The Competition and Markets Authority (“CMA”) has the power to review certain mergers in the UK, provided they do not qualify for EU review and they meet the relevant UK jurisdictional criteria. Relevant mergers for these purposes are those where either the target has UK turnover in excess of £70 million or where the entities overlap in a particular area and will, following the merger, have a combined share of supply of more than 25%. However, there is no obligation to notify at a national level in the UK even where these criteria are met and the CMA therefore keeps an eye on the market to identify mergers that may be of interest to it. The CMA recently published short guidance about how it gathers information on non-notified mergers before deciding whether or not to investigate. This sits alongside the CMA’s existing jurisdictional and procedural guidance.
How does the CMA gather information?
The CMA mergers intelligence staff present potential candidate transactions to the mergers intelligence committee on a weekly basis. This includes cases that are brought to the CMA’s attention by third parties and those that arise as a result of the CMA’s own review of the press and other public sources. Third party complainants are encouraged to make reasoned submissions to support their assertions with evidence to avoid imposing a regulatory burden on parties from unsubstantiated allegations. Additionally, parties who are not minded to notify a merger are invited to provide information to the CMA in the form of a short briefing (maximum of five pages) to explain the parties’ views on jurisdiction and substance.
Where the mergers intelligence committee identifies a non-notified transaction of potential concern, it will seek further information from the parties including, turnover, share of supply and other information on the transaction. The CMA may seek further clarifications but will not typically engage in more than two rounds of questions before deciding whether or not to investigate.
When will the CMA investigate?
The CMA aims to decide whether to investigate a transaction within one week of the last contact (i.e. submission of a response to an initial request for information or submission of a short briefing). It will open an investigation in respect of a non-notified merger where it believes that “there is a reasonable chance that the test for a reference to an in-depth phase 2 investigation will be met”. This threshold is lower than the test for a reference itself, but suggests that straightforward cases should not be investigated, consistent with the CMA’s desire to ensure that the ‘voluntary’ element of the regime (i.e. the lack of an obligation to notify qualifying mergers) works well.
If the CMA decides to investigate a non-notified merger, it must publish a public invitation to comment and ultimately must also publish a reasoned decision on the outcome (i.e. clearance, reference or found not to qualify).
If the CMA decides not to investigate, there is no certainty that the CMA will not subsequently open an investigation if further information comes to light – it remains able to refer a merger for an in-depth review up to the expiry of the statutory time limit of four months from completion/when material facts became public. If parties want complete certainty as to whether their transaction might be subject of a reference, they may proactively approach the CMA requesting that it opens a formal investigation. This may be particularly useful where there is some doubt on jurisdiction.