Under the proposals, mergers involving one significant market player (most likely the acquiror, but it may be either party) with UK turnover of more than £100 million and a share of at least 25% of any plausible description of goods or services would be caught, regardless of the size of the target or the extent of any overlap. Although the voluntary nature of the regime is retained, businesses will need to give increased consideration as to whether their merger may be called in for investigation by the CMA.
Measures designed to increase speed and efficiency
As explained above, calls have been made in recent years to allow the CMA and parties to cooperate in bringing about conclusions to merger (and market) investigations earlier than is permitted under the existing regime. Currently, parties are prevented from reaching an agreement on remedies with the CMA before the end of a Phase 1 or Phase 2 merger investigation. The Government now proposes to allow binding commitments to be agreed earlier in the Phase 2 process, possibly alongside the ability to pause the Phase 2 investigation whilst commitments are being considered.
It is also proposed to couple a more streamlined remedies regime with the ability for merging parties to request an automatic 'fast-track' reference to Phase 2, without a Phase 1 investigation being required. Under these proposals, parties would provide a short-form submission, prior to the commencement of the CMA's Phase 2 investigation, requesting referral. Importantly, the parties would not have to accept that the merger has a realistic prospect of resulting in a 'substantial lessening of competition' in order to request the referral (in contrast to the little-used current fast track system, where such an admission is required).
Given that much of the CMA's evidence gathering is often undertaken during Phase 1, a 'fast track' request may lead to an extension of three weeks to the Phase 2 timetable to allow for evidence gathering. However, overall, this would be shorter than the current statutory timescale for Phase 1 investigations (40 working days, or approximately 8 weeks) even accounting for the existing fast-track procedure.
Other proposals under consideration
The consultation covers a raft of other proposals in the mergers sphere, including:
- Restricting the scope of a Phase 2 investigation by requiring the CMA to consider only those concerns that have been identified at Phase 1.
- Potentially making timetable extensions subject to additional conditions and giving the CMA greater flexibility to extend the statutory timetable unilaterally or with the agreement of the merging parties.
- Extended deadlines in public interest interventions in media mergers (PIINs). Where the Secretary of State has issued a PIIN in relation to a completed media merger, a power to extend the deadline for referral to Phase 2 once, by a period of 28 days, is proposed.