UK Antitrust Regulator Signals Flexibility in Merger Reviews to Boost Economic Growth

The United Kingdom’s Competition and Markets Authority (CMA) announced plans to prioritize its efforts on addressing “truly problematic mergers” while adopting a more flexible approach to approving deals, a move aimed at aligning with the government’s focus on economic growth. The statement from the antitrust watchdog came during the Chatham House Competition Policy 2024 Conference on Thursday, where CMA Chief Executive Sarah Cardell outlined the regulator’s evolving strategy.

Rethinking Remedies for Mergers

In her address, Cardell emphasized the need to support business activity by ensuring that every viable merger capable of being approved—either unconditionally or with remedies—receives the green light. According to Reuters, she stated that only mergers posing irreparable harm to competition would be blocked outright. The CMA is now exploring the use of behavioral remedies, such as commitments to investments or customer protections, to address potential anti-competitive issues—marking a shift from its traditional reliance on structural remedies like divestments.

This shift follows the CMA’s handling of the high-profile $69 billion Microsoft-Activision Blizzard deal in 2023. The regulator initially blocked the acquisition before reversing its decision after concessions were offered by the companies. Per Reuters, this sparked criticism of the CMA’s decision-making process and prompted an internal review of its merger assessment procedures.

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Balancing Growth and Regulation

The CMA’s recalibration aligns with recent calls from Prime Minister Keir Starmer for regulatory bodies to adopt a more growth-oriented mindset. Starmer specifically highlighted the CMA last month when he pledged to reform regulations that he argued were stifling economic progress. Speaking to investors, he stressed the importance of regulators taking growth as seriously as the business community does.

Cardell responded by reaffirming the CMA’s commitment to promoting competition while ensuring that the UK remains attractive to businesses. “We must deliver a regime that leaves no one in any doubt that the UK is open to business,” she said, according to Reuters.

Early Signs of Change

Industry observers have already noted signs of the CMA’s evolving approach. Mark Kelly, CEO of M&A-focused MKP Advisors, pointed to the recent Vodafone-Three merger as evidence of the regulator’s growing flexibility. The CMA has indicated that the deal could be pro-competitive if commitments on investment and consumer protections are upheld. Kelly noted that this represents a notable departure from the CMA’s historical stance, per Reuters.

Post-Brexit Role Expansion

Since Brexit, the CMA has taken on a larger role in scrutinizing mergers, previously under the purview of the European Commission. This has amplified the regulator’s influence but also heightened scrutiny of its decisions. Cardell acknowledged the challenges, noting that while the CMA has made progress in overhauling its processes, more can be done to ensure timely and effective outcomes.

Source: Reuters