There is no question that the UK’s Competition and Markets Authority is playing an increasingly pivotal role in global transactions. In a post-Brexit world, the CMA has successfully inserted itself into the top table of merger enforcers, with UK approval being key to focus the minds of dealmakers around the world.
Whilst it has made itself heard on its path to becoming a leading international regulator, much of the CMA’s Phase 2 procedures pre-date its establishment in 2014. Its limited reforms over the years have led many to question whether the current process is capable of handling the increased volume and complexity of the CMA’s caseload.
Although it is one of the most intensive merger processes in the world, the UK Phase 2 review currently provides only limited access to decision-makers and few opportunities to influence and respond to substantive concerns.
The fact that 57% of transactions have either been effectively blocked or abandoned in the last five years suggests that it can be incredibly challenging for merging parties to obtain approval. Whether this stems from a flaw in the system or is simply a natural consequence of the CMA’s expanded remit, merging parties are clear that something needed to change.
To its credit, the CMA has listened. This past summer it issued a call for information to gather feedback and has now proposed significant procedural reforms within the limits of the existing statutory framework. These proposals are an important signal by the CMA of its willingness to increase engagement throughout the Phase 2 process, and a welcome step towards more predictability and transparency for merging parties, especially regarding remedies. The package also represents the first major attempt to reform the UK merger control process since 2014.
Many of these proposals codify the latest practice, including the learnings from Microsoft/Activision Blizzard. Based on our experience of that case and others, we give our insights below. Whilst undoubtedly a step in the right direction, there is more that the CMA can do to provide merging parties with the requisite transparency to defend their mergers. We will also be responding to the CMA’s current consultation on the proposals – please do reach out if you would like to discuss our response.