Merger thresholds
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UNITED KINGDOM

Neil Baylis
Partner

neil.baylis@mishcon.com

Tel: +44 20 3321 7096

Natasha Pearman
Managing Associate

natasha.pearman@mishcon.com

Tel: +44 20 3321 6389

Gwen Ballin-Reeler
Associate

gwen.ballin-reeler@mishcon.com

Tel: +44 20 3321 7818

Alex Jennings
Associate

alex.jennings@mishcon.com

Tel: +44 20 3321 7172

New regulation proposed

A National Security and Investment Bill has been proposed which will give the Government powers to better intervene in transactions to protect national security. It is expected that the bill will be adopted in first half of 2021 and it will apply to any transaction entered into from 12 November 2020.

Confirmed up-to-date: 21/04/2021

(Content available free of charge at Mergerfilers.com - sponsored by Mishcon de Reya)

Relevant legislation and authorities

1) Is a merger control regulation in force?

Yes. The UK merger control regime is governed by the provisions of the Enterprise Act 2002 ("Enterprise Act")

2) Which authorities enforce the merger control regulation?

The Competition and Markets Authority (the "CMA") is the authority responsible for reviewing mergers in the UK.

3) Relevant regulations and guidelines with links:

UK merger control is governed by the Enterprise Act.  The CMA has released the following guidelines:

Official English version

Mergers: Guidance on the CMA’s jurisdiction and procedure (December 2020)

Interim Measures in Merger Investigations (June 2019)

Guidelines on the CMA's mergers intelligence function (December 2020)

Guidance for requests for internal documents in merger investigations (15 January 2019)

Merger Remedies (December 2018)

Mergers: Exceptions to the duty to refer (December 2018)

Administrative penalties: Statement of Policy on the CMA’s approach (January 2014)

Transparence and Disclosure (January 2014)

Merger Assessment Guidelines (September 2010)

Merger notice forms

4) Does general competition regulation apply to mergers or ancillary restrictions?

Restrictions on competition that are ancillary to the merger are not subject to separate scrutiny under the general competition regulation.

Restrictions that go beyond what may be considered ancillary may be caught by the general prohibition on anti-competitive agreements.

In the case of non-ancillary restrictions of competition, the following regulations apply:

Chapter 1 of the Competition Act 1998

Chapter I of the Competition Act 1998 prohibits agreements between undertakings, decisions by associations of undertakings or concerted practices which may affect trade within the UK and have as their object or effect the prevention, restriction or distortion of competition within the UK. Arrangements infringing the Chapter I prohibition are rendered void and unenforceable if the infringing provisions cannot be severed. Infringing parties can be fined up to 10% of their worldwide turnover.  For infringements involving Cartel activity, individuals may also be prosecuted criminally under s.188 of the Enterprise Act. The penalties involve individual fines and/or prison sentences.

Joint ventures which do not meet the relevant criteria to be examined under the merger control regime may be reviewed under Chapter 1.  The CMA has released a "Dos and Don’ts" on its website which should act as a guide for Joint Ventures, and legal advice should be sought to ensure compliance with competition law. 

Chapter 2 of the Competition Act 1998

Chapter 2 prohibits the abuse of a dominant market position which has or is capable of having an effect on trade within the UK. Infringing parties can be fined up to 10% of group worldwide turnover

5) May an authority order a split-up of a business irrespective of a merger?

Yes.

6) Other authorities that also require merger filing or may prohibit transaction
(Note that this may not be an exhaustive list and that industry-specific legislation should always be considered. Furthermore, a merger will often require change of registrations with – but not approval from – the companies register, land register and authorities that have issued permits for the activities of the merging parties.)

Under UK merger control rules, only the CMA has the power to prohibit mergers on competition law grounds. The government may currently intervene in the case of 'public interest'. The public interest considerations in which the Secretary of State can intervene are national security, media plurality, the stability of the financial system and public health emergencies. 

These measures apply both to domestic and foreign investment, although they are frequently used to scrutinize foreign investment. 

The UK Secretary of State can intervene in transactions that raise public interest concerns by issuing a public interest intervention notice where the transaction falls within the UK merger control regime. They can also issue a European Intervention Notice where the transaction falls within the EU merger control regime, where the UK jurisdictional thresholds are met. Generally, the Secretary of State can intervene in any transaction which meets all the requirements for a relevant merger situation, other than the UK turnover or share of supply test, i.e. in circumstances where two or more "enterprises" cease to be distinct (or where there are arrangements in progress which would lead to this), as a result of being brought under common ownership or control.  An enterprise will exist if the substance of its activities are carried out for gain or reward.

In these cases, the CMA will then prepare a report for the Secretary of State listing out the considerations which may be relevant to carrying out a more detailed 'Phase 2' investigation. 

The Secretary of State will then: 

  • decide there are no relevant public interest concerns; or
  • accept undertakings in lieu of a Phase 2 investigation where appropriate; or
  • decide to refer the transaction to a more detailed Phase 2 investigation.

Foreign investment control

The UK does not yet have a stand-alone foreign direct investment regime, but when foreign investors are involved, the Secretary of State may be more likely to use its competence to intervene in merger cases to protect national security, media plurality, the stability of the financial system and/or public health emergencies. 

Foreign investment control

On 11 November 2020, the National Security and Investment Bill was introduced to the UK Parliament. The CMA will no longer have a role in mergers involving foreign investments in the UK that involve the acquisition of control over certain types of entities and assets, on the grounds of national security.  A new government body, the "Investment Security Unit", will oversee such transactions. The Bill  also introduces a hybrid system of mandatory and voluntary notifications. This new system strengthens merger control enforcement as a result of introducing the mandatory element of the notification regime, as well as lowering the thresholds for notification under this regime within specific sectors. 

The mandatory notification regime will apply to 17 industry sectors considered to pose the greatest risk, including computing hardware, data infrastructure, and transport. These transactions will be notifiable if:

  • 15% or more of the votes or shares in a qualifying entity (where the acquirer previously held less than 15%) are acquired; or
  • control of a qualifying entity (an entity which carries on activities in the UK or supplies goods or services to persons in the UK) is acquired (defined as: (i) more than 25%, 50% or 75% of the votes or shares in a qualifying entity; or (ii) the acquisition of voting rights that enable or prevent the passage of any class of resolution governing the affairs of the entity).

The voluntary regime encourages businesses to notify where there is a "trigger event". Trigger events are acquisitions of control over a qualifying entity or assets. For these purposes, control also includes acquiring "material influence" over a qualifying entity's policy. The UK government can review transactions up to five years post-completion under the voluntary regime.

Once it has come into force, the Bill will apply to any transaction entered into from 12 November 2020.

7) Are any parts of the territory exempted or covered by particular regulation?

No.

Voluntary or mandatory filing

8) Is merger filing mandatory or voluntary?

In the UK, merger filing is voluntary and parties may, therefore, complete a transaction without prior clearance from the CMA.  However, it is important to note that the CMA has the power to halt integration of the target business or order divestments if it subsequently chooses to investigate the merger.

Types of transactions to file – what constitutes a merger

9) Is there a general definition of transactions subject to merger control?

The position in the UK is whether, in essence, there has been a change in control over a business, and whether there is a "relevant merger situation". 

A relevant merger situation arises where the jurisdictional thresholds are met, and where two or more "enterprises" cease to be distinct (or where there are arrangements in progress which would lead to this), as a result of being brought under common ownership or control. An enterprise will exist if the substance of its activities are carried out for gain or reward.

10) Is "change of control" of a business required?

Yes. The CMA has discretion to review transactions that result in a "change of control". Such a review may be undertaken each time a change in control takes place. 

11) How is “control” defined?

Control is defined as the possibility of exercising decisive influence on an undertaking. It can be sole or joint in nature. The CMA may review any transaction where it considers a change in control has taken place. 

The Enterprise Act, which governs UK merger control, distinguishes three levels of interest that amount to control (including moving from one level to another):

  • a controlling interest (de jure or legal control);
  • de facto control (control of commercial policy); and
  • material influence (ability materially to influence commercial policy, irrespective of shareholding).

Under UK law, a change of control includes a 100% acquisition of a target company, but can also occur when there is the creation or strengthening of 'material influence' over the strategic and commercial policy of the target business that is relevant to its behaviour in the marketplace. The 'material influence' test is designed to enable the CMA to review a wide range of transactions. 

In general the CMA will only be interested in transactions where there has been a shift in control (from one party to another, from sole to joint etc), and is unlikely to be interested where a series of transactions results in the balance of control remaining the same. However, legal advice should be taken to determine whether a transaction should be notified to the CMA, as the CMA's discretion is wide.

12) Acquisition of a minority interest

Acquisition of a minority interest must result in a change of control in order to be considered a relevant merger situation. The CMA will therefore examine the existence of de facto control (actual control) and de jure control (where a material influence resulting from a variety of factors amounts to legal control of the entity)

In assessing material influence, the CMA will consider all of the circumstances of the case, including: (i) the extent of any voting rights conferred by any shareholding held by the acquirer; (ii) the acquirer's ability to influence the board of the target business; and (iii) any other aspects considered relevant by the CMA.

Voting Rights

In relation to the acquisition of minority interests leading to a change in voting rights:

  • shareholder voting rights of more than 25%: as a general rule the CMA is likely to view the acquisition of shareholder voting rights of more than 25% as conferring material influence, given that this level of minority shareholding would typically allow the acquirer to block decisions requiring a special resolution;
  • shareholder voting rights of 15% to 25%: the CMA may examine acquisitions of shareholder voting rights of 15% to 25% in order to consider whether these might enable the acquirer to exercise material influence over the commercial policy of the target business (e.g. by reference to the distribution of the remaining voting rights, patterns of voting at recent shareholder meetings, and/or any special voting or veto rights attaching to the minority shareholding); and
  • shareholder voting rights of less than 15%: at levels below 15% of shareholder voting rights, the CMA may exceptionally choose to examine acquisitions, where other factors indicate that material influence may arise.

Board influence

A change in board composition may be enough for the CMA to consider there has been a change in material influence, or otherwise may be considered amongst other factors when assessing material influence.

Other considerations

The CMA may also consider the financial dependence of the target business upon the acquirer, the possibility that the parties may become more closely involved in the future, and the extent of influence that the acquirer may exercise over the target's business in practice (whether due to status within the market or particular expertise). 

13) Joint ventures/joint control – which transactions constitute mergers?

A relevant merger situation will exist under the Enterprise Act in the case of joint ventures if previously distinct businesses acquire common control of another business (i.e. where more than one shareholder has "control").

The application of the jurisdictional thresholds (set out in topic 14) in the context of joint ventures is complex, and reference should be made to the CMA’s jurisdictional and procedural guidance in this area.

Thresholds that decide whether a merger notification must be filed

14) Which thresholds decide whether a merger notification must be filed?
(Unless explicitly stated otherwise, the thresholds described under one threshold category are not cumulative with those described under another category. Thus for instance if there is a market share threshold and a turnover threshold, it is sufficient to meet one of these, unless stated otherwise.)

a) Turnover thresholds

Merger filing is voluntary in the UK. The thresholds described here decide whether the CMA may challenge a merger or not.

The turnover test is met when the UK turnover associated with the business which is being acquired (i.e. the target) exceeds GBP 70 million. (See lower turnover threshold for certain industries in topic 15.)

b) Market share thresholds

This is not strictly a market share threshold but rather a Share of Supply Test. The share of supply test is met when the businesses which cease to be distinct from each other (generally the acquirer and the target) have overlapping activities and, after the merger, together supply or acquire at least 25% of any description of goods or services supplied in the UK or a substantial part of the UK.

The test is satisfied only if the parties both supply or acquire the same category of goods or services and will not be met where the merging parties are only active at different levels of the supply chain.

c) Value of transaction thresholds

N/A

d) Assets requirements

N/A

e) Other

N/A

15) Special thresholds for particular businesses

Lower thresholds will apply in relation to following particular business sectors which are considered to be crucial to UK national security:

  • The production of items for military or military and civilian use
  • Computer Processing Units
  • Quantum technology
  • Artificial intelligence
  • Cryptographic authentication technology
  • Advanced materials which include:
    • materials capable of modifying the appearance, detectability, traceability or identification of objects by humans or sensors within specified ranges up to and including ultraviolet
    • alloys formed from chemical and electrochemical reduction of metals, polymers and ceramics in their solid state, 
    • processes taking solid state alloys in or into crude or semi-fabricated forms, or powders for additive manufacturing, and 
    • other metamaterials (not including fibre-reinforced plastics in certain applications and packaged device components for civil application).

To these sectors, the thresholds have been reduced to £1 million (from £70 million), and the share of supply test has been amended such that it can be satisfied by the target having a share of at least 25 per cent, where the transaction involves a target that is active in one of the above sectors which are considered crucial to national security.

16) Rules on calculation and geographical allocation of turnover

The CMA has historically (pre-Brexit) followed the European Commission's practice on allocation of geographical turnover. Lately, the CMA has confirmed that UK turnover will continue to be determined on the basis of turnover derived from customers within the UK.

Turnover is generally considered to be the income derived from the sales of all products/services falling within an entity’s ordinary activities, (minus rebates, VAT and other taxes directly related to turnover).  Intra-group sales are excluded. Turnover includes any aid granted by a public body to a business which is directly linked to the sale of products or the provision of services by the business and therefore reflected in the price of those products/services.

Is the seller/seller's group turnover relevant in a standard acquisition of sole control?

No.

17) Special rules on calculation of turnover for particular businesses

Financial services and insurances

The applicable turnover of an enterprise which, in whole or in part, is a credit institution or financial institution is the sum of the following specified income received by the branch or division of that institution in the UK, after the deduction of value added tax and other taxes directly related to those items:

  1. interest income and similar income
  2. income from securities:
  3. income from shares and other variable yield securities
  4. income from participating interests
  5. income from shares in affiliated undertakings
  6. commissions receivable
  7. net profit on financial operations, and
  8. other operating income.

Insurance undertakings

The applicable turnover of an enterprise which, in whole or in part, is an insurance undertaking is the value of the gross premiums received from residents of the UK after deduction of taxes and certain other premium related deductions. Gross premiums received comprises all amounts received together with all amounts receivable in respect of insurance contracts issued by or on behalf of an insurance undertaking, including outgoing reinsurance premiums.

18) Series of transactions that must be treated as one transaction

At its discretion, the CMA can apply sections 27(5) and 29 of the Enterprise Act to allow it to treat a series of transactions where a party acquires control of an enterprise within a single two-year period as having occurred simultaneously on the date of the last transaction. 

In exercising its discretion, the CMA will have regard to the nature and extent of any competition issues associated with the merger. The CMA may also take into consideration any transactions in contemplation by the parties, even if they have not yet occurred. 

Exempted transactions and industries (no merger control even if thresholds ARE met)

19) Temporary change of control

Acquisitions of control intended purely as a temporary step in a wider overall transaction might constitute a relevant merger situation. In practice, such arrangements might include break-up bids, stake-building in the context of a public bid, and ‘warehousing’ arrangements.

20) Special industries, owners or types of transactions

Special industries

Please see alternative thresholds for special industries as set out in topic 15.

Types of transactions: Asset Purchases

The transfer of assets or employees alone may be sufficient to constitute an "enterprise" for UK merger control purposes, and would therefore be considered a relevant merger situation. For example, where the facilities or site transferred, or a group of employees and their know-how, enables a particular business activity to be continued.

The CMA will use its discretion in the assessment of whether what is being acquired amounts to an enterprise. The assessment will depend on the specific facts and circumstances of each case and the industry in question. Independent legal advice should therefore be sought in order to determine whether a transfer of assets will amount to a relevant merger situation capable of being reviewed by the CMA.

21) Transactions involving only foreign businesses (foreign-to-foreign)

There is no exemption for foreign-to-foreign transactions. All transactions that meet the thresholds are subject to merger control regardless of where the undertakings concerned are registered, operate or own assets.

22) No overlap of activities of the parties

There is no exemption for transactions with no overlap of activities, so long as the relevant thresholds are met the CMA will have jurisdiction. In cases where there are no effects on competition, the parties may well choose not to notify and there will be no material risk of the transaction being blocked. 

23) Other exemptions from notification duty even if thresholds ARE met?

N/A

Merger control even if thresholds are NOT met

24) May a merging party file voluntarily even if the thresholds are not exceeded?

No, although given the share of supply test is very flexible, some cautious buyers may wish to discuss a proposed merger with the CMA even if the risk of the test being met is low.

25) May the competition authority request a merger notification or oppose a transaction even if thresholds are not met?

No.

Referral to and from other authorities

26) Referral within the jurisdiction

None.

27) Referral from another jurisdiction

The CMA cannot handle mergers based on referrals from other jurisdictions, except referrals from the European Commission that have taken place before the end of the Brexit transition period. 

28) Referral to another jurisdiction

N/A

29) May the merging parties request or oppose a referral decision?

N/A

Filing requirements and fees

30) Stage of transaction when notification must be filed

As noted above there is no mandatory filing obligation in the UK.

However where the parties decide to file they will normally do so when the sale and purchase agreement is either signed or in a near final form, or when a formal bid has been made for the target.

Once the notification has been submitted, the CMA will publish that fact. So notification should only be made when the parties are willing for the transaction to be put in the public domain.

If the parties chose not to notify, they may be required to do so within a short time after the CMA becoming aware of the merger.

31) Pre-notification consultations

The CMA encourages pre-notification consultations. Often the parties will submit a briefing paper to the CMA in advance of a draft notification in order to introduce the parties and the proposed transaction.

32) Special rules on timing of notification in case of public takeover bids and acquisitions on stock exchanges

The UK Listing Rules require that it is a condition of any offer made for securities in listed companies that the clearance of the CMA be obtained prior to closing (assuming the bid constitutes a qualifying merger).

The parties should take detailed advice on the implications of this for the bid timetable.

Furthermore, the Listing Rules require that the bid will lapse if a reference is made for a Phase 2 inquiry. In such circumstances, the Parties will normally have the option to walk away and/or make a fresh bid once clearance has been obtained.

33) Forms available for completing a notification

The notification must be made using the statutory form known as a "Merger Notice". It may be possible to seek waivers from the CMA for certain questions in the Merger Notice, however, as a rule, all requested information will be required.

34) Languages that may be applied in notifications and communication

English.

35) Documents that must be supplied with notification

The following documents must be supplied with the Merger Notice:

  1. the most recent audited annual financial statements and annual reports for each of the parties to the merger.
  2. documentation regarding undertakings that have been sold or acquired after the conclusion of the most recent financial year;
  3. all documents concerning the merger, regardless of whether the merger is brought about by agreement between the parties to the merger, acquisition of a controlling interest or a public takeover bid;
  4. group chart/overview for each of the parties to the merger;
  5. contact information for most significant competitors, suppliers and customers;
  6. any documentation on which the parties have based their market definition and assessment of market shares, in particular market studies; and
  7. any internal board documents discussing the rationale for the merger.

Further documents may be sought during Phase 1 or Phase 2 such as management accounts, analyses, reports, minutes of board meetings and similar documents related to the merger.

36) Filing fees

The filing fee depends on the UK turnover of the target. Current fees are:

Target UK turnover

Filing fee:

GBP 0 - 20 million

GBP 40,000

GBP 20 - 70 million

GBP 80,000

GBP 70 - 120 million

GBP 120,000

More than GBP 120 million

GBP 160,000

Fees are payable by the person or persons submitting the notification.

Implementation of merger before approval – “gun jumping” and “carve out”

37) Is implementation of the merger before approval prohibited?

Once the merger has been notified, it cannot be implemented until it has been approved. However, as noted in topic 8, notification is not mandatory under UK law and so the parties can close the deal and take the risk of an investigation and subsequent order to unwind the merger. That stance, for any merger raising competition issues, is rarely regarded as acceptable by the buyer.

38) May the parties get permission to implement before approval?

Generally no. The parties must wait for the decision to clear the merger – absolutely or once commitments have been agreed. To ensure this is respected, the CMA will usually impose an order preventing any integration steps between the merging parties prior to the final decision. In exceptional circumstances derogations may be granted to the order.

39) Due diligence and other preparatory steps

Due diligence must be conducted in a way that prevents sensitive market information from being used for purposes other than assessing the viability of the merger.

There are no guidelines on what may be considered acceptable preparatory steps and there is a risk that due diligence could amount to unlawful information sharing where the parties are competitors. 

As a result, many parties now agree to set up "clean teams" to ensure that only a specified small group of individuals have access to information and that certain highly confidential information is only shared on a lawyer to lawyer basis.  A formal clean team agreement will be put in place in these circumstances which will be evidence to the CMA of the precautionary measure put in place should there be an allegation of any inappropriate information sharing (more likely where the deal has been cancelled and the parties continue as competitors on the market).

All competitor information should be returned or deleted if the merger does not proceed.

40) Veto rights before closing and "Ordinary course of business" clauses

The CMA will impose an initial enforcement order (or hold separate order) on almost all completed and most anticipated mergers in order to prevent any integration taking place prior to a decision having been reached.  This is intended to ensure that if a remedy is required it remains effective which might not be the case where the buyer has taken steps to dismantle the acquired business.

It is possible to seek derogations from such orders where it is essential that the businesses are integrated to some extent in the interests of customers, for example, where key staff from the seller/target have exited the business.

41) Implementation outside the jurisdiction before approval – "Carve out"

If the UK elements of the transaction can be carved out then it would in principle be possible to close the deal elsewhere prior to clearance being obtained in the UK. Since notification is not mandatory, there is no penalty imposed for closing in the UK without clearance – but the parties will take the risk of the transaction being investigated and potentially unwound.

42) Consequences of implementing without approval/permission

As mentioned in topic 8, notification is voluntary, but if the parties have submitted a merger notification to the CMA, they may be fined if the merger is implemented before approval is obtained. The amount of the fine will be fixed based on the nature, gravity and duration of the infringement, and the fine cannot exceed 10% of the parties’ worldwide turnover.

Furthermore, the merger may be prohibited and the CMA may decide to split up the merged entity or take any other measures necessary to restore efficient competition.

The process – phases and deadlines

43) Phases and deadlines

Phase

Duration/deadline

Pre-notification phase:

There are no formal rules on pre-notification consultations, but it is normally advisable to inform the CMA of the intended transaction at an early stage and to enter into pre-notification consultations that will include submitting one or more draft notifications.  Since the UK retains a voluntary regime, it is always open to the parties not to approach the CMA – but with the risk, relatively high, that the CMA will hear about the merger and then approach the parties.

No set duration or deadline.

Assessment of completeness of notification:

When the merger notification has been formally submitted, the CMA will assess whether the notification is complete.  If not, it will ask the parties to amend the notification usually giving a very short period of time to do so.  In practice it can take months for the authority to declare a notification complete, hence the importance of pre-notification discussions.

Even when the notification has been declared complete, the authority will usually still request more information and documentation in the course of its inquiry.

No statutory deadlines.

Phase I:

The merger is either approved (with commitments if relevant) or it is referred for a Phase II investigation.

In practice, the CMA will indicate to the parties that there are issues within 6 weeks of filing and an issues meeting will be held to discuss these concerns.  The CMA will then invite the parties to offer commitments to address these concerns.

The final decision at Phase I is taken by the CMA Board.

40 working days from the date when the notification was complete.  The clock can be stopped if requests for evidence or documents have not been complied with.

Phase II:

This is a much more detailed inquiry, involving extensive questionnaires, formal hearings with the parties and third parties, economist reports, surveys and site visits.  At the end of the period, the merger is either approved, approved with conditions/commitments or prohibited.  As with Phase 1 if there are concerns the parties will be invited to offer commitments and if these involve divestment then there will normally be a period of time (say six months) to complete the divestment to a buyer approved by the CMA.

Normally, the CMA will provide the parties with a preliminary statement of concerns within 5 working days after initiating phase II.

24 weeks from the date when the Phase II investigation was initiated.  

One extension of no more than eight weeks may be allowed.

Assessment and remedies/decisions

44) Tests or criteria applied when a merger is assessed

The CMA has a duty to assess whether a merger has resulted or may be expected to result in a substantial lessening of competition in a UK market.

45) May any non-competition issues be considered?

No.

The proposed National Security and Investment Bill will require mandatory notification for acquisitions in certain specified industries deemed important for the UK's national security. The approval will be based on public interest test rather than competition issues.

46) Special tests or criteria applicable for joint ventures

The assessment for joint ventures is the same as for other mergers; only joint ventures that satisfy the test for a "merger" (see topic 13) will be assessed under the merger control rules.  Cooperative joint ventures will be assessed under the general prohibition against anti-competitive agreements – Chapter 1 of the Competition Act 1998.

47) Decisions and remedies/commitments available

A merger may be approved, approved with conditions/commitments or prohibited.  A prohibition is only possible at the end of the Phase 2 inquiry.  

If the CMA expresses serious concerns about the merger, it is important that the parties enter into negotiations of possible commitments well before the expiry of the deadlines, as the authority will normally only consider an approval with conditions if the parties have offered commitments. The parties are not obliged to offer commitments during Phase 1, but if they fail to do so in response to the CMA identifying it has serious concerns, then the merger will be referred for a Phase 2 inquiry.

Commitments may take any form and they can be either structural or behavioural and with or without time limitations. Structural remedies are preferred – usually a divestment of some of the acquired business.

If a merger has been closed prior to the CMA becoming aware of the merger, generally a more vigorous approach to investigation and commitments will be applied.

Publicity and access to the file

48) How and when will details about the merger be published?

The CMA will make a public announcement when it has received a merger notification and will invite third parties to comment. The CMA sets up a webpage for each merger under investigation and publishes updates on interim decisions, hearing etc. as the decision making process progresses. Final decisions are published – although the parties are given the opportunity to redact any commercially sensitive information prior to publication. A Phase 2 decision is invariably considerably longer than a Phase 1 decision, and will contain numerous annexes setting out third party submissions, economists' reports, survey findings as well as the parties' own submissions.

49) Access to the file for the merging parties and third parties

The merging parties:

The merging parties have a right to access the file, which includes correspondence with third parties that the CMA may have had, including market survey questionnaires as well as an overview of all documents/correspondence in the file. However, the authority may redact third parties’ confidential information, often including the identity of such third parties. There is no right of access to the authority’s internal documents and correspondence.

Third parties:

Third parties do not have access to the file, but the CMA may decide to provide third parties with a non-confidential version of the notification and other documents in connection with its market surveys.

Judicial review

50) Who can appeal and what may be appealed?

The merging parties can generally appeal any decisions by the CMA to the UK Competition Appeal Tribunal and from there to the Court of Appeal and then the Supreme Court. An appeal may involve conditions contained in an approval decision – even if they are based on commitments suggested by the parties themselves.

Any appeal of a CMA decision will mean that the applicable deadlines will be put on hold until the Tribunal (and courts) has made a final decision.

As usual with UK litigation, the loser pays the winners costs and so there is a risk to appealing a CMA decision that if not successful, it will prove very costly.


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