New regulator from 1 April 2014 for mergers in the UK

On 1 April 2014, the Competition and Markets Authority (CMA) will officially become the regulator of mergers in the UK.

The CMA will bring together the existing competition and certain consumer protection functions of the OFT and the responsibilities of the competition commission.

What other key changes are taking place?

  • The previous investigating bodies, the Office of Fair Trading and the Competition Commission, will cease to exist.

  • The notification of mergers will remain voluntary although a statutory form will now need to be completed if parties decide to notify the CMA. (It will no longer be possible to notify using an informal submission).

  • For mergers that are investigated, a two phase investigation process will remain although the phase I process will now have a statutory time limit of 40 days for the CMA to decide whether to make a referral to phase II.

  • The CMA will now provide reasons before parties have to propose remedies.

  • Remedies may be considered and agreed during phase I to avoid an in-depth phase II investigation.

  • The CMA will have a new power to “stop the clock” on the investigation process if information is not provided promptly. In addition, penalties can be imposed on businesses and individuals who fail to co-operate with an investigation.

  • The CMA will be able to suspend the integration of a target before merger clearance has been approved and also potentially reverse steps that have already taken place.

  • The CMA will be able to impose larger penalties of up to 5% of aggregated global turnover for breaches of interim orders.

  • Any remedies required at the completion of the phase II review must be implemented within 18 weeks of the publication of the CMA’s final report.

  • Payment of notification fees, which have recently increased to a maximum of £160k, will only be required on publication of the CMA’s decision.

It remains to be seen what effect these changes will have, but from the outset, it seems an investigation will result in a significant increase in the level of engagement expected from the parties involved, against a backdrop of increased sanctions for non-compliance. Companies, therefore, need to ensure they have the right procedures in place to handle any investigation effectively.

Speak to a member of our corporate finance team for more details.


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