The Office of Fair Trading has issued for consultation revised guidance on the so-called 'markets of insufficient importance' or 'de minimis' exception in merger cases. The revised guidance is intended to provide the same high level of consumer protection in UK merger control while reducing the system’s cost to business and the taxpayer.
Under the Enterprise Act 2002, the OFT has a duty to refer certain mergers to the Competition Commission. The exception allows the OFT to decide not to refer where the markets involved are not of sufficient importance to justify a reference.
Existing guidance suggests that the OFT may consider a merger in a market worth as little as £400,000 per year to be of sufficient importance to justify a reference to the Competition Commission. The revised guidance raises the market size threshold to £10 million.
The OFT decided to review its guidance in this area because it was concerned that an unduly narrow interpretation of the exception might result in mergers being referred to the Competition Commission where the risk of consumer harm was low and any adverse effect there might be would be small-scale. In such cases the costs involved potentially outweigh any benefit of intervention. This concern has been heightened by the impact of the Court of Appeal’s judgment in IBA Health which is widely regarded as having made references more likely in marginal cases. The existing guidance emphasises that the exception will be used only very rarely and suggests a very low threshold for market value. This may have contributed to a situation in which, to date, the exception has not been determinative of the outcome of any case.