CMA jurisdiction to cover “killer” acquistions…
The UK Digital Markets, Competition and Consumers Bill introduces significant changes to the merger control rules, expanding the powers of the Competition and Markets Authority (CMA) and altering the landscape for competition scrutiny of mergers and acquisitions.
New jurisdictional threshold - one party has significant market presence
A key reform is the introduction of a new threshold allowing scrutiny of deals where only one party has a significant market presence in the UK, i.e. where one of the parties to a deal has:
an existing 33% (or more) share of supply of goods or services in the UK (or a substantial part thereof) and
UK turnover exceeding £350 million.
In such instance, the other party only needs to have some sales to the UK, and the parties’ activities would not need to overlap for the UK CMA to have jurisdiction to examime the deal. This is intended to enable scrutiny of so-called “killer acquisitions” i.e. acquisitions by dominant firms of nascent or potential competitors that could become significant market players, widening the CMA’s ability to intervene in local deals.
Safe Harbour
Counterbalancing this, the existing £70 million turnover threshold will increase to £100 million and a safe harbour will be introduced to exempt deals where each party’s UK turnover is less than £10 million.
Procedural changes
The bill codifies the ability for companes to request a “fast-track” to Phase 2 investigations, allowing for this at any stage of prenotification or Phase 1. This aims to streamline the review process where an in-depth investigation is anticipated. Additionally, merging parties and the CMA can agree to extend the deadline of a Phase 2 review without limit, offering more flexibility to the review timetable.
Enhanced notification requirements for digital mergers
A mandatory notification requirement will be introduced for large digital firms designated with Strategic Market Status (SMS) under the new digital markets regime, requiring any acquisition worth £25 million or more to be notified to the CMA.
Enforcement and penalties
Significant increases in penalties for non-compliance are introduced. Maximum fines for failing to respond to information requests or providing misleading information will rise to 1% of annual worldwide turnover, with additional daily penalties of up to 5% worldwide turnover.
