New Merger Control Reforms under the Digital Markets, Competition and Consumer Act 2024 come into force

Reforms to UK Merger Control Regime:

The DMCC Act makes several changes to the thresholds which determine what transactions come within jurisdiction of UK merger control and are subject to investigation by the Competition & Markets Authority (“CMA”).

Under the commencement regulations the reforms will apply to undertakings that “cease to be distinct” or merge after 1 January 2025. The main reforms the legislation introduces are as follows:

Turnover Test: increases the level of the existing turnover test under S23 of Enterprise Act 2002 for the target of a merger transaction from £70 million UK turnover to £100 million UK turnover.

New De Minimis Safe Harbour: introduces a safe harbour by adding a condition into the existing share of supply test in Section 23(2) EA2002 that requires at least one of the merging enterprises to have UK turnover of more than £10 million. This has the effect that as long as all merging enterprises have a UK turnover of £10m or less the transaction will be exempt from UK merger review.

Vertical Mergers: introduces a new provision which brings within the UK merger regime certain vertical mergers. The new rules specify that an acquisition is capable of investigation under the UK merger regime if one party supplies at least a 33% share of relevant goods or services of a particular description in the UK or part of the UK and that person also has a UK turnover of at least £350 million. The conditions are to be assessed without taking the merger into account. This reform was introduced to bring so called “killer acquisitions “ by “Big Tech” within the merger control net .However the scope of the new test is likely to catch a wide range of vertical mergers  in other industries where the acquirer has a substantial Uk share of supply and a level of turnover capable of tripping the £350 million turnover threshold.

Fast-track References: Schedule 5 of the DMCC Act enables the CMA to fast-track a merger to an in-depth Phase 2 investigation if it receives a request from the parties involved in a merger to do so. This puts the existing fast track procedures on a statutory footing. Parties involved in a merger can make a fast-track request either before or after the start of Phase 1. The CMA has broad discretion on whether to accept a fast-track request but can only do so if it is satisfied that a relevant merger situation has been or may be created. However, the CMA does not have to carry out a detailed investigation as the substantive issues will be looked at during the in-depth Phase 2 investigation.

Time Limits in Phase II Investigations: the CMA and the parties involved in a merger can mutually agree to extend the statutory timetable for Phase 2 investigations (the normal period being six months). The extension comes into force when published and continues until the end of the agreed extension period, unless the CMA and the parties involved in a merger agree to an earlier cancellation.

Contact us today if you have any questions or queries about the DMCC Act 2024 and what it means for your transaction:

Robert Bell, Competition Law Consultant

Stephen Jarvis, Partner and Head of Corporate & Commercial