The UK Competition and Markets Authority has made it clear that it will not relax key UK merger control rules in response to COVID-19, although it recognises that some adjustments may be required.
In this briefing we look at what this means for parties contemplating corporate transactions (including acquisitions, disposals, joint ventures and debt for equity swaps) which may be subject to UK merger control.
On 22 April 2020, the UK Competition and Markets Authority ("CMA") issued welcome guidance summarising its approach to merger control processes in the current climate, including its approach to "failing firm" arguments. In short:
- While the jurisdictional and substantive tests remain unchanged, the CMA's processes and procedures have (understandably) been affected. In particular, timelines for review may be extended – either by virtue of longer pre-notification or by the use of "stop-the-clock" powers.
- The guidance addresses the CMA's current approach to two areas which have been the subject of increasing enforcement activity and fines in recent years, namely: (i) parties' responses to formal information requests (issued under section 109 of the Enterprise Act 2002); and (ii) parties' compliance with the terms of hold separate orders.
- The CMA does not intend to relax its evidential bar to clearing transactions on the basis of so-called "failing firm" scenarios. The CMA's comments arrived less than a week after its provisional Phase II decision to clear Amazon's minority investment in Deliveroo on the basis that, absent the transaction, Deliveroo would have exited the market. However, the CMA will continue to address failing firm arguments with the same rigour and evidential requirements as before.