On 5 September 2017 the CMA published guidance on the use of initial enforcement orders, amended its merger notice template and made some minor amendments to the guidance on its merger intelligence function. The changes follow on from consultations on the CMA’s merger process and are intended to streamline the CMA’s process and reduce the burden the merger review places on companies.
The CMA can impose an initial enforcement order on merging parties to prevent them from integrating in a way which might prejudice the outcome of the CMA’s ongoing investigation or impede the CMA’s ability to take remedial action. The guidance aims to clarify: (i) the circumstances in which an initial enforcement order will typically be imposed; (ii) the form that it will typically take; (iii) the types of derogations that the CMA is likely to grant; and (iv) the timeframes for initial enforcement orders and associated derogations. Examples of where the CMA has previously granted derogations include allowing the buyer to provide back-office support services to the target on asset sales where those back-office services are not being transferred as part of the sale, and allowing the buyer to fill vacant staff roles at the target company.
The merger notice template that parties use to notify the CMA of a merger has also been changed with the intention of reducing the amount of information that businesses need to provide. The consultation response sets out some of the most notable changes, which include additional direction that parties do not need to provide all of the information in the template in every case, a new question relating to share of supply data and a new section consolidating all third party contact details.
The CMA’s guidance on its merger intelligence function is intended to assist lawyers advising their clients on whether they should notify the CMA of a merger and for third parties considering whether to inform the CMA of an as yet unnotified merger. The updated guidance addresses the question of when merging parties, who do not intend to notify the CMA of their merger, should submit a briefing note. The CMA stipulates that generally a briefing note should only be submitted after a merger agreement has been signed by the parties.