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Trends and climate


How would you describe the current merger control climate, including any trends in particular industry sectors?

Recent merger control investigations carried out by the Competition and Markets Authority (CMA) place increased emphasis on data-led evidence, with a particular focus on merger parties' internal documents. The CMA now expressly recognises the importance of the merger parties' internal documents for its investigations, as stated in its recently published guidance notes to the revised merger notice template, published in September 2017. The CMA has indicated that it intends to use ‘as standard’ its statutory powers to require merger parties to produce responsive documents, rather than relying on informal requests for information.

The CMA is also using recent investigations to develop its frameworks of analysis – for example, in relation to input and customer foreclosure theories of harm (Tesco/Booker (ME/6677/17)) – and revisit previously established market definitions (Heineken/Punch Taverns (ME/6656/16)) where it considers that the evidence supports a change in approach.

Further, senior CMA officials have publicly stated that while the CMA and its predecessors may have historically been overly optimistic about merger parties' arguments in relation to entry and expansion, such arguments will need to be supported by robust data going forward.

While the vast majority of CMA merger control cases continue to be primarily focused on horizontal unilateral effects, there have been some significant recent developments in relation to vertical effects analyses in UK merger control. For example, in Intercontinental Exchange, Inc v the Competition and Markets Authority ([2017] CAT 6) the Competition Appeal Tribunal (CAT) agreed with the CMA that vertical mergers can and do give rise to competition concerns and the question of whether a particular merger was likely to give rise to a substantial lessening of competition was necessarily a fact-specific question.

Finally, the UK government has allocated an additional £23.6 million to the CMA's budget for 2018-2019 specifically to enable the CMA to prepare for the United Kingdom’s exit from the European Union. This will include dealing with a potential increase in merger control work with respect to UK aspects of transactions that would otherwise fall exclusively within the European Commission's jurisdiction.


Are there are any proposals to reform or amend the existing merger control regime?

In March 2018 the UK Parliament adopted two statutory instruments which introduced sector-specific share of supply and turnover thresholds where target enterprises are involved in specified activities in connection with military or dual-use goods which are subject to export control, computer processing units and quantum technology. These statutory instruments came into force on 11 June 2018.

The new thresholds introduced are as follows:

  • the turnover test – whether the annual UK turnover of the target enterprise exceeds £1 million; and
  • the share of supply test – whether the share of supply or purchase of the target business is at least 25% in a substantial part of the United Kingdom (the test is met even if there is no increment in the share of supply).

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