Competition – UK Legislation
The Competition and Markets Authority (“CMA”) may initiate an investigation of a takeover if there is a merger situation qualifying for investigation (other than if covered by the European Commission).
The CMA must initiate if it believes a relevant merger has been created which might be expected to result in a lessening of competition.
A merger qualifies for investigation if criteria are met:
- The value of assets acquired exceeds £70 million; or
- The combined business creates or adds to a share of any market in the UK greater than 25%; or
- The combined businesses have a share of any market in a substantial part of the UK greater than 25%.
“Substantial part” is not defined but the takeover by South Yorkshire Transport of four local bus operators in August 1990 was referred.
Additionally, the Secretary of State can intervene virtually on any merger on national security grounds.
There is no statutory obligation to notify the CMA.
It was possible to seek clearance by an Informal Submission, but as of April 2014, the only way to notify is a formal Merger Notice.
Parties are encouraged to enter pre-notification discussions to ensure the Merger Notice is complete on submission. The notification can only be made once the acquisition is a matter of public record.
Without an announcement, the CMA can be approached about genuine competition concerns, but this informal advice does not bind the CMA.
Without a Merger Notice, the CMA may initiate an investigation within 4 months of completion.
In order to gain clearance, the CMA can consider undertakings to divest.
Following an investigation, the CMA has wide powers to clear, prohibit or approve subject to remedies. This can include unwinding the transaction.
Excerpt taken from Conquering M&A by James Dow available to purchase from Amazon here.