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.
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Global Competition Law

There is no general requirement to notify mergers to the UK competition authorities (except in the case of newspaper mergers, which require the prior consent of the Secretary of State), or any obligation to suspend a merger after its voluntary notification. However, without calling into question the previous voluntary notification system, the Enterprise and Regulatory Reform Act 2013 (ERRA 2013) i …

Merger notification

There is no general requirement to notify mergers to the UK competition authorities (except in the case of newspaper mergers, which require the prior consent of the Secretary of State), or any obligation to suspend a merger after its voluntary notification. However, without calling into question the previous voluntary notification system, the Enterprise and Regulatory Reform Act 2013 (ERRA 2013) introduced a set of provisions designed to encourage undertakings to notify their transaction. The Act granted the CMA new powers to agree or impose interim measures: in the course of dealings, the competition authority will be able to suspend the integration of companies involved in a merger in order to consider with the parties whether any further integration should be allowed through derogations, as well as to unwind pre-emptive action that might be difficult to unwind, if necessary, at a later stage. The new provisions include the power to impose enforcement orders and, following a reference to Phase 2, interim undertakings or interim orders. As a consequence, the ERRA has removed the OFT's power to accept initial undertakings at Phase 1. 

Mergers may also be reviewed in the absence of voluntary notification: the CMA may investigate a case on its own initiative in the course of its monitoring activity or following a complaint from a third party (customer, consumer or competitor). Where the merger is not voluntarily notified, the CMA will consider whether to investigate the case by sending the parties an inquiry letter, whose purpose is to establish whether the thresholds set by the 2002 Act are met and to ascertain information about the transaction. If the response to the inquiry letter contains all the information that the CMA needs to begin its investigation, it will then review the merger as if it had been notified. If the CMA is not satisfied with the parties' submission, it will make a request for a full submission and the administrative timetable will only begin when sufficient information has been received.

The ERRA 2013 introduced a new “single track” process for voluntary notifications to the CMA according to which all cases will be dealt with on a 40 working-days statutory timetable. Voluntary notification of mergers will have to be made using an updated Merger Notice. 

Filing fees are set at £40,000 (EUR 43,875), £80,000 (EUR 87,750), £120,000 (EUR 131,625) and £160,000 (EUR 175,500) where the target's turnover is respectively £20 million or less (EUR 21.9 million), greater than £20 million but less than £70,000 (greater than EUR 21.9 million but less than EUR 76.7 million), between £70 million and £120 million (EUR 76.7 million and EUR 131.6 million), or over £120 million (EUR 131.6 million).

The Board has taken over the OFT's competition responsibilities from April 2014. Like the OFT, the Board may invite comments on any public merger situation under review from interested third parties by means of an invitation to comment notice published on its website. The Board may also conduct specific consultations and ask merging parties to provide contact details for their main customers, suppliers and/or competitors. Customers' views may be of value in assessing the degree of substitutability between different products or services and therefore in defining the relevant market. In addition, the Board may seek to estimate the degree of buyer power exercised by major customers, which may act as a constraint on any market power resulting from the merger. The Board is inclined to give more weight to the views of customers than competitors, though this partly depends on the quality of the opinions. Where adverse views raise significant competition issues, the parties proposing the merger are told of the nature of the concerns expressed (but not the identity of the persons involved) and are given the opportunity to respond to them. The Board may also seek opinions from the Government or from sectoral Regulators.

The statutory timetable for the Board's investigation is normally up to four months after the transaction becomes unconditional or is made public.

If pursuant its investigation, the Board is satisfied that there is no relevant merger situation or no substantial lessening of competition, it will clear the merger. Conversely, the Board has a duty to refer completed and anticipated mergers to the Panel of experts (previously the Competition Commission) for investigation if it believes that the merger has resulted, or may be expected to result in an Substantial Lessening of Competition (SLC). The Board must make a reference to the Panel when it believes that the merger is more likely than not to result in an SLC. If the Board believes that the relevant likelihood is greater than fanciful, but below 50%, it has a wide margin of appreciation in exercising its judgment. There is a duty to refer when the Board believes there to be a realistic prospect that the merger will result in an SLC. However, the Board may decide not to refer the transaction to the Panel for a phase 2 investigation in the case of de minimis mergers (i.e. mergers on markets with an annual aggregate turnover of less than £15 million (EUR 16.4 million)); where customer benefits outweigh the SLC and any adverse effects of the SLC; and in the case of an anticipated merger, where the arrangements concerned are not sufficiently far advanced, or are not sufficiently likely to proceed, to justify a reference. Furthermore, the Board may not make a reference where it considers accepting undertakings in lieu of making a reference.

Proceedings before the CMA Board

The Panel of experts, which has taken over the Competition Commissions responsibilities cannot initiate an investigation ex officio but only after reference made by the Board or the SoS. When a merger is referred to the Board for an in-depth investigation (phase 2), it has 24 weeks, beginning with the date of the reference, to prepare and publish its report. One extension of no more than eight weeks is allowed. The Panel's duty is to investigate and report on whether a relevant merger situation has been or will be created and, if so, whether the creation of that situation has resulted or may be expected to result in a substantial lessening of competition within any market or markets for goods or services in the UK. In addressing those two issues, the Panel will apply a “balance of probabilities” threshold to its analysis to decide if it is more likely than not that the transaction will result in an SLC. In this respect, the Panel must form an expectation which has a higher level of probability than that required of the Board, which requires a more extensive investigation than that carried out at phase 1. As the Board, the Panel has the power to ask the merging parties to supply any document, information or witness testimony. The Commission is also empowered to take evidence on oath and to administer oaths for that purpose.

The 2002 Act contains two prohibitions (in Sections 77 and 80) that prevent the parties taking any action which might prejudice the reference or make it difficult to take action on the Panel's findings in the event of an adverse report. Where the merger has not yet been completed, Section 78 of the Act prohibits the parties from acquiring interests in each other's shares during the reference period without the Panel's consent. Parties can however apply for special consent to acquire shares during the reference period. A company that wants to do this can either make its views known before the decision to refer has been announced or seek special consent after the reference has been made. In considering any request for such special consent, the Panel will take into account the need to prevent the bidding company from increasing its level of control over the target. Where a merger does not involve the acquisition of shares or where it has already been completed, the Panel may, for the purposes of preventing pre-emptive action, accept interim measures. The ERRA 2013 strengthened those powers, enabling the CMA to issue initial enforcement orders to prevent pre-emptive action and to unwind pre-emptive action that has already occurred in respect of both anticipated and completed mergers, and at an earlier stage. Furthermore, any initial orders made by the CMA at Phase 1 will automatically remain in force for the duration of any Phase 2 investigation, unless amended, revoked or replaced by new interim undertakings or interim orders at Phase 2. The CMA can grant derogations to, or supplement, such interim measures at any time during its investigation. 

Proceedings before the CMA Panel 

Under the 2002 Act, the SoS has the ability to issue an intervention notice in public interest cases (Sections 42 and 43). The Act currently defines only national security, plurality of the media and stability of the UK financial system as public interest criteria, although there is provision for the SoS to identify additional public interest criteria. If such a notice is not issued, the CMA will treat the case and make its decision on competition grounds as if it were any other merger case. If an intervention notice is issued, the case is handled in the following way:

- The CMA provides definitive advice to the SoS on jurisdictional and competition issues, which must be accepted. The CMA can also advise on the public interest considerations that are relevant to the SoS's decision on referred cases, and must pass a summary of any relevant public interest-related representations it has received to the SoS.

- The SoS then makes a judgment on the outcome of the case in light of the CMA's advice. References to the CMA' Panel of experts can be made either because the merger results in a substantial lessening of competition and, combined with the public interest issues, will operate or be expected to operate against the public interest; or because, while there is no substantial lessening of competition arising from the merger the public interest issues are such that the merger may be expected to operate against the public interest. The SoS will also consider whether undertakings in lieu of a reference are justified.

If a reference is made on public interest grounds (with or without competition grounds) the SoS will also make the final decision on the merger following the Panel of experts' report. If the SoS concludes that there are no public interest issues that are relevant to the intervention notice, the CMA will be instructed to deal with the merger as an ordinary merger case.

In any event, any decision in the case that is based on competition considerations must follow the CMA's advice on whether or not the merger should be expected to result in a substantial lessening of competition.

Global Competition Law

1418. Merger notification

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Les notions juridiques connexes

1418. Merger notification

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Les notions juridiques connexes

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