Yes. Whilst Northern Ireland is its own separate legal jurisdiction, the merger control regime is governed under the same legislation as the United Kingdom ("UK") through the Enterprise Act 2002 ("EA 2002"), as amended by the Enterprise and Regulatory Reform Act 2013 ("ERRA 2013").

The Competition & Markets Authority ("CMA") is the primary merger enforcement body in the UK, which examines both completed and anticipated mergers. Alongside the legislative regime, the CMA also publishes guidance on merger control procedures and thresholds.

The CMA conducts both the Phase 1 examination of mergers and the more detailed Phase 2 investigation and final determination. Certain CMA decisions can be appealed to the Competition Appeal Tribunal ("CAT").

The Secretary of State may also intervene in merger cases that raise the following public interest considerations:

1. national security – the National Security and Investment Act 2021 ("NSI 2021") empowers the Secretary of State for Business, Energy and Industrial Strategy to "call in" acquisitions of sensitive assets and entities for the purpose of undertaking a national security assessment (detailed at question 23);
2. plurality and other considerations relating to the media and newspapers;
3. capability to combat and mitigate the effects of public health emergencies; and
4. stability of the UK financial system.

Note that the relevant Secretary of State can also intervene in a very limited number of cases on public interest grounds where the jurisdictional thresholds are not met.

Prior to Brexit and throughout the transition period, the European Commission ("the Commission") had exclusive competence in relation to mergers with a "Community dimension" (based on the parties' turnover worldwide and within the EU), including in relation to the UK market. As a result of Brexit, when the UK left the European Union (“EU”) on 31 December 2020, the CMA is no longer prohibited from investigating a merger that is being reviewed by the Commission.

Nevertheless, mergers with a Community dimension involving UK parties remain reviewable by the Commission, but the Commission no longer has exclusive jurisdiction. Mergers may therefore be subject to parallel investigation by both the CMA and the Commission. This can be outlined as follows:

• The Commission will retain its responsibility for merger proceedings initiated prior to 31 December 2020; and
• For cases not initiated by the Commission prior to the 31 December, the CMA will no longer be prohibited from taking jurisdiction over the merger and UK national merger control law will apply in parallel with EU rules.

It is worth noting that the result of these parallel investigations could potentially result in doubling the risk of fines however the most recent CMA guidance encourages cooperation between the two competition authorities.            

No. The UK merger control regime is one of the few voluntary, non-suspensory filing regimes in the world. If a transaction meets one of the relevant thresholds in place (e.g. where the turnover of the acquired business exceeds £70 million or the merging companies will supply more than 25% of a particular good or service). Nevertheless, the CMA has jurisdiction to investigate these transactions up to four months from when completion is made public and impose remedies in order to address any impact that such a merger may have on competition.

A relevant merger situation arises when the following criteria are met:

• Two or more enterprises cease to be distinct or will cease to be distinct as a result of being brought under common control or ownership. The EA 2002 distinguishes three levels of interest that amount to control:
  • a controlling interest;
  • de facto control; and
  • material influence.
• The jurisdictional thresholds (as detailed below) are met; and

Either the merger has not yet taken place, or it has taken place within the last four months, unless the merger took place, was not made public, and the CMA was not informed of it.

Notification is not required, but should a merger situation exist even when a minority investment is made, the CMA may conduct an inquiry or the parties may provide notice under the voluntary regime.

Yes. The EA 2002 states that an enforcement order may apply in foreign-to-foreign transactions if either of the companies are carrying on business in the UK (notwithstanding that the companies' 'center of gravity' is elsewhere), including if they are in partnership with one or more others in the UK.

There are two alternative thresholds:

1. the acquired entity’s turnover exceeds £70,000,000; or
2. the transaction results in the creation of, or increase in, a 25% or more combined share of sales of purchases in (or in a substantial part of) the UK, of goods or services of a particular description.

However, the UK operates a voluntary notification procedure as detailed above. 

Notification is voluntary (save for acquisitions falling within the NSI Act as detailed below). However, where transactions meet the jurisdictional thresholds (detailed above), the CMA may open an investigation where it considers that there is a reasonable chance that the transaction gives rise to a realistic prospect of a substantial lessening of competition (“SLC”).

The decision not to notify the CMA in cases where a transaction raises substantive competition issues carries particular risks.

If companies decide to seek clearance from the CMA, there is a three-stage recommended process:

1. Seek advice on a confidential basis prior to any announcement – this is typically an informal arrangement;
2. The companies should then enter into pre-notification discussions and, as under the CMA’s guidance, pre-notification contact should commence at least two weeks before the parties' intended date of notification. Although, in practice, it is advisable to allow for a longer period;
3. The final stage is to provide official notification by filing a Merger Notice.

No. The CMA can prevent further intervention and in exceptional circumstances, can require that merger arrangements are reverted to the previous state of affairs.

Parties wishing to provide notification should contact the CMA by completing the Merger Case Team Allocation Request Form. The CMA will then discuss the information that should be provided within the Merger Notice Form.  

After this, official notification can be made through the completion and submission of a Merger Notice to the CMA, which can either be in the standard template or in a format that has been agreed by the parties with the CMA. A merger must be in the public domain in order for a Merger Notice to be submitted.

Yes. Fees are payable in every case in which the CMA publishes either a reference decision or a decision not to make a reference at the end of Phase 1.

The fee will subsequently depend on the size of the target's UK turnover preceding the date of completion of the merger (for completed mergers) or the date of the clearance decision (for anticipated mergers):

• £40,000 where the target's UK turnover is below £20 million.
• £80,000 where the target's UK turnover is £20 million to £70 million.
• £120,000 where the target's UK turnover is £70 million to £120 million.
• £160,000 where the target's UK turnover exceeds £120 million.

There are limited exceptions to the filing fee, i.e., for small and medium-sized enterprises.

The CMA review process can be divided into two stages – Phase 1 and Phase 2.

Phase 1 Investigations

Phase 1 consists of the initial review, of which the ERRA 2013 introduced a statutory time limit of 40 working days. This period starts on the first working day after the CMA confirms either (a) the Merger Notice is complete or (b) for an own-initiative investigation, it has received sufficient information to enable it to begin its investigation. Note that the 40 working day deadline is subject to extension in certain circumstances.

• In the initial period the CMA will (i) engage in an information-gathering process and invite views from interested third parties; (ii) may also contact third parties directly; and (iii) carry out a substantive assessment of the proposed transaction, considering the information it gathered from publicly available sources, merger parties and third parties;
• Between days 15 to 20: the CMA will hold a "state of play" discussion with the parties, typically over the phone;
• Days 25 to 35: an issues meeting will be held in cases raising more complex or material competition issues. The CMA sends an issues letter prior to this meeting taking place;
• By day 40: the CMA will make one of the following decisions – (i) an unconditional clearance; (ii) a clearance subject to legally binding undertakings; or (iii) a reference for a Phase 2 investigation.

Note that between Phase 1 and Phase 2, there can be a delay of up to two weeks.

Phase 2 Investigations

For Phase 2 investigations, the CMA has a statutory period of 24 weeks to conduct its investigation and publish a report, although this may be extended by up to 8 weeks at the CMA’s discretion. The investigation will include written submissions from the parties to the transaction (as well as interested third parties) as well as oral hearings with the parties to the transaction (including significant third parties).

The CMA will then decide if there is a relevant merger situation, before deciding if it may lead to SLC. The CMA must then make one of the three following decisions at the end of Phase 2: (a) unconditional clearance; (b) conditional clearance, subject to legally binding undertakings; or (c) prohibition.

The substantive test is whether a merger has resulted, or may be expected to result in the SLC within a market or markets in the UK for goods or services.

There are three main circumstances in which a merger may lead to the SLC:

1. Unilateral effects: may arise in situations concerning horizontal mergers in which a merger involves two competing firms and removes the rivalry between them, allowing the merged firm to profitably raise prices.
2. Co-ordinated effects: these may arise in both a horizontal and non-horizontal merger where the merger increases or enables the ability for several firms within the market (including the merged firm) jointly to increase prices as it creates or strengthens the conditions under which they can coordinate.
3. Vertical or conglomerate effects: these may arise principally in non-horizontal mergers where the merger strengthens or creates the ability of the merged firm to use its market power in at least one of the markets, thereby reducing rivalry.

It must be noted that there is no requirement for the CMA's assessment of competitive effects to be based on a highly specific description of a market definition. As such, the CMA may consider applying a simpler approach when defining the market.

Three decisions may be reached from a Phase 1 assessment: (i) an unconditional clearance; (ii) a clearance subject to legally binding undertakings; or (iii) a reference for a Phase 2 investigation.

Correspondingly, one of three decisions can be made after a Phase 2 investigation: (i) unconditional clearance; (ii) conditional clearance subject to legally binding undertakings; or (iii) prohibition.

In the Phase 1 process, it is for the parties to submit undertakings however, the CMA typically leads the Phase 2 process.

Phase 1

As the CMA has no authority to impose remedial action on merger parties during Phase 1, the burden is on the parties to suggest suitable undertakings in lieu ("UILs") that address the competition concerns raised by the CMA. The CMA can propose amendments to the submitted UILs and where the CMA accepts that the UIL offer may be a suitable remedy, it will confirm this to the parties who made it and issue a public announcement to that effect.

Phase 2

In Phase 2, the CMA can accept undertakings as a condition for clearing a transaction. These are subject to negotiation and implemented only when the CMA has decided that the merger will result in (or may be expected to result in) the SLC. Undertakings of this nature can be split into two categories:

1. Structural – e.g., divesting the part of the company where overlaps cause competition concerns;
2. Behavioral – i.e., formal commitments in relation to future conduct.

The CMA typically favors structural remedies, as behavioral undertakings are considered to be less likely to resolve any adverse effects as thoroughly and may create market distortion themselves. Regardless of the remedy applied, the CMA is under a statutory duty to keep any UILs under review (as per the Fair Trading Act 1973 and the EA 2002). Consequently, it must therefore ascertain whether, by reason of any change of situation, undertakings are no longer adequate and should be varied, released or replaced.

There are no sanctions as notification is voluntary. As discussed however, if a transaction meets the thresholds and the parties do not notify the CMA, it is entitled to open an investigation.

A transaction can be completed before clearance has been obtained unless it has been referred for a Phase 2 investigation. The CMA can impose a fixed penalty (but not a daily penalty) for failure to comply with interim measures (e.g., an undertaking or order to suspend pre- or post-merger integration). The penalty is capped at 5% of the worldwide turnover of the enterprises owned or controlled by the person on whom the penalty is imposed.

Yes. The CMA can review mergers where prior clearance has not been sought. The CMA has an obligation to monitor merger activity in the situation that an unnotified merger results in an SLC.

The CMA’s intelligence function monitors all unnotified merger activity. If a merger has been completed without notification, the CMA can require the termination of the transaction or the cessation or rollback of any future integration. The CMA will investigate if it suspects it is within its jurisdiction and is subject to payable fees.

In recent years, there has been a greater emphasis on digital markets. In April 2023, the UK government published the Digital Markets, Competition and Consumers Bill (not yet enacted) which intends to introduce wide-ranging amendments to the consumer and competition law regime by expanding the powers of the CMA, partly in response to the perceived under-enforcement in respect of acquisitions by the major digital platforms.

With regard to the merger control regime specifically, some key changes include:

• New filing thresholds for pre-emptive acquisitions of nascent businesses, which will eliminate the need for an overlap between merging parties’ activities in the UK where one party has a high share of supply (at least 33%) and a substantial UK presence (turnover exceeding £350 million);
• Higher jurisdictional thresholds - the turnover threshold will increase from £70 million to £100 million (save for media cases in order to protect the plurality of media, of which the threshold will remain at £70 million). Small businesses will be provided with an exemption from the CMA’s jurisdiction in deals in which each party has a turnover in the UK of less than £10 million (similarly, this will not apply to media mergers on the grounds of preserving plurality).
• Greater flexibility to request a “fast-track” reference to Phase 2 in order to save time and effort in the Phase 1 stage where it is clear that an in-depth investigation is required. The merging parties and the CMA can also agree to extend the Phase 2 review without limit (an extension is currently limited to a maximum of 8 weeks);
• Increased penalties for failing to respond to information requests or providing misleading information. Maximum fines for companies will be increased to 1% of annual worldwide turnover, with the possibility of additional fines of up to 5% of daily worldwide turnover.

The CMA’s merger control is solely concerned with impacts on competition. There is a separate regime for vetting deals based on concerns about national security which is administered by the Department of Business and Trade.

This new regime for foreign investment was enacted under the National Security and Investment Act 2021 ("NSI 2021")and introduced a mandatory form of notification. It empowers the Secretary of State for Business, Energy and Industrial Strategy to scrutinize and intervene in certain transactions for national security protection

Subject to certain criteria, there is a legal obligation to inform the government about acquisitions of certain entities within 17 sensitive areas of the economy (known as "notifiable acquisitions"). These include:

1. Advanced Materials;
2. Advanced Robotics;
3. Artificial Intelligence;
4. Civil Nuclear;
5. Communications;
6. Computing Hardware;
7. Critical Suppliers to Government;
8. Cryptographic Authentication;
9. Data Infrastructure;
10. Defense;
11. Energy;
12. Military and Dual-Use;
13. Quantum Technologies;
14. Satellite and Space Technologies;
15. Suppliers to the Emergency Services;
16. Synthetic Biology;

If an entity being acquired performs one of these 17 activities, it may be within the scope of the NSI 2021. For transactions that are notifiable, notifying the Secretary of State is mandatory and failure to do so for a notifiable acquisition, will mean that a transaction is void were it to have been completed without notice. Given that (i) clearance must be obtained before a “notifiable acquisition” may take place in these specified sectors; (ii) the government has powers to call in for a national security assessment acquisitions of control over qualifying entities; and (iii) it is the responsibility of the buyer in a transaction to make the notification, it is prudent to consider this regime in future acquisitions.