UK: UK Merger Control Snapshot

Last Updated: 1 October 2019
Article by John Schmidt, Ludovica Pizzetti and Zeno J. Frediani

As the deadline for Brexit is getting closer and with increasing likelihood of a no-deal Brexit, we set out below how a transaction might become reviewable by the UK Competition and Markets Authority (Cnoted, John. MA) in addition (or instead of) the European Commission. We also provide a high level outline of the UK merger regime.

JURISDICTIONAL SCENARIOS IN A NO-DEAL BREXIT

The following table sets out a potential shift in jurisdiction where a transaction straddles the Brexit date.

Status EU Jurisdiction UK Jurisdiction
Merger notified to and cleared by the EU Commission prior to Brexit but transaction closes after Brexit. EU decision stands. UK has no jurisdiction. If the merger decision is quashed wholly or partially following an appeal to the European Court then the UK may have jurisdiction if the UK thresholds are met.
Merger notified to EU and referred to UK. EU continues with any non-UK aspects not referred. UK continues its review under the referred UK markets.
Merger notified but not cleared prior to Brexit. EU continues to have jurisdiction for its ongoing review. UK has jurisdiction from Brexit day if the UK thresholds are met.
Merger announced but not notified prior to Brexit. EU has jurisdiction if the EU thresholds are met but only for the EU-27 member states (i.e. excluding the UK). UK has jurisdiction to review if the UK thresholds are met.

Two key points to note:

  • First, early engagement between the legal teams and both the CMA and the EU Commission is likely to minimises disruption caused by Brexit.
  • Second, the UK regime will remain voluntary and there will continue be situations where companies will not want or need to notify.

WHEN TO NOTIFY?

  • The UK merger control regime remains voluntary. This means that, even where the jurisdictional thresholds are met, no filing is required and no suspension to closing is necessary.
  • Companies typically notify the CMA in cases where there are material overlaps in activities or for timing or process reasons.
  • The UK merger thresholds are (i) a Target turnover of £70 million in the UK, or (ii) a share of supply of 25% in the UK market or a substantial part of it. Lower thresholds apply to certain industries.
  • Reviewable transactions are not only the acquisition of majority control over a target, but also the acquisition of material influence. This typically applies to voting rights of 25% but has in the past be held to apply to shareholdings of a little as 15%.

WHAT HAPPENS IF I DON'T NOTIFY?

Although filing in the UK is voluntary, the CMA might still "call-in" a deal for merger review if it believes it may have jurisdiction. The CMA may become aware of non-notified transactions through:

  • its merger intelligence activity;
  • active dialogue with other competition authorities, particularly those of other EU Member States;
  • third-party complaints (e.g. customers or competitors).

Even if a merger has been completed, the CMA has powers to, among others:

  • make interim orders preventing the merged businesses from taking actions that might pre-empt its decision;
  • impose remedies, including ordering the parties to unwind a transaction.

The statistics set out below show that the CMA obtains interim orders in between 26-32% of cases even though more than two-third of all cases result in unconditional clearances.

IS THE DEAL CAUGHT UNDER THE FOREIGN DIRECT INVESTMENT (FDI) REGIME?

Scrutiny of foreign direct investment is becoming more active. For this purpose, the government has reduced thresholds under the merger regime to allow for such a review in sensitive industries. These are set out below. In parallel, the government has proposed an entirely separate and self-standing regime but the timing that is, as yet, unclear.

Threshold for review For transactions affecting goods and services for military use, computing hardware and quantum technologies where the target turnover threshold is reduced £1m and no increment is needed to satisfy the share of supply test.
Grounds for intervention The UK government has the power to intervene on grounds of (i) national security, (ii) freedom of expression, (iii) plurality of the media, (iv) availability and high quality of broadcasting, and (v) stability of the UK financial system in any merger. Such a review is in addition and separate from the competition based merger review.

KEY STAGES OF A UK MERGER REVIEW

There are statutory deadlines in place for both Phase 1 and Phase 2 merger investigations. The length of the review period will depend on the complexity of the deal and the level of overlaps between the parties:

CMA MERGER STATISTICS

The table below sets out core statistics around UK merger review outcomes. Two key points to note:

  • First, there is a disproportionately high rate of cases where the CMA obtains measures that stop further integration pending a final determination of the review.
  • Second, the number of Phase 2 outright clearances is higher than in the EU, which suggests that the CMA either is more willing to refer cases to Phase 2 or is more open to taking a fresh look at Phase 2.
2019* 2018 2017
Number % Number % Number %
Total reviewed 27 56 62
Phase 1 23 85% 45 80% 56 90%
Phase 2 4 15% 11 20% 6 10%
Initial enforcement orders 7 26% 29 52% 20 32%
Cleared unconditionally 18 67% 44 79% 41 66%
Cleared conditionally 3 11% 6 11% 14 23%
Blocked/withdrawn/abandoned 2 7% 4 7% 0 0%
Phase 2 unconditional clearance (as % of Phase 2) 1 25% 3 27% 4 66%

* Up to 31 August 2019

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions