August 2020

The Enterprise Act 2002 (“EA02”) affords the CMA broad discretion in asserting jurisdiction over mergers that may affect a UK market. Under the EA02, a relevant merger situation (“RMS”) exists where (i) two or more enterprises cease to be distinct; and (ii) either the UK turnover of the target exceeds £70 million (the “turnover test”) or the parties supply or acquire at least 25% of a particular good or service in the UK (the “share of supply test”).

The first limb of the RMS test can be satisfied by the acquisition of de jure control, of de facto control (where it is able to control another company’s policy without holding a majority of the voting rights) or of material influence (where it can directly or indirectly materially influence policy without having a controlling interest ). The material influence test continues to be subject to significant debate.

The second limb of the RMS test aims to ensure that a transaction has sufficient nexus to the UK. The share of supply test is designed to enable the review of transactions which, while they do not trigger the turnover test, are of competitive significance in the UK. This share of supply test has been central to the CMA’s expansive assertion of jurisdiction in a number of recent cases. In Amazon/Deliveroo the CMA took an expansive approach to the notion of material influence. In Sabre/Farelogix the CMA adopted an expansive interpretation of what constitutes the supply of services in the UK, and it also took an expansive approach to the share of supply test in each of Roche/Spark and Google/Looker.Continue Reading The CMA’s approach to jurisdiction in recent merger cases

On 22 April 2020, the UK Competition and Market Authority (“CMA”) published its guidance on ‘Merger assessments during the Coronavirus (COVID-19) pandemic’ (“the guidance”). Prior to the publication of the guidance, there was some speculation about whether the CMA would be more willing to accept ‘failing firm’ arguments as the economic impact of COVID-19 hit home. However, while the CMA has, as it acknowledged, “been working closely with the government to relax competition law where appropriate”, the guidance and a number of recent CMA cases make it clear that the CMA is not relaxing its merger assessments in response to COVID-19.
Continue Reading The CMA’s Guidance on Merger Assessments During the Coronavirus (COVID-19) Pandemic and Recent CMA Cases