Towards a More Interactive Merger Review Process: UK CMA Proposes Amendments

By: James Marshall, Sophie Albrighton, Robin Campbell, Dora Pap & Tomos Griffiths (Covington & Burling)

After soliciting information earlier this year, the UK’s Competition and Markets Authority (CMA) has unveiled its planned modifications to the merger review process. The primary focus of these changes lies in the Phase 2 process, primarily applied in formal reviews where the CMA anticipates a substantial reduction in competition. As of the current date, out of the 72 transactions qualifying for investigations under the Enterprise Act 2002 since January 1, 2022, 17 (24%) have been referred to Phase 2. This percentage is notably higher compared to the EU, where around 10% of non-simplified merger reviews proceed to Phase 2.

The proposed adjustments aim to enhance the interactivity of the Phase 2 process, intending to expedite the formulation of acceptable remedy proposals. These changes respond to recent criticism of the CMA’s merger enforcement approach and align with efforts to enhance the efficacy of the UK merger review process. The proposed amendments are open for consultation until January 8, 2024.

The revision of Phase 2 procedures by the CMA is driven by the post-Brexit landscape. With the UK’s departure from the EU, global deals impacting UK competition, previously overseen by the European Commission under the “one-stop-shop” principle, are now frequently subject to parallel reviews by the CMA. This has resulted in divergent outcomes concerning clearance or acceptable remedies at an unexpectedly high frequency. The CMA’s expanded responsibilities have intensified scrutiny on its merger enforcement approach, revealing discrepancies between the EU and UK merger processes. Some of the CMA’s proposals aim to align the UK process more closely with that of the European Commission, indicating a potential key driver behind these changes is to limit procedural divergence…

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