Comparative Guides

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4. Results: Answers
Merger Control
Penalties and sanctions
If notification is mandatory, what sanctions may be imposed for failure to notify? In practice, does the relevant authority frequently impose sanctions for failure to notify?

Answer ... Notification is voluntary, so there are no sanctions for failing to notify.

However, the Competition and Markets Authority (CMA) retains the power to retrospectively review mergers post-completion, and the effect of a finding that the merger would result in a substantial lessening of competition at this stage is potentially more damaging given that a company could be required to divest a business it has already paid for.

For more information about this answer please contact: Neil Baylis from Mishcon de Reya
If there is a suspensory obligation, what sanctions may be imposed if the transaction closes while the review is ongoing?

Answer ... There is no requirement that the parties suspend completion of an intended merger during the period in which it is being reviewed by the CMA.

However, under Section 72 (during a Phase 1 investigation) and Section 81 (during a Phase 2 investigation) of the Enterprise Act, the CMA is entitled to impose interim orders in relation to a merger prior to completion of the CMA’s review if it considers it appropriate to do so. These are commonly referred to as ‘hold separate’ orders. The CMA may make orders that:

  • prohibit or restrict the doing of things which the CMA considers would constitute pre-emptive action;
  • impose on any person concerned obligations as to the carrying on of any activities or the safeguarding of any assets;
  • provide for the carrying on of any activities or the safeguarding of any assets either by the appointment of a person to conduct or supervise the conduct of any activities (on such terms and with such powers as may be specified or described in the order) or in any other manner; and
  • do anything which may be done by virtue of Schedule 8, paragraph 19 (which relates to the provision of information).

The CMA will usually require the chief executive officer (or another appropriate person) to provide a statement of compliance with any interim order(s) on a regular (typically fortnightly) basis. The CMA may also require that further information or statements of compliance be provided on an ad hoc or periodic basis.

Under Section 117 of the Enterprise Act 2002, it is a criminal offence for a person to provide false or misleading information to the CMA either knowingly or recklessly.

For more information about this answer please contact: Neil Baylis from Mishcon de Reya
How is compliance with conditions of approval and sanctions monitored? What sanctions may be imposed for failure to comply?

Answer ... The implementation of and/or compliance with any undertakings accepted or orders made by the CMA following the conclusion of an investigation will be handled by either the Remedies, Undertakings and Commitments Committee or an inquiry group appointed to oversee this part of the process.

In some cases the CMA may appoint a monitoring trustee or hold separate manager. A monitoring trustee is appointed to monitor and report on compliance with any interim measures and/or implementation of remedies. A hold separate manager, on the other hand, is an individual granted executive powers to operate the acquired business separately from the acquirer and in line with the relevant interim measures or remedies. He or she will play a day-to-day operational role in the business.

If a party fails to comply with any undertakings or orders, the CMA may enforce compliance by way of civil proceedings (including applications seeking injunctive relief) before the relevant courts in the United Kingdom.

In addition, under Section 94 of the Enterprise Act 2002, any person affected by the breach of undertaking or order that has sustained loss or damage as a result of it may bring an action against the party subject to those undertaking(s) and/or order(s).

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