CMA Updates Merger Guidance

1. Summary

The UK's Competition and Markets Authority ("CMA") has updated its guidance on merger control jurisdiction and procedure ("CMA2"), together with its template merger notice and guidance on the CMA's mergers intelligence function. The new documents came into effect on 28 October 2025, following a public consultation earlier in the year.
The changes form part of the CMA's implementation of its '4Ps framework' – pace, predictability, proportionality and process – through which it aims to support the UK government's wider aim to drive growth, investment and business confidence in the UK. and the updated guidance includes the introduction of KPI timeframes for pre-notification and clearance of straightforward cases, clarification of the 'material influence' and 'share of supply' jurisdictional tests, and additional information about the CMA's approach to global mergers.

2. The updated guidance

The revised guidance includes much-anticipated clarification regarding aspects of the threshold test which determines whether the CMA has jurisdiction to review a merger: in particular, the 'material influence' and 'share of supply' tests.

a) Material influence

The CMA can only investigate if there is a 'relevant merger situation', which requires that two enterprises are brought under common ownership or control. 'Control' in this context includes situations where the acquiring party does not hold a controlling interest (i.e., a shareholding of 50% or more), provided it is able to exercise 'material influence'.

This aspect of the jurisdictional test has been criticised as being too broad and lacking clarity, which makes it harder for businesses to know whether their transaction is likely to be caught. The CMA's new guidance provides a more detailed explanation of how the CMA interprets the 'material influence' test, including providing greater clarity on the main factors that are regarded as conferring material influence:

• Shareholdings conferring the right to block special resolutions (whether directly or which, in combination with other factors, have that practical effect);
• Rights to appoint board members (including board observers); and
• The existence of financial, commercial, and/or consultancy agreements or arrangements between the acquirer and the target entity which create dependency of the target entity on the acquirer.

In particular, the new guidance clarifies that material influence is not likely to be found in situations where a minority shareholder has no more than the rights normally accorded to minority shareholders in order to protect their financial interests (though the CMA declined to rule this out entirely). The guidance has also been updated to provide greater certainty in regard to shareholdings of less than 25%: the new version states that shareholdings below 25% are unlikely to confer material influence in the absence of other factors, though the CMA retains its discretion to examine any shareholding for material influence, including those below 15%.

b) Share of supply

The CMA's jurisdictional thresholds incorporate the concept of a 'share of supply' (or acquisition), which differs from the more common formulation of a 'market share'. The share of supply test will be met if at least one of the merger parties has a UK turnover exceeding £10 million, and the parties (a) supply or acquire goods or services of any description and (b) together supply or acquire at least 25% of all those particular goods to services of that kind supplied in the UK or a substantial part of it.¹ The CMA has a broad discretion to determine which goods or services are the same "kind", even if they are not substitutable for one another (see, for example, the CMA's Phase 1 investigation of Google's acquisition of Looker Data Sciences², in which the CMA concluded that the share of supply threshold was met despite customer responses making clear that the parties' products were not substitutable).

In addition, a share of supply may be measured in a variety of different ways (e.g., value, volume, share of customers, etc.).

The test has been criticised for creating uncertainty, and not enabling merging parties reliably to predict whether the CMA would consider the share of supply test to be met in any given circumstance.

The changes to CMA2 in this regard are fairly minor, but include the deletion of a phrase that expands the CMA's discretion (namely, that the share of supply used need not necessarily correspond with a standard recognised by the industry in question³), as well as the addition of some explanatory paragraphs regarding how the CMA will calculate the share of supply. In particular, the new guidance explains that the CMA will typically only focus on the factors specified in the applicable legislation⁴, namely value, cost, price, quantity, capacity and number of workers employed, and that ordinarily it will rely on value and/or volume sold, unless there are particular circumstances which militate in favour of the use of another factor (for guidance gives some examples, including the use of capacity as the appropriate measure in the context of the acquisition of animal feed mills).

The CMA declined to restrict itself to the factors listed in the legislation, on the basis that to do so would conflict with parliamentary intent in circumstances where the legislation expressly confers on the CMA discretion to rely on other factors. In its summary of the consultation responses, the CMA also rejected a number of other measures suggested by stakeholders, including the introduction of a materiality requirement to find an increment to the share of supply, further clarification of the link between the description of goods or services and any potential competition concerns being investigated, and changes relating to other jurisdictional aspects such as the concept of an 'enterprise'.

c) Other changes

In addition to providing some much-needed clarification in relation to the threshold tests, the CMA's revised guidance introduces a 40-working-day KPI for pre-notification in a 'typical' case, and a 25-working-day KPI to announce straightforward clearance decisions (reduced from 40 working days under the old guidance). The guidance also emphasises the importance of engagement with the merger parties and third parties throughout the investigation process, and introduces additional points of direct engagement, in an effort to make the process more transparent.

In accordance with the UK government's strategic steer, which encouraged the CMA to "consider the actions being taken by competition and/or consumer protection agencies in other jurisdictions internationally, and seek to ensure parallel regulatory action ... avoids duplication", the updated guidance introduces the concept of a 'wait and see' policy, whereby the CMA may decide to wait and see how investigations in other jurisdictions progress before deciding whether to launch its own investigation. The guidance explains that this policy may be adopted where the CMA considers that a merger concerns "exclusively global (or broader than national) markets", and there is a reasonable chance of a reference to a phase 2 investigation. In relation to the geographic market scope, the guidance explains that the CMA will have regard to the factors set out in paragraphs 9.13-9.16 of its Merger Assessment Guidance⁵ (which set out how the CMA will approach geographic market definition) as well as relevant precedent. If the deal is cleared unconditionally in other jurisdictions, the CMA would generally expect to take no action.

The changes to CMA2 are also reflected in the CMA's guidance on its mergers intelligence function, and in its merger notice template.

3. Next steps

The CMA has indicated that further reforms are on the horizon as it continues to implement its 4Ps framework. On 28 October it published revised guidance regarding leniency applications in cartel investigations. It is also currently consulting on changes to its merger remedies guidance and has said that further reforms to its merger control regime will follow.

Footnotes

1 In addition, the Digital Markets, Competition and Consumers Act 2024 introduced the 'hybrid test', which also incorporates the concept of a share of supply. This test will be met if one of the merger parties supplies or acquires at least 33% of goods or services of any description in the UK, and the same party has a UK turnover exceeding £350 million, provided that another merger party has a UK nexus.

2 Case ME/6839/19 Completed acquisition by Google LLC of Looker Data Sciences, Inc.

3 Though the CMA declined to expressly link the description of goods or services to industry standards, as suggested by some responses to the consultation.

4 Enterprise Act 2002, section 23(5).

5 Namely: information on the competitive performance of firms supplying from different geographic areas or over different distances; information on differences in pricing, sales, advertising and marketing strategies by area and information on delivery costs or barriers to entry when supplying into an area or over different distances or across borders; the views of market participants on consumer preferences; product characteristics such as perishability; as well as consideration of whether supply-side substitution is sufficient to aggregate geographic markets, and – where relevant – the geographic catchment area within which the great majority of a store's custom is located.

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