UK Government Consults On Proposals To Improve The Mergers And Markets Regimes

On 20 January 2026 the government published its consultation setting out a range of proposals for legislative changes to the mergers and market regimes in order to ensure the regimes support the government's wider agenda for economic growth and investment and to have an international 'best in class' competition regime.

Last year, in response to the government's strategic steer, the Competition and Markets Authority (CMA) embarked on a programme of reform, rolling out a series of internal policy measures based on its new '4Ps' framework supporting pace, predictability, proportionality and process (see our blog post here). The government recognises that the CMA is limited in how far it can go in this regard as it operates within the existing legislative framework, and has therefore committed to bring forward legislative proposals to refine the UK's competition regime, building on the CMA's '4Ps' initiative.

The proposals set out in the consultation, on which the government is inviting comments by 31 March 2026, include:

• Changes to the CMA's phase 2 decision making process in mergers and markets. The government proposes to abolish the panel decision-making process for phase 2 investigations replacing it with a new sub-committee of the CMA board that consists of CMA executives, non-executive directors, and a pool of non-CMA experts, aligning decision-making in mergers and markets with the approach in digital markets. The aim is to address accountability issues resulting from the fact that the CMA leadership is currently responsible for final panel decisions but without a formal mechanism for direct input.
• Providing greater certainty around the share of supply and material influence tests. These jurisdictional thresholds are notoriously broad and vague and can make it difficult for businesses to assess whether their transactions fall within the CMA's jurisdiction. For the 'share of supply test', under which the CMA has broad discretion to define the relevant category of goods or services and in choosing how supply is measured, the government proposes to limit the assessment to a defined set of criteria. It proposes to use the criteria already listed as examples in the legislation (value, cost, price, quantity, capacity and number of workers employed) and to remove the ability for the CMA to consider "some other criterion, of whatever nature". The 'material influence test', which is the lowest level of control required for enterprises ceasing to be distinct, similarly lacks certainty as there is no statutory list of factors that can be considered by the CMA when deciding whether the test is met. The government proposes to establish a closed list of factors for the CMA to take into account, which are: shareholding or voting rights, board representation or appointment rights, special voting rights or veto rights over strategic decisions, access to confidential strategic information and commercial, financial or consultancy arrangements. The government will have delegated power to amend these factors if necessary.
• Allowing an extension to the timeline of phase 1 merger investigations to agree remedies. The government proposes to extend the statutory period for the CMA to consider phase 1 remedies following an SLC decision from up to 10 working days to up to 20 working days. Merging parties would still have to submit their remedy proposal by working day 5, but the CMA would have discretion to grant a 5 working day extension to further develop their proposals where there is a reasonable prospect of resolving issues at phase 1.
• Reforms to streamline the markets regime. The government proposes to replace the current market studies and market investigations with a single-phase tool and a single legal test of "adverse effect on consumers", to reduce the length of time markets are under review. Under the new regime investigations would take 6 to 12 months, resulting in a final report setting out the CMA's recommendations or in a consultation on a provisional adverse effect on consumers decision, including areas to consider for remedies. Depending on the nature of the potential remedies a final report would then be published within 6 or 12 months of a provisional adverse effect decision. The end-to-end process should then in most cases take between 18 to 24 months (compared with the current 30 months or more), and in some cases less than 18 months.
• Regular review of market remedies. The government recognises that market remedies can place significant burdens on businesses and should not remain in place longer than necessary. The CMA has reaffirmed its commitment to impose sunset clauses by default and the government proposes to place this on a statutory footing and make considering sunset clauses when designing remedies a legal requirement. The CMA is currently also not required to review remedies within a set timeframe and government is proposing that all market remedies must be reviewed at least once every 10 years.
• Stronger investigative powers for algorithms. The government is proposing to provide the CMA with stronger powers to investigate algorithms under its competition and consumer protection regimes. This would involve powers to demand access to algorithms operated by a business, information around its role and operation, producing simulated outputs and performing specified demonstrations and tests.

Comment

Many of the proposed reforms will be welcomed by businesses and practitioners alike as they are expected to complement the CMA's '4Ps' framework of pace, proportionality, predictability and process.

We expect that the proposed decision to remove the independent panel in the phase 2 merger and market decision process will be divisive, with some possibly supporting a faster decision-making process while others will regret the removal of the 'second pair of eyes' many lobbied for when the OFT and MMC were merged to become the CMA. This will also be seen as concerning in light of the lack of a full merits appeal standard for merger decisions.

The proposals for greater clarification of the jurisdictional merger thresholds of 'share of supply' and 'material influence' which had been keenly anticipated are also likely to disappoint, as they do not make any substantive changes but simply place on a statutory footing the clarifications already made by the CMA in its updated merger guidance on jurisdiction and procedure.

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