UK: Merger Control Procedures Change Yet Again

Last Updated: 15 July 2006
Article by David Strang

One of the more valuable aspects of the UK’s merger control system has traditionally been the ability of merging parties to receive advice and guidance on a confidential basis from the OFT as to whether a prospective merger is likely to be cleared or subject to detailed review by the Competition Commission. In November 2005, however, the OFT suspended these confidential procedures and we reported on this in the last edition of Technology Law review. This article considers the recent OFT announcement about the arrangements it is introducing to replace the previous procedures.

The system of confidential guidance originated under the old mergers legislation, the Fair Trading Act 1973, and was part of a relatively informal set of merger control procedures. The merger control system was, however, fundamentally changed by the Enterprise Act 2002, in particular by the transfer of responsibility for merger control from ministers to the Office of Fair Trading ("OFT"). Many observers correctly anticipated that this would lead to an increase in challenges to merger control decisions but few seem to have appreciated the impact this might have on the OFT’s procedures, including the pre-merger advice procedures.

The reality has been that because of the vastly increased scope for legal challenge to its decisions, the OFT has had to increase significantly the level of scrutiny of individual mergers. This increased workload has led the OFT to conclude that it can no longer afford the time to offer pre-merger advice or guidance except in the most limited of circumstances.

The position therefore is that the old confidential guidance procedure, which was akin to a full merger analysis by the OFT but on a confidential basis, has been abandoned. Instead, parties can apply for informal advice ("IA") if certain conditions are fulfilled. First, the IA procedure is only available for "good faith confidential transactions". Accordingly, hypothetical transactions and those which are at an early stage of consideration by the prospective acquirer will be excluded. Equally, no guidance will be available where transactions are in the public domain. Secondly, IA is only available where there is a genuine issue for the OFT to consider. The onus is on merging parties, therefore, to raise with the OFT possible theories of harm relating to the proposed merger. If these hurdles are cleared, the OFT will give advice although this may range from a telephone conversation confirming that the OFT agrees with the parties’ analysis to a full meeting between the OFT and the parties and their advisers.

The need for the parties themselves to suggest how their merger might harm competition and the fact that the OFT sees itself as merely giving an "input into the assessment that expert advisers can offer the parties" will no doubt substantially reduce the value of pre-merger contacts with the OFT. It can be expected that many advisers will be wary of committing the necessary effort to an application for IA given these limitations. The need to identify potentially adverse effects of the merger would seem to many to be doing the OFT’s work for them and while parties would normally consider such matters internally, it is a novel concept to have to volunteer an analysis of a merger’s negative effects to the OFT. Equally, the fact that any advice given is likely to be inconclusive will deter many from seeking informal advice.

While "pre-notification" discussions are still available with a view to framing correctly the merger notification, it seems clear that merging parties can expect little assistance from the OFT in forecasting how a particular merger might be reviewed. This no doubt greatly increases the burden on advisers to predict how a merger will be viewed by the OFT.

The new policy may therefore have the effect of discouraging mergers in cases where there are particular sensitivities. There are many circumstances in which a vendor will be unwilling to contemplate a merger without some form of firm indication from the authorities of how they are likely to view the transaction once it is formally notified. It would seem that informal advice is not going to fulfil this need and it will be unfortunate if the change in OFT procedure dissuades parties from proceeding with otherwise valuable mergers.

When is summary judgment not suitable for trademark infringement cases?

Doncaster Pharmaceuticals Group Ltd & Ors - and - The Bolton Pharmaceutical Company 100 Ltd (2006)

This appeal addressed the question of whether it is appropriate to grant final judgment without a trial on liability and remedies regarding imports of branded pharmaceutical products. Lord Justice Mummery said that summary judgment procedures, designed for the swift disposal of straightforward cases, should only be available where the applicant demonstrates that the other party has no "real" prospect of success (as opposed to one that is "fanciful" or "merely arguable"). While the test to be applied was summarised in Celador Productions Ltd v Melville (2004), LJ Mummery noted that its application in practice can be difficult and the outcome more unpredictable than a trial. He provided some tips that may indicate when a case is not suitable for summary judgment, namely:

  1. even though a case may be described as "open and shut", its relative complexity may be indicated by the amount of evidence produced (e.g. papers which resemble trial bundles rather than interlocutory application bundles);
  2. are there conflicts of fact on relevant issues? Courts should avoid mini-trials on the facts without normal pre-trial procedures as this could lead to "summary injustice";
  3. are there reasonable grounds to believe that fuller investigation into the facts would add to or alter the evidence available to a trial judge and, therefore, affect the outcome?


Appeal allowed. This case was not suitable for summary judgment.

To read the full text of the judgment, go to:

Source: BAILII

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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