In the latest of a series of procedural breaches that have been punished by the UK and EU merger control authorities, over the summer the UK Competition and Markets Authority (CMA) fined Electro Rent £100,000 for failure to comply with the requirements of an interim enforcement order (IEO). The case serves as an important reminder of the need for transaction parties to ensure tight compliance with procedural requirements during merger control investigations. It is also a useful reminder of the complexities of closing a transaction without obtaining merger control clearance from the CMA.
What is an IEO?
Post-closing IEOs (also commonly referred to as "hold separate orders") are a particular feature of the UK merger control regime; they exist because the merger control regime in the UK is a voluntary filing regime, with no prohibition on merger parties from closing transactions ahead of obtaining clearance.
The quid pro quo for a voluntary and nonsuspensory system is that the CMA has the power to examine deals on a post-closing basis if they meet the UK's jurisdictional thresholds. In such post-closing cases, the CMA will routinely impose an IEO on the merger parties – the main purpose of which will be to prevent action which might prejudice the merger control investigation or impede the taking of appropriate remedial action.