The UK government has published a consultation on extensive reforms to UK competition and consumer policy (available here), which includes proposed changes to the UK merger control thresholds – if approved, the jurisdictional tests for UK merger control would be as follows:
- The target has a UK turnover of >£100m (increase from £70m)
- Or the merger would create/enhance at least a 25% share of the supply of goods/services in the UK, or a substantial part of the UK (“share of supply test” retained)
- Or any merger party has at least a 25% share of the supply of goods/services in the UK, or a substantial part of the UK, and has a UK turnover of more than £100m (a new threshold to e.g. capture “killer acquisitions”)
- Unless, irrespective of any of the above thresholds being met, the worldwide turnover of each of the merging entities is less than £10m (a new “safe harbour”)
Whilst the voluntary regime would be retained and some of the proposed changes might be welcome, e.g. in reducing merger control burdens for some smaller transactions, the new threshold in c. could be met by just one party with no requirement for any overlap with the other party (and could not benefit from the new “safe harbour”), therefore risking drawing in a significant number of transactions that may not warrant merger control scrutiny. More clarity on when and how that threshold could be applied would be welcome.
Other proposals include further strengthening the CMA’s already strong enforcement powers (including interviewing powers and increased levels of administrative fines), providing holders of full immunity under the leniency programme with additional immunity from liability for damages caused by the cartel, and replacing the existing market study and market investigation system with a new single stage market inquiry tool with CMA powers to adopt remedies earlier in the process (prior to the current market investigation stage).
The deadline for responses to the consultation is 1 October 2021.
Gustaf Duhs