CMA jurisdiction under the current rules

The UK operates a voluntary merger control regime and, unlike in many other jurisdictions, parties are free to complete a transaction which satisfies the merger control thresholds without notifying the CMA or obtaining its prior approval. However, the CMA has jurisdiction to review a transaction where:

• The target generated turnover in the UK in its last financial year of more than £70 million; and/or
• The parties both supply goods or services in the UK of a particular description and together have a share of supply of those goods or services in the UK or a substantial part of it of 25% or more.

Where jurisdiction is established, the CMA has four months from the date of completion and material facts about the transaction being made public to decide whether to refer it for an in-depth Phase 2 investigation. If, following such an investigation, the transaction is found to give rise to a substantial lessening of competition, the CMA may take various steps, including ordering full or partial divestment of the target business.

New CMA thresholds

As of 1 January 2025:

• A new ‘de minimis’ threshold will exclude from CMA jurisdiction any transaction where both parties generated turnover in the UK in their last financial year of £10 million or less
• The £70 million turnover threshold will increase to £100 million
• A new threshold will apply, giving the CMA jurisdiction where:
  • One party has a 33% share of supply in the UK (or a substantial part of it), and total UK turnover of £350 million, and
  • The other is either a UK entity, carries on activities in the UK or supplies goods or services in the UK.

Unlike the current 25% share of supply threshold (which will continue to apply under the new regime), the new test does not require any overlap in the parties’ UK activities. Given the CMA’s considerable discretion to establish the goods or services to which it applies the current share of supply test, it may be relatively easy for it to find that a business which generates £350 million turnover in the UK also supplies 33% of a particular category of goods or services in the UK.

The new thresholds will apply to any deal that has not completed by 1 January 2025, provided the CMA has not already launched a Phase 1 review into the transaction by that date.

Other changes to the regime

Further changes to note from 1 January 2025 are that:

1. The CMA will have the power to impose larger penalties on parties for failure to respond to compulsory requests for information or for providing false or misleading information. It will also have wider powers to fine companies for breaches of any orders, undertakings or commitments imposed or agreed as part of a merger control investigation.
2. A new ‘fast track’ route will allow parties subject to a CMA investigation to request referral to a Phase 2 investigation at any stage of pre-notification of the transaction or during Phase 1. Unlike under the current system, this won’t require them to concede that the transaction may create a substantial lessening of competition.
3. Firms designated by the CMA as having strategic market status (SMS) will have to report to the CMA acquisitions of shares/voting rights which trip a 15%, 25% or 50% threshold and the creation of joint ventures where they will hold at least 15% of the shares/voting rights where:

• • the target/JV entity is a ‘UK-connected body corporate’ and
  • the consideration is £25 million or more.

Addressing merger control risk

Firms doing deals involving a target with UK sales or activities should consider at an early stage whether the CMA may have jurisdiction to review a transaction under the new rules and, if so, the best strategy to address the risk of a “call-in”.

Depending on factors such as the substantive competition issues raised by the transaction, the parties’ risk appetite and the deal timetable, options will include:

• Proceeding to completion without notifying the CMA
• Submitting a formal merger notice to the CMA, either pre- or post-completion
• Providing a briefing note to the CMA explaining why the parties have not submitted, or do not propose to submit, a formal merger notice.

Once the first firms are designated as having SMS (which is expected to be in autumn 2025), parties will also have to consider if their deals trigger the mandatory reporting obligation described above.

UK merger control: How we can support you?

Our Competition team has extensive experience advising firms on the application of the UK (and non-UK) merger control rules to their transactions and, as appropriate, shepherding them through the filing and clearance process, and any other interactions with the merger control authorities.