Global Competition Law is primarly a practitioner's guide presenting the most salient aspects of the major competition laws country by country, giving an overview of their structure and most charasteristic elements.
Global Competition Law also provides insight into possible future developments in the field.

Global Competition Law

A merger falls under the Enterprise Act if the share of supply test or the assets test, or both, are satisfied. Broadly speaking, the share of supply test is met if, as a result of the merger, the new entity accounts for at least 25 per cent of the supply or acquisition of particular goods or services either in the UK as a whole or in a substantial part of it. If this was already the case before t …

Thresholds

Under the Enterprise Act, as amended by the Enterprise and Regulatory Reform Act 2013, mergers are investigated by the CMA Board (previously by the OFT) and may be referred to the CMA's Panel of Experts (previously the Competition Commission) for a Phase 2 in-depth analysis. On 25 April 2024, the CMA has provided updated guidance on the CMA's jurisdiction and procedure.

Mergers involving defense-related companies, newspapers and broadcast media or water companies may be subject to distinct procedures and jurisdictional tests, so that mergers of smaller businesses that do not meet the turnover test nor the share of supply test may still be subject to merger scrutiny. Moreover, sector-specific Regulators, such as the Ofcom in the telecommunications sector, are empowered to investigate sector-specific mergers.

Finally, the Competition (Amendment etc.) (EU Exit) Regulations 2019 No 93 “revokes” the application of EC Merger Regulation No 139/2004 in the United Kingdom from 31 December 2020, putting an end to the one-stop-shop principle from that date. During the transition period, the European Commission will remain exclusively competent for transactions reaching the EU thresholds. Henceforth, such mergers will be dealt with by both the European Commission and the CMA entailing risks of conflicting assessments.

Context

The Enterprise Act 2002 substantially changed the existing rules applicable to mergers in the UK by replacing the vast majority of the provisions of the Fair Trading Act 1973 (FTA 1973). Following the new provisions, prior notification of a merger to the CMA is not mandatory, except in certain cases specified in the Act. The Enterprise and Regulatory Reform Act 2013 did not call into question the voluntary system but contains a set of provisions designed to encourage undertakings to notify their transactions. In addition, where a “relevant merger situation” is created, the CMA Board (previously the OFT) is required by Section 22 of the 2002 Act to refer any completed or anticipated merger to the CMA's Panel of Experts (previously the Competition Commission) (see joint OFT and CC's Merger Assessment Guidelines, OFT 1254 of September 2010).

A relevant merger situation under the 2002 Act (Section 23) arises where two or more enterprises cease to be distinct and either the merger has not yet taken place or has taken place less than four months before the reference is made, or it took place without having been made public and without the CMA being informed.

Enterprises cease to be distinct if they are brought under common ownership or control (Section 26). The term “control” refers to the existence of a controlling interest, such as where an individual or undertaking acquires more than 50 per cent of the voting right in a company. However, “control” is also defined more broadly as the ability to materially influence or control the policy of an undertaking or of any person carrying on an enterprise.

Concept of concentration

A merger falls under the Enterprise Act if the share of supply test or the assets test, or both, are satisfied. Broadly speaking, the share of supply test is met if, as a result of the merger, the new entity accounts for at least 25 per cent of the supply or acquisition of particular goods or services either in the UK as a whole or in a substantial part of it. If this was already the case before the merger, the test will be met if, as a result of the merger, the market share is enhanced. The assets test is satisfied if the gross value of the world-wide assets taken over exceeds £70 million (EUR 76.8 million).

The phrase “a substantial part of the UK” has been held to mean an area which must be of a size, character and importance as to make it worth consideration by the supervisory authorities (Regina v Monopolies and Mergers Commission, ex p South Yorkshire Transport Ldt, [1993] 1 WLR 23).

In June 2018, both tests were amended for mergers involving an enterprise that is relevant to national security. This includes undertakings whose activities involve developing or producing goods that are subject to export controls (including dual-use technology), quantum computing, and computer hardware, firmware or software that performs critical security or low-level control functions (such as “rooting” software), the development and production of and research into advanced materials (and materials used to manufacture advanced materials), cryptographic authentication and artificial intelligence. For those mergers, the CMA's control will be triggered where (i) the target’s UK turnover exceeds £1 million (EUR 1.1 million) or (ii) the target’s existing share of supply of goods or services in the United Kingdom is at least 25%.

The 2002 Act substantially modified the assessment criteria for mergers. Except in certain cases, mergers will now be assessed against a pure competition test, rather than the wider public interest test. Generally, mergers will be prohibited, or remedies required, if they would result in a substantial lessening of competition in a UK market. In December 2010 the OFT and the CC (merged by the Enterprise and Regulatory Reform Act 2013 into the Competition and Markets Authority - CMA) unified their assessment criteria relating to the competition effects of a merger, nevertheless specifying that they would conduct a case by case analysis taking account of the particular transaction and the individual markets being analyzed. The relevant market(s) in which the parties to the merger are involved must be defined, before the structure of these markets, the unilateral or coordinated effects are analyzed with regard to elements such as barriers to entry, buying power of customers and efficiencies.

Global Competition Law

1414. Thresholds

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Les notions juridiques connexes

1414. Thresholds

Demandez un accès gratuit au contenu exclusif Livv – juristes d’entreprise

Les notions juridiques connexes

Demandez un accès gratuit
au contenu exclusif Livv – juristes d’entreprise