In FY 2024/25, UK merger control underwent significant changes, including important statutory amendments, updates to the Competition and Market Authority's (CMA) rules and an apparent shift in focus when reviewing mergers to ensure that the CMA contributes to the UK government's policy of creating growth. Here are our key takeaways:
1. The year in numbers. In FY 2024/25 (to 31 March 2025), the CMA analysed 1,018 mergers formally or informally, more than in each of the two previous years. These numbers include transactions notified to the CMA and transactions reviewed by the CMA's Market Intelligence Unit. During the year, the CMA formally investigated 41 deals, of which only seven were referred to Phase 2, the lowest since 2020/21. Out of the 41 Phase 1 investigations, the CMA unconditionally approved 21 deals, five were cleared subject to remedies and one was abandoned. The CMA unconditionally cleared three deals referred to Phase 2, two other deals were cleared with remedies in Phase 2 and one deal was abandoned. According to the CMA's statistics, prenotification took on average three to four months (and much longer in many cases), longer than in almost any previous year.
2. The UK government calls for a pro-business
approach. In January 2025, the UK government called on UK regulators, including the CMA, to
"supercharg[e] the economy with pro-business decisions".
Shortly after this, the UK government unexpectedly appointed Doug
Gurr, the former manager of Amazon UK and former president of
Amazon China, as the CMA's interim chair, replacing Marcus
Bokkerink, who had led the CMA since 2022.
The CMA has committed to implement "4Ps" in its merger
reviews: pace, predictability, proportionality and process. One
potential consequence of this commitment could be shorter deal
reviews. For example, the CMA has stated that it aims to complete
prenotification procedures within 40 working days and issue
relatively straightforward Phase 1 clearances by the 25th working
day. In April 2024, the CMA widened the scope of its de minimis
exception, which can allow it to avoid lengthy Phase 2 procedures
for deals in smaller markets (see more on this below in point
8).
Another possible consequence of the 4Ps is a potential limiting of
the CMA's jurisdiction. In March 2025, the UK government
launched a consultation on improving the UK competition regime,
including potential changes to the current "material
influence" and "share of supply" tests, which give
the CMA broad jurisdiction to investigate transactions that may
have limited nexus with the UK. While at this stage it is not clear
whether the government will amend these tests, it could narrow
their scope. The CMA's chief executive, Sarah Cardell, has also
stated that the CMA may choose not to investigate certain
international transactions if other authorities' investigations
or remedies would likely resolve any UK concerns. The CMA will
therefore likely prioritize global mergers with UK-specific impact
and remedy considerations. To help achieve this, the CMA is
encouraging parties in relevant cases to explain in their
submissions the status of reviews in other jurisdictions and why a
formal CMA investigation may not be warranted.
3. The CMA cleared the Vodafone/Hutchison's Three joint venture subject to novel remedies requiring investment. After an 11-month review, the CMA approved the high-profile joint venture between Vodafone and Hutchison's Three—two of the UK's four largest mobile network operators—subject to Vodafone's commitment to invest £11 billion within the next eight years to create one of Europe's most advanced 5G standalone networks.
The CMA was concerned that the deal would increase consumer prices and harm mobile virtual network operators that use third-party infrastructure to provide mobile services. The investment commitment aims to address this concern by creating a mobile operator with scale to effectively compete with the UK's two leading operators—the BT Group and VMO2.
This is the first behavioural remedy that the CMA has accepted
in a Phase 2 investigation since FY 2019/20. Notably, the remedy is
based on the parties' original post-merger business plan. The
parties additionally agreed to set price caps on certain mobile
tariffs and offer preset contractual terms to mobile virtual
network operators for at least three years. In this case, Ofcom
(the UK telecommunications regulator) will play a significant role
in monitoring the implementation of the commitments, which is
likely one of the factors that gave the CMA sufficient comfort to
accept behavioural remedies even though such remedies can often be
difficult to monitor and are typically disfavoured.
It is too early to say whether this decision marks a strategic
shift in the CMA's approach towards telecommunications markets
or behavioural remedies in general. In any case, the decision is an
important precedent both in the UK and across the Channel, where
the European Commission has also been urged to give more
consideration to investment commitments, innovation and long-term
efficiencies, particularly for deals in the telecommunications
sector.
4. Artificial intelligence (AI) partnerships are a CMA
focus. Since late 2023, the CMA has investigated five
"AI partnerships", arrangements between large tech
companies and smaller developers of AI foundation models that
involve significant investment in the smaller players and often
acquisition of core developer teams, intellectual property (IP) and
know-how.
These kinds of deals are not typically structured as traditional
M&A transactions and do not necessarily involve acquisition of
control over the smaller company. However, merger assessments are
not limited to acquisitions of control under UK law (unlike, for
example, in the EU) but also cover situations where an investor
obtains the ability to materially influence the target's
commercial policy. Reviewable transactions include cases where, for
example, (1) an investor obtains preferential consultation rights;
(2) an investor's expertise and status in the market can
influence the target's commercial decision-making; (3) the
target becomes dependent on inputs from the investor (e.g. for AI
partnerships involving on-compute infrastructure, which is key to
developing an AI foundation model); (4) the deal involves an
exclusive distribution agreement between the investor and the
target; or (5) the terms of future R&D collaboration can
restrict parties' independent commercial policies.
First, in Microsoft/Mistral, the CMA concluded that Microsoft was a minority shareholder (<1%) with no special voting rights or board representation. It further observed that Microsoft's provision of compute capacity to Mistral did not result in a material influence because (1) the capacity accounted for only a relatively modest proportion of Mistral's total contracted compute capacity, and (2) Microsoft did not receive any rights in return that would allow it to influence Mistral's commercial policy, including use of its IP. Further, the CMA observed that Mistral's nonexclusive commitment to make its flagship commercial models and model variants available on Microsoft's Azure platform did not enable Microsoft to materially influence Mistral's commercial policy.
Second, in Alphabet/Anthropic, the CMA followed the same approach, observing that Alphabet (Google) was a minority nonvoting shareholder that, in addition to investing, had committed to providing Anthropic with compute capacity but that Alphabet was not Anthrophic's main supplier and did not receive any exclusive distribution rights in return.
As to the third partnership, Amazon/Anthropic, the CMA concluded that the deal did not meet either the statutory revenue or share of supply thresholds and left open whether the partnership gave Amazon material influence over Anthropic. Amazon was the main compute provider to Anthropic.
Fourth, in Microsoft/Inflection, the CMA concluded that hiring Inflection's key personnel, including its CEO and chief technical officer, as well as acquiring a licence to Inflection's key IP, constituted a "relevant merger situation" under UK law. The CMA cleared the deal based on Inflection's limited presence in the UK.
Last, in Microsoft/OpenAI, the CMA concluded that the 2019 partnership between Microsoft and OpenAI gave Microsoft material influence over OpenAI's commercial policy and could have been a relevant merger situation. However, because OpenAI did not sell any products in the UK in 2019, the CMA decided that the deal did not merit an investigation. The CMA looked at the partnership again when Microsoft fired and rehired the CEO of OpenAI and obtained an observatory seat on OpenAI's board in November 2023. It concluded, however, that the 2023 changes to OpenAI's governance did not increase Microsoft's level of control over OpenAI and thus were not reviewable under UK law.
The CMA will likely continue monitoring new AI partnerships. In July 2024, the CMA signed a joint statement on competition in generative AI foundation models and AI products with the European Commission, the US Department of Justice and the US Federal Trade Commission. In this document, the authorities signalled an intention to align their thinking on key issues, partnerships, financial investments and other connections between firms regarding development of generative AI. It is yet to be seen how the US agencies will approach this topic under the new administration.
5. In 2024, the CMA cleared three deals based on the "exiting firm" defence. The exiting firm defence allows the CMA to clear deals where the parties can show that a firm would inevitably have exited the relevant market independently of the deal even if the deal would otherwise be expected to result in a substantial lessening of competition. In practice, this defence has traditionally rarely been successful since the parties must provide compelling evidence (1) that the firm would inevitably exit the market (due to financial failure or a strategic decision) irrespective of the proposed deal, and (2) that there is no alternative, less-anticompetitive purchaser for the relevant business.
Eurofins/Cellmar was cleared after only 11 business days of Phase 1 review. Cellmar was a supplier to UK police forces and government bodies. Despite an unprecedentedly quick formal review period, the CMA conducted a thorough review analysing extensive evidence of forensic services market distress and Cellmar's severe financial difficulties. While it is not clear how long the prenotification stage lasted, the case shows the CMA's flexibility to shorten timelines where a deal affects national interests and the parties submit clear and comprehensive evidence that the target would inevitably exit the market and customers corroborate this.
The CMA also accepted the exiting firm counterfactual in the Phase 2 investigation of T&L Sugars/Tereos after rejecting it during the Phase 1 review. Notably, the CMA accepted the defence notwithstanding the following factors, which were previously normally considered impediments to the defence: (1) the target being profitable on a stand-alone basis in the past two financial years and being part of a larger profitable group, and (2) lack of evidence of the board's definitive decision to exit the UK market. The CMA observed that, even though the target had recently been profitable on a stand-alone basis, the Tereos group was making less money in the UK compared to what it could have achieved in other export markets. Accordingly, the CMA concluded that the Tereos group would inevitably exit the UK business.
The CMA also accepted the exiting firm counterfactual for one of the geographic markets in Daily Mail and General Holdings Limited/News Corp UK & Ireland Limited, but it completely rejected the defence in Cochlear/Oticon Medical, Roche/LumiraDx and Spreadex/Sporting Index.1
6. The Digital Markets, Competition and Consumers (DMCC) Act became effective on 1 January 2025. The DMCC makes significant changes to the UK merger control thresholds, which determine whether the CMA has jurisdiction over a transaction:
- The target turnover threshold was increased from £70 million in the UK to £100 million.
- An alternative "hybrid" threshold was introduced to
capture deals where either party has:
- A share of supply of at least 33% in the UK or a substantial part of the UK and UK turnover exceeding £350 million; and
- The other party has a nexus to the UK.2
Unlike the turnover and unchanged supply share test, this hybrid threshold does not require an overlap in the parties' activities in the UK and could therefore be used to capture purely vertical or conglomerate transactions.
Second, the DMCC introduces an exemption from jurisdiction for
deals where each of the merging parties has a UK turnover below
£10 million, regardless of the degree of overlap between the
parties. This exemption differs from the de minimis exemption,
which remains in place and was modified in 2024, as described in
point 8 below.
Finally, the DMCC requires companies that the CMA has previously
identified as having strategic market status (SMS) to report
certain acquisitions and requires that these transactions not close
before expiration of a five-working-day waiting period. This
departure from the existing voluntary notification regime applies
only to transactions in which a firm with SMS is the acquirer and
the transaction (i) involves the acquisition of 15% or more of
shares or voting rights, (ii) is valued at £25 million or
more, and (iii) has a nexus to the UK.
7. On 1 January 2025, revised rules for in-depth (Phase 2) merger investigations came into force. The updated Guidance on CMA's Jurisdiction and Process includes changes that the CMA introduced in April 2024 and procedural changes under the DMCC. The key new provisions include:
- The possibility to request a fast-track reference of the deal for Phase 2 review at any time during the Phase 1 investigation.
- The possibility to extend the Phase 2 timetable by mutual agreement to facilitate evidence gathering or to discuss possible cross-jurisdictional remedies.
- Greater engagement with the CMA, including earlier opportunities to engage with the decision makers, update calls and direct engagement with the merger parties' economic advisors.
- An earlier interim report and earlier remedies discussions to enable the parties to understand the CMA's substantive concerns at an earlier stage.
8. The CMA increased the de minimis exception threshold from £15 million to £30 million. Unlike the safe harbour, discussed in point 6 above, that exempts the deal from the CMA's jurisdiction, the de minimis exception allows the CMA to decide not to refer certain mergers that raise competition concerns to Phase 2 where the costs of a Phase 2 investigation cannot be justified due to the low value of the relevant markets in the UK. Where the CMA applies the exemption, it clears the deal at the end of Phase 1. The CMA has already applied the revised de minimis exception in XSYS/MGS, Arla Foods Ingredients/Volac Whey Nutrition and Keysight/Spirent. As well as raising the de minimis threshold, the CMA's updated guidance states that the CMA can apply the de minimis exception even where the parties could offer clear-cut remedies at the end of Phase 1; this was not the case under previous guidance.
9. In April 2024, the UK Court of Appeal upheld the CMA's intervention and unwinding of Cérélia's completed acquisition of Jus-Rol. In 2023, at first instance, CAT also upheld the CMA's decision. The bar for judicial appeal of CMA decisions is very high—the appellant must demonstrate that the CMA acted irrationally or illegally or applied an improper procedure. While in this case the appellant could not prove irrationality or an illegal or improper procedure, the Court of Appeal's judgment contains several important clarifications regarding the scope of the CAT's review of CMA decisions.
The Court of Appeal also confirmed that the CMA could extend the timeline for its investigations for "special reasons", which are to be assessed on a case-by-case basis and need not be "exceptional", which leaves the CMA some margin of discretion for its timeline.
10. In October 2024, the UK and EU formally concluded negotiations on a post-Brexit UK-EU Competition Cooperation Agreement. The agreement, which has not yet been ratified, is intended to improve coordination between the CMA, the European Commission and EU Member State national competition authorities regarding important antitrust and merger investigations to avoid "any conflicts between jurisdictions". For more detail, see our client alert here. At the EU-UK summit on 19 May 2025, the EU and UK representatives confirmed that negotiations had concluded; the agreement is expected to enter into force later this year.
Footnotes
1. The parties appealed the CMA's decision ordering Spreadex to unwind the completed takeover of Sporting Index. In March 2025, the Competition Appeal Tribunal (CAT) referred the Spreadex/Sporting Index case back to the CMA for reconsideration due to errors that the CMA had identified in its final report, which include instances where the summaries of third-party evidence did not accurately reflect the underlying material.
2. It is expected that “nexus” will be interpreted broadly.
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.
