On 16 September 2010, the Office of Fair Trading (OFT) and the Competition Commission (CC) (together the "Authorities") published the final version of their new joint merger assessment guidelines (the "Guidelines") which will in principle, be applied in their decisions with immediate effect.
Work on the Guidelines began in 2008, with a first draft published and commented upon in mid-2009. A substantially revised second draft was published in April 2010, followed by a further consultation period that closed at the end of May this year. The new Guidelines, which have been developed by working closely with the European Commission and US competition authorities, incorporate and supplement separate publications previously issued by each authority and formalise the approaches of the Authorities that have been emerging in their recent decisions.
The main topics covered by the Guidelines focus on how the respective Authorities carry out merger reviews, and in particular how they assess if a case gives rise to a "relevant merger situation". The Guidelines also explain the methodology used by the Authorities to determine whether a merger results or may result in a "Substantial Lessening of Competitions" (SLC), and outline considerations relevant to the public interest which may be taken into account in a merger assessment.
The new Guidelines explain the "theories of harm" used by the Authorities in detail, and in line with recent cases and announcements of the Authorities, re-iterate their commitment to use such theories in assessing the potential effect of a merger on the relevant market(s). The Guidelines also emphasise that the Authorities will now focus on the direct assessment of the potential anti-competitive effects of a merger, rather than on the definition of the relevant market. Finally, the new Guidelines give a more detailed account of the Authorities' approach in relation to counterfactuals, barriers to entry, non-horizontal effects and efficiencies than to date.
The Guidelines replace the separate guidance previously issued by each authority following the enactment of the Enterprise Act 2002. Although both Peter Freeman (head of the CC) and John Fingleton (head of the OFT) were broadly positive about the introduction of the new Guidelines, they still stressed that merger analysis cannot be straight-jacketed and will always ultimately be decided on a case-by-case basis. However, these new Guidelines seem to provide welcome clarity on the UK merger regime, and are likely to lead to further guidance on the Authorities likely approach to mergers in specific sectors (such as retail mergers) in the future
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