The UK Government published the Digital Markets, Competition and Consumers Bill on 25 April. Alongside changes to the regulation of the largest tech firms (see Part One in this four-part series), competition law enforcement (see Part Three) and consumer protection law (which we cover in Part Four), the Bill also promises to bring about significant changes to the way UK merger control works.

The Current Merger Regime

UK merger control is currently governed by the Enterprise Act 2002. The Government does not intend to change the current voluntary and non-suspensory merger review process, which means that parties will remain able to merge without prior CMA approval or notification, albeit at the risk of the completed deal being unwound if the CMA later investigates and identifies competition concerns (in contrast with the EU and many other European regimes, under which a qualifying merger cannot be completed without approval).

The CMA's jurisdiction to investigate a given transaction is based on certain thresholds. At present the CMA can investigate an acquisition of control:

  1. if the target business has a UK turnover of at least £70 million; or
  2. if the parties to the deal each supply (or purchase) a particular good or service and, post-merger, will supply (or purchase) 25% or more of the relevant good or service in the UK (or a substantial part of the UK).

Changes to General Merger Control Thresholds

The Bill will modify and add to these existing tests, amending the jurisdictional thresholds as follows.

  1. The threshold in the first test above will be increased to £100m of UK turnover.
  2. The second test above (the 'share of supply' test) will become subject to a new de minimis turnover threshold requiring either the target or "any other enterprise concerned" (a term that is not defined in the Bill but would certainly include a buyer) to have a UK turnover of more than £10m. This will create a 'safe harbour' for deals between smaller businesses who might nevertheless have a relatively large share of a niche product market or a narrow geographic market.
  3. A new test will be added to catch acquisitions by (or of) large businesses, regardless of the other party's turnover or market presence. It will apply where (a) one of the parties has a UK turnover of more than £350m and (b) at least 33% of a particular good or service supplied in the UK (or a substantial part thereof) is supplied by or to that party, as long as (c) at least one other party is a UK business or carries on activities in the UK (including supplying goods or services to a person in the UK).

One of the effects of this new test is that non-horizontal mergers, where the merging parties do not compete with each other, are now clearly caught (in practice the CMA always found significant room for manoeuvre when it came to identifying overlaps). It will similarly make it more straightforward for the CMA to review so-called "killer acquisitions", in which large companies buy up potential future competitors before they can pose a threat (and so before they would trigger either of the existing turnover or share of supply tests). The "UK nexus" part of that jurisdictional threshold is a very low bar so will not be difficult for the CMA to meet.

Media mergers

The Enterprise Act already contains a "special public interest" merger regime that allows the Secretary of State to require the CMA to review mergers that don't otherwise meet the merger control thresholds where one of the parties, in the UK or a substantial part thereof:

  • supplies at least one-quarter of all newspapers of a particular description; or
  • provides at least one-quarter of all broadcasting of a particular description.

The Bill will supplement these conditions so the Secretary of State can also refer a deal to the CMA if it involves a "media enterprise" (i.e. a business that undertakes broadcasting activities) or "newspaper enterprise" (i.e. a business that supplies newspapers) and it would have been within the CMA's jurisdiction if the 'regular' merger control thresholds had never been changed (i.e. if the target has a turnover of less than £100m but more than £70m, or the share of supply test would be met if not for the new £10m turnover 'safe harbour').

It seems unlikely that there will be many (if any) media mergers that: (a) will fall in that 'gap' between the original and the updated jurisdiction thresholds; and (b) could not already have been referred under the original special public interest criteria; and (c) will nevertheless be sufficiently concerning for the Secretary of State to want to intervene. The amendments in the Bill may therefore simply exist to ensure the Government cannot be accused of making media mergers any easier, such mergers often being the most politically controversial.

Changes to Merger Control within Digital Markets

In our previous blog we set out the CMA's proposed new powers to designate certain digital businesses as having "Significant Market Status". The Bill also requires such businesses to notify the purchase of any shares or voting rights in a "UK-connected" body corporate to the CMA where (1) the consideration is £25m or more and (2) the purchase results in the SMS business's shareholding / voting rights in the target crossing a threshold of 15%, 25% or 50%. Taken together with the CMA's new jurisdictional threshold for acquisitions by large companies, this will make it significantly easier for the CMA to intervene in tech acquisitions.


The new and amended thresholds will put some deals outside of the CMA's jurisdiction, but at the same time will allow the CMA to be more proactive in respect of vertical mergers and the largest international mergers. The CMA is already perceived as becoming increasingly interventionist, by virtue of the increasing number of mergers reviewed and market investigations conducted in recent years. The changes to be made by the Bill will further empower the CMA to investigate and block potential mergers.

The Bill is currently going through its second reading in Parliament and the changes are not expected to take effect until spring next year. However, businesses with plans for future acquisitions should start planning for them now.

For more information on the competition law aspects of the Bill please parts one and three in this series: changes to the regulation of digital markets and investigating and enforcing competition law breaches. For more information on the consumer protection aspects of the Bill please see part four: the Impact on UK Consumer Protection Law.


Jamie Dunne

Senior Associate