UK Law and Practice Contributed by: Becket McGrath and Marc Freedman, Van Bael & Bellis
2.3 Types of Transactions The UK merger control rules apply to “relevant merg - er situations”. Although purely internal restructurings or reorganisations will not usually amount to such a situation, it is possible that changes to shareholders’ agreements and articles of association could result in a relevant merger situation, where they lead to a change in control (see 2.4 Definition of “Control” ). A “relevant merger situation” arises when: • two or more enterprises cease to be distinct, or will cease to be distinct, due to being brought under common ownership or control; • at least one of the applicable jurisdictional thresh - olds is met (see 2.5 Jurisdictional Thresholds ); and • the transaction has not yet completed or was completed within the CMA’s four-month time limit to issue a decision on referring a transaction for a Phase II investigation. Note that, in the case of a transaction being com - pleted either without the CMA being notified or with - out any public notification (such as a press release), the four-month period will start running from the date the CMA was subsequently notified or the date when completion was publicised, whichever is earlier. As the term “enterprise” is broadly defined under the EA as “the activities, or part of the activities, of a busi - ness”, acquiring the assets of a business may be con - sidered as acquiring an enterprise, rather than “bare assets”. In order to make the distinction, the CMA will take account of “economic continuity” when: • acquiring the assets gives the acquirer more than they might have acquired by going into the market and buying factors of production; and • the extra benefit obtained by the acquirer is attrib - utable to the fact that the assets were previously used in combination in the “activities” of the target business. In its assessment of economic continuity and the facts related to the transaction, the CMA will also take into account the transfer of specific types of assets, such as intellectual property rights (trade marks, trade names and domain names), business data, employ -
ees, tangible/intangible assets and/or good will. The CMA has confirmed that the hire of a team (known as an “acquihire”) can be caught by the regime. 2.4 Definition of “Control” The EA sets out three levels of control. • Legal control – a controlling interest generally means holding more than 50% of the voting rights in a company. • De facto control – the ability to unilaterally deter - mine the target company’s commercial policy, despite holding less than the majority of the voting rights in the target. • Material influence – the acquirer’s ability to exert material influence over the target’s commercial policy and conduct on the market, which may be evidenced through shareholding, board representa - tion, contractual, financial or other arrangements. In general, the CMA considers that material influ - ence will arise if the acquirer has more than 25% of the shares in the target. However, as the CMA takes a holistic view, material influence can be con - ferred by a lesser shareholding (eg, a shareholding of – or, in exceptional cases, even below – 15%) or even where there is no shareholding at all, if the parties’ commercial relationship is sufficiently close. There is no safe harbour and the assess - ment is fact specific. As a result, careful analysis may be required to rule out the presence of mate - rial influence in an individual case. Whilst this is accurate at the time of writing, it should be noted that – as part of a wider package of pro - posed refinements to the UK competition regime – in January 2026 the UK government announced plans to limit the criteria that the CMA may apply when assessing whether material influence is present. This list would include shareholding/voting thresholds (eg, at least 15%, or any shareholding/voting rights in combination with other factors), board representation/ appointment rights, veto/voting rights over strategic decisions, access to confidential strategic information and commercial/financial/consultancy arrangements. The CMA will also take account of transactions that increase control in stages. Where there are multiple transactions or events increasing control over a target
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