The UK Competition and Markets Authority ("CMA") has a duty to refer a transaction for an "in depth" phase 2 investigation in instances where it believes that there is a realistic prospect of a transaction resulting in a "substantial lessening of competition", subject to certain exceptions. This includes a de minimis exception in markets of "insufficient importance", where the costs involved in investigating the transaction would be disproportionate to the size of the market concerned.
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On 23 January 2017, the CMA launched a public consultation on possible changes to the de minimis exception. The proposed changes would increase the upper threshold for markets considered to be sufficiently important to justify a merger reference from £10 million to £15 million, and would raise the lower threshold for markets not considered to be sufficiently important from below £3 million to below £5 million.
In instances where the size of the market falls between these two thresholds, the CMA would continue to evaluate, on a case-by-case basis, the potential harm of the transaction against the cost of an investigation when assessing whether to make a reference.
The proposed changes are likely to reduce the number of smaller merger investigations carried out by the CMA, and also provide smaller businesses with wider scope to self-assess whether a merger filing to the CMA may be required.1
Stakeholders are invited to provide feedback on the consultation by 13 February 2017. Further details can be found here.
Footnote
1. Note that the UK operates a voluntary merger control regime.
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