed in the 2019–2020 financial year, only three were imposed in the context of anticipated mergers.25

The CMA has stated that it would generally not expect to impose an order limiting the parties' ability to complete an anticipated merger unless it had strong reasons to believe that completion will occur prior to the end of Phase I and the act of completion itself might amount to pre-emptive action that would be difficult or costly to reverse (e.g., where the act of completion would automatically lead to the loss of key staff or management capability for the acquired business). The CMA may also consider creating a tailored interim order in cases where this is likely to optimise procedural efficiency and avoid unnecessary disruption to the merging parties' businesses. Therefore, absent exceptional circumstances, it is expected that parties will still be able to complete transactions prior to CMA clearance.

The CMA is willing to grant derogations from interim orders. The CMA advises parties to raise derogation requests as early in the process as possible, preferably in a single comprehensive request. The CMA will often grant the following types of derogation requests where sufficiently specified, reasoned and evidenced: (1) the provision of back-office support services by the acquirer to the target; (2) the exclusion from the scope of the interim order of parts of one party's business that are not engaged in activities that are related to the other party's business; (3) the exclusion from the scope of the interim order of parts of either parties' business that have no relevance to the merging parties' relevant activities in the United Kingdom; (4) the replacement of specified key staff at the target or substantive changes to the merging parties' organisational or management structures; and (5) continued access to key staff members where integration is staggered.

The CMA will seek to release merging parties from some or all of the obligations incumbent in an interim order as early as is appropriate in the circumstances of the case, including during Phase II for parts of the business about which the CMA is no longer concerned. The CMA may also release interim orders following a state of play meeting if it is decided that the case will be cleared.

vii Exceptions to the duty to refer

As explained above, the CMA has a statutory duty to refer a relevant merger situation for a Phase II investigation where it believes that it is or may be the case that a merger has resulted or may be expected to result in a substantial lessening of competition in a UK market. The CMA has published guidance on the statutory exceptions that apply to the duty to refer potentially problematic mergers to a Phase II investigation, and separate guidance on remedies.26

The remedies guidance sets out the criteria for accepting undertakings that may be offered by the merging parties in lieu of a reference. The objective of these undertakings is to ensure that competition following implementation of the remedy is as effective as pre-merger competition. To discharge the CMA's duty to refer, any undertakings offered by the parties should be clear cut and capable of ready implementation. 'Clear cut' is stated in the remedies guidance to mean that there are no material doubts about the overall effectiveness of the remedy and that it achievable in the constraints of the Phase I timetable. It is most common for undertakings to relate to the sale of a part of the merged assets; the CMA has stated a preference for structural remedies and is generally reluctant to accept behavioural remedies. The CMA has nonetheless in the past accepted a number of 'quasi-structural' remedies with behavioural features.27 It is becoming increasingly common for the CMA to require an 'upfront buyer', in other words, for a buyer of the divestment assets to be identified and approved by the CMA before clearance is granted.

The merging parties have five working days from the issuance of a substantial lessening of competition decision (SLC decision) to offer undertakings to the CMA, although they may offer them in advance should they wish to do so. The CMA then has until the 10th working day after the SLC decision to decide whether the offered undertakings might, in principle, be acceptable as a suitable remedy to the substantial lessening of competition. If the CMA decides the offer might, in principle, be acceptable, a period of negotiation and third-party consultation follows. The CMA is required to decide formally whether to accept the offered undertakings, or a modified form of them, within 50 working days of providing the parties with the SLC decision, subject to an extension of up to 40 working days if there are special reasons for doing so.

The CMA's duty to refer may also be discharged in other circumstances, namely in respect of small markets (de minimis mergers), mergers where there are sufficient efficiencies to offset any competition concerns and merger arrangements that are insufficiently advanced. In relation to de minimis mergers, the guidance states that, for markets with an aggregate turnover exceeding £15 million, the benefits of an in-depth Phase II investigation may be expected to outweigh the costs. However, for markets with an aggregate turnover of less than £5 million, the CMA will generally not consider a reference to be cost-effective or justified provided that there is, in principle, no clear-cut UIL available (though this is not to be considered a 'safe harbour'). For markets with an aggregate turnover of between £5 million and £15 million, the CMA will consider whether the expected customer harm resulting from the merger is materially greater than the average public cost of a Phase II reference. The CMA's general policy is also not to apply the de minimis exception where clear-cut UILs are available. The CMA applied the de minimis exception in just one case during the 2019–2020 financial year.28

viii Phase II investigations

Upon the making of a Phase II reference, there are a number of consequences for the transaction – some arising automatically, some relevant only if invoked by the CMA. When a reference is made in relation to a merger that has not yet been completed, the EA automatically prohibits the parties from acquiring interests in each other's shares until such time as the Phase II inquiry is finally determined. This restriction can be lifted only with the CMA's consent.

In relation to completed mergers, from the point of reference, the EA prohibits any further integration of the businesses or any transfer of ownership or control of businesses to which the reference relates (although in practice, the CMA is likely to have imposed an interim order at Phase I in any event).

Unless the CMA releases or replaces an interim order made during Phase I, it will continue in force for the duration of the Phase II inquiry. If an interim order was not made at Phase I or if it is necessary to supplement the measures previously put in place at Phase I, the CMA may impose a new order or accept interim undertakings from the parties.

The CMA is obliged to publish a report, setting out its reasoned decisions, within a statutory maximum of 24 weeks (extendible in special cases for a period of up to eight weeks). The CMA has a statutory period of 12 weeks (which may be extended by up to six weeks) following the Phase II review within which to implement any remedies offered by the parties.

ix Appeals

Any party aggrieved by a decision of the CMA (including a decision not to refer a merger for a Phase II investigation) or the Secretary of State may apply to the CAT for a review of that decision. Appeals against merger decisions must be lodged within four weeks of the date the applicant was notified of the disputed decision or the date of publication, if earlier. Lodging an appeal does not have a suspensory effect on the decision to which the appeal relates. In determining an application for review, the CAT is statutorily bound to apply the same principles as would be applied by the High Court on an application for judicial review.

Appeals against merger decisions have been relatively rare since the establishment of the CAT. In January 2019, the CAT ruled against the CMA in relation to the dates and times by which Sainsbury's and Asda were required to respond to CMA working papers and the timing of the 'main party hearing' during the Phase II review of their transaction. The deal was subsequently blocked by the CMA in April 2019.29 In February 2019, the CAT dismissed an appeal by Electro Rent Corporation against a £100,000 fine imposed by the CMA for the breach of an interim order in a merger investigation. Electro Rent breached the terms of the interim order by exercising a break option to terminate a lease for its premises in the United Kingdom. The CAT affirmed the CMA's view that Electro Rent had no reasonable excuse for failing to comply with the terms of the interim order and also confirmed that the level of the fine imposed by the CMA was not excessive.30 In February 2020, the CAT upheld the CMA's prohibition of the Tobii/Smartbox merger. The appeal addressed both the procedure and merits of the CMA's decision, with the CAT dismissing the appeal on both counts. It affirmed the CMA's view that the two parties were close rivals, and held that the CMA is not obliged to provide all the evidence received or disclosed to it prior to releasing its provisional findings.31

Other strategic considerations

i Whether to notify

Given that notification under the UK system is voluntary, the question of whether clearance should be sought from the CMA in a particular case is one for the parties – and, in particular, the purchaser – to consider. This is essentially a question of what level of commercial risk is acceptable.

Where the parties elect not to notify a transaction, the CMA may still become aware of it as a result of its own market intelligence functions, including through the receipt of complaints. The CMA has a dedicated Mergers Intelligence Committee responsible for monitoring non-notified merger activity and liaising with other competition authorities, and is increasingly focusing on this. The CMA merger intelligence guidance explains when merging companies, that do not propose to notify their transaction, should submit a briefing note to the CMA.32 When deciding whether to call in a non-notified merger, the CMA has powers to request information from the parties and will also accept submissions from the parties on jurisdictional, de minimis and substantive issues. The CMA is willing to give an informal indication that it does not at that point in time intend to call in a merger.

As at 1 March 2020, the Committee had reviewed over 700 transactions during the 2019–2020 financial year. This is an increase on the previous years, during which 600 to 650 cases were reviewed. Fourteen Phase I investigations were launched during the financial year as a result of the Committee's review of those transactions. Three of these cases resulted in a Phase II investigation.

As noted above, the fact that a merger has been completed does not prevent the CMA from investigating and referring it for a Phase II investigation or accepting UILs. While the substantive assessment of anticipated and completed mergers ought to be identical, the CMA can be expected to impose interim orders while it considers a completed merger. In addition to ordering the parties to stop any integration that might constitute pre-emptive action, the CMA may also require the parties to unwind any integration steps that have already taken place.

An additional risk to bear in mind is that the initial period for a Phase I investigation may be reduced to less than 40 working days if the parties elect not to notify a completed merger. The CMA must comply with the four-month statutory deadline for a reference under the EA, which will start to run when the 'material facts' of the merger have been made public or are given to the CMA. If the CMA's timetable is compressed in this manner, it may mean that it has insufficient time to obtain evidence that would support a Phase I clearance, without the need for a Phase II investigation.

ii United Kingdom or European Union?

If a merger has an 'EU dimension', as defined in the EUMR, it falls under the exclusive jurisdiction of the European Commission and cannot be completed until it has been notified and cleared. Conversely, the CMA is in principle competent to investigate mergers that do not have an EU dimension but qualify for review under the UK rules. This is often referred to as the 'one-stop-shop' principle. This simple allocation of jurisdiction is, however, subject to the EUMR processes relating to the reallocation of jurisdiction (see the European Union chapter for details of these procedures).

The decision whether to make a pre-notification referral request is a strategic issue for the parties, and will depend on where the competition issues lie and the degree of risk that the Member States may request a post-notification referral. The European Commission granted Article 4(4) requests by parties to transactions with an EU dimension for the case to be referred to the CMA on three occasions in the 2019–2020 financial year.

The CMA's mergers guidance recommends that, in all cases in which a referral back might be considered appropriate, parties contact the CMA prior to notification to the European Commission to discuss any UK issues raised by the transaction.

The UK left the EU on 31 January 2020 following the results of the 2016 referendum. Pursuant to the UK–EU Withdrawal Agreement, a transition period will end on 31 December 2020, unless extended, during which time the UK will be treated for most purposes as if it were still an EU Member State. The EUMR continues to apply to the UK throughout the transition period, meaning that the UK turnover of the parties will be taken into account when establishing whether the transaction satisfies the EUMR thresholds. Where these thresholds are satisfied, the European Commission will continue to retain exclusive competence for the investigation of that merger, including in respect of any effects on any UK market. The CMA guidance on the Withdrawal Agreement sets out the scenarios in which the European Commission will retain jurisdiction over cases that it is reviewing but on which it has not yet made a decision towards the end of the transition period. In general, the European Commission will retain jurisdiction over cases formally notified or referred before 31 December 2020 (in practice, 23 December 2020). Merging parties have been encouraged to engage promptly with the CMA where a merger might not be formally notified to the European Commission before the end of the transition period.

After the end of the transition period, the one-stop-shop principle will no longer apply, meaning that the UK turnover will no longer be relevant to EUMR thresholds, and businesses may need to submit parallel notifications in the United Kingdom and European Union to obtain clearance for a deal.

iii Cross-border cooperation

Parties should be aware that the CMA is currently part of the European Competition Network, and as such is informed of mergers notified to the competition authorities of the other 27 EU Member States and the European Commission. It also participates in the International Competition Network, an informal network that seeks to develop best practice among competition agencies around the world. In the 2019–2020 financial year, the CMA reviewed the Illumina/PacBio merger in parallel with the US Federal Trade Commission. Cooperation was made possible by the merging parties signing waivers for the sharing of information between authorities. The transaction was ultimately abandoned in January 2020.

Outlook and conclusions

The CMA has stated in its Annual Plan 2020/21 that it expects a 50 per cent increase in the number of merger cases and UK elements of international competition enforcement cases from January 2021, as it acquires jurisdiction over cases previously reserved to the European Commission.33 The CMA has therefore increased its workforce to address the increased case load. The CMA has also noted that it will have to work on cases (for example, by engaging in pre-notification discussions) from autumn 2020, to be ready for the increased caseload.

The Department for Business, Energy and Industrial Strategy published the government's Strategic Steer to the CMA in July 2019. This recognised the key role of the CMA in the government's industrial strategy, and underlined the need for the CMA to champion consumers, make the most of the challenges and opportunities of the digital economy, continue its enforcement practices and ensure that it remains a strong and independent voice in the UK. The Digital Competition Expert Panel also carried out a wide-ranging review of digital markets in 2019.34 In response, the CMA noted in its Annual Plan that it would continue to prioritise activity in online areas and update the Merger Assessment Guidelines to reflect the function of digital markets.35

The CMA also aims to continue the 'tidy up' of its existing guidance in the year ahead, with a focus on ongoing consolidation and refreshing its guidance to reflect current practice. It has stated its intention to consider further revision of its jurisdictional and procedural guidance, and to publish a revised draft of the guidelines for external consultation in its review of the Merger Assessment Guidelines in the second half of 2020. The CMA also intends to make changes to the Phase II process to facilitate a greater degree of international cooperation post-Brexit; for example, by reducing unnecessary duplication in evidence gathering, while preserving the independence of Phase II decision makers.


1 Jordan Ellison is a partner and Paul Walter is a special adviser at Slaughter and May. The authors would like to thank Henry Llewellyn, associate at Slaughter and May, for his help in preparing this chapter.

2 The changes were brought into effect by the Enterprise Act 2002 (Share of Supply Test) (Amendment) Order 2018 and the Enterprise Act 2002 (Turnover Test) (Amendment) Order 2018. See also 'Guidance on changes to the jurisdictional thresholds for UK merger control' (June 2018) CMA90.

3 See Section II.v for several recent public interest intervention notices.

4 See, for example Mergers: Guidance on the CMA's jurisdiction and procedure (January 2014) CMA2.

5 For the CMA case directory, see

6 Sainsbury's/ASDA and Tobii/Smartbox.

7 Rentokil Initial/Cannon Hygiene and Tobii AB/Smartbox.

8 Mergers updates, Law Society Competition Section seminar, 10 March 2020. FY 2019–2020 figures taken from this seminar do not include data for March 2020.

9 Interim Measures in Merger Investigations, CMA108 (June 2019).

10 Bottomline/Experian, 6 August 2019.

11 PayPal/iZettle and Nicholls/DCC Energy Limited.

12 AL-KO Kober/Bankside Patterson, Rentokil/Mitie, Sabre.

13 Mergers updates, Law Society Competition Section seminar, 10 March 2020.

14 ibid.

15 ibid.

16 ibid.

17 The CAT has confirmed that Sabre has lodged an appeal against the CMA's decision in Sabre/Farelogix.

18 UK Exit from the EU: Guidance on the functions of the CMA under the Withdrawal Agreement, CMA113 (January 2020).

19 Material influence also formed the jurisdictional basis for the investigations by the OFT and the Competition Commission (CC) in relation to the 29.82 per cent shareholding acquired by Ryanair in Aer Lingus in the context of a takeover bid. The CC ultimately found that the existence of Ryanair's minority shareholding led or may have been expected to lead to a substantial lessening of competition in the markets concerned and decided that the most effective and proportionate remedy was to compel the airline to reduce its stake in Aer Lingus to 5 per cent.

20 See OFT v. IBA Health Ltd [2004] EWCA Civ 142.

21 Merger Assessment Guidelines (September 2010) OFT 1254, CC 2.

22 Good practice in the design and presentation of customer survey evidence in merger case (May 2018) CMA78.

23 The CMA has made a number of changes to the merger notice form, reflecting comments received in a consultation in 2017, which are intended to reduce the overall amount of information that businesses need to provide.

24 Guidance on interim measures in merger investigations (June 2019), CMA108. This guidance replaces the September 2017 guidelines on initial enforcement orders (CMA60) and updates the relevant parts of the CMA's existing guidance on jurisdiction and procedure (CMA2) that deals with interim measures.

25 Mergers updates, Law Society Competition Section seminar, 10 March 2020.

26 Mergers: Exceptions to the duty to refer (December 2018) CMA64, Merger remedies (December 2018) CMA87.

27 For example, in Mastercard/VocaLink, the CMA accepted a network access remedy under which VocaLink agreed to make its connectivity infrastructure available to a new supplier of infrastructure services to the LINK ATM network. In addition, VocaLink agreed to transfer to LINK the intellectual property rights relating to a particular messaging standard and Mastercard agreed to contribute to LINK members' switching costs.

28 Mergers updates, Law Society Competition Section seminar, 10 March 2020.

29 J Sainsbury PLC/ASDA Group Limited v. CMA [2019] CAT 1.

30 Electro Rent Corporation v. CMA [2019] CAT 4.

31 1332/4/12/19 Tobii AB v. Competition and Markets Authority [2020] CAT 6.

32 CMA's mergers intelligence function: CMA56 (September 2017).

33 CMA Annual Plan 2020/21 (March 2020).

34 The 'Unlocking digital competition' report published by the Digital Competition Expert Panel, as appointed by HM Treasury to examine competition in the digital economy.

35 CMA Annual Plan 2020/21 (March 2020).

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