Comparative Guides

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4. Results: Answers
Merger Control
Can the parties negotiate remedies to address any competition concerns identified? If so, what types of remedies may be accepted?

Answer ... Parties can negotiate remedies to address any competition concerns identified.

If the Competition and Markets Authority (CMA) concludes at the end of a Phase 1 investigation that the merger should be referred to a Phase 2 investigation, the parties can offer to give undertakings in lieu of a reference (UILs) in order to avoid such a referral. Under Section 73 of the Enterprise Act 2002, the CMA will accept the proposed UILs if it is confident that they will resolve the competition concerns that it has identified without any further investigation. Once UILs are accepted by the CMA, it is precluded from referring the merger to a Phase 2 investigation.

Broadly speaking, there are two types of UILs:

  • behavioural undertakings, where the parties give undertakings as to how they will conduct themselves post-merger; and
  • structural undertakings, where the parties offer either to exclude part of the relevant undertaking(s) from the merger or to divest part(s) of the merged business.

Typically, the CMA will be more willing to accept structural undertakings, though in some cases the CMA may want to receive both behavioural undertakings and structural undertakings. In some cases, UILs in relation to the assignment or licensing of patents, brands, data or other IP rights which could be considered to be either structural or behavioural may also be appropriate.

For more information about this answer please contact: Neil Baylis from Mishcon de Reya
What are the procedural steps for negotiating and submitting remedies? Can remedies be proposed at any time throughout the review process?

Answer ... UILs are the only form of negotiated remedy available in the UK merger control regime and must be agreed prior to the commencement of a Phase 2 investigation. Any offer of UILs must be made in writing using the CMA’s Remedies Form for Offers of Undertakings in Lieu of Reference.

The parties may wait until the CMA issues its decision as to whether it considers that the merger would result in a substantial lessening of competition, and therefore has a duty to refer the merger to a Phase 2 investigation, before proposing any UILs. If they do so then, under Section 73A(1) of the Enterprise Act 2002, they will have five working days from the date on which they receive the CMA’s reasons for that decision to formally propose any UILs. The CMA cannot consider any offers made after this period has expired, even where they are revised versions of offers made within that period.

The CMA will have until the end of the 10th working day following the parties’ receipt of its decision (ie, five further working days from the deadline for the parties’ submission of UILs) to decide whether it would be willing to accept the offer either as made or in a modified form. If a modified form is proposed, the parties will be allowed a further brief period to consider whether they would be willing in principle to agree to the modified UILs.

Once the CMA has determined that the proposed UILs are acceptable or the parties have agreed the modified UILs in principle, the CMA will begin a detailed analysis of the UILs. The CMA is allowed 50 working days, with the option under Section 73A(4) of the Enterprise Act 2002 to extend by a further 50 working days if there are ‘special reasons’ for doing so, to reach a final decision.

For more information about this answer please contact: Neil Baylis from Mishcon de Reya
To what extent have remedies been imposed in foreign-to-foreign transactions?

Answer ... As noted above, no legal distinction is made between UK-to-UK transactions and foreign-to-foreign transactions. Remedies, including divestment remedies, can be ordered in relation to all mergers qualifying for investigation that raise competition concerns.

For more information about this answer please contact: Neil Baylis from Mishcon de Reya
Merger Control