UK Law and Practice Contributed by: Becket McGrath and Marc Freedman, Van Bael & Bellis
Sustainability In assessing economic efficiencies such as relevant customer benefits, the CMA may consider sustain - ability enhancements. Recently, the CMA has been vocal in its willingness to take account of environmen - tal improvements where appropriate and, in general, supporting the UK’s Net Zero Strategy. Public Interest The secretary of state is able to intervene in “public interest mergers” and “special public interest merg - ers” under the EA (see 1.2 Legislation Relating to Particular Sectors ). In public interest mergers, trans - actions will be assessed on public interest grounds and may also be assessed on competition grounds. In special public interest mergers, transactions will be assessed on public interest grounds only. 4.7 Special Consideration for Joint Ventures Joint ventures are assessed using the same consid - erations as other relevant merger situations. 5. Decision: Prohibitions and Remedies 5.1 Authorities’ Ability to Prohibit or Interfere With Transactions At Phase II, if the CMA establishes that the transac - tion has resulted, or may be expected to result, in an SLC, it must decide whether the SLC or any result - ing adverse effect(s) should be remedied, mitigated or prevented (see 4.1 Substantive Test ). In general, this means the CMA will typically impose remedies at the end of the Phase II review, which may include pro - hibiting or unwinding a completed transaction. How - ever, and importantly, the CMA only has the power to impose remedies at Phase II – not at Phase I (see 5.2 Parties’ Ability to Negotiate Remedies ). 5.2 Parties’ Ability to Negotiate Remedies Merging parties may offer remedies to address com - petition concerns raised by the CMA at either Phase I or Phase II, or during pre-notification discussions. Merging parties are encouraged to consider possible remedy packages at an early stage of the process, if a transaction is expected to raise competition concerns. This approach is usually taken to avoid a Phase II ref -
erence, aiming to offer remedies capable of resolving issues raised by the CMA at Phase I, known as UILs. If the CMA decides to accept offered UILs, it will no longer be able to refer the case to Phase II. There - fore, the CMA will need to be convinced that the UILs will effectively resolve the identified competition con - cerns and are capable of being implemented within the Phase I timetable. Note that the CMA is not able to unilaterally impose UILs on merging parties – ie, UILs are entirely volun - tary and it is up to the parties concerned to formulate and offer them as they see fit. 5.3 Legal Standard In considering any remedies put forth, the CMA is required by the EA to have regard to the need to achieve a comprehensive solution that is fit for the purpose of remedying, preventing or mitigating an SLC as well as any resulting adverse effects, taking account of how reasonable, proportionate and prac - ticable such a solution would be. 5.4 Negotiating Remedies With Authorities The CMA’s guidance on merger remedies sets out the common principles that apply to the assessment of remedies at Phase I and Phase II. In seeking rem - edies that are effective in addressing an SLC and any resulting adverse effects (see 5.2 Parties’ Ability to Negotiate Remedies ), the CMA should: • aim to select the least costly and intrusive remedy that it considers to be effective; • ensure that any remedies offered are not dispro - portionate in relation to the SLC and its adverse effects; and • have regard to any relevant customer benefits aris - ing from the merger. In addition to these common principles, the CMA’s guidance lays out specific requirements for both structural and behavioural remedies. Structural Remedies The CMA has expressed a preference for structural remedies (ie, divestments) – particularly at Phase I, where UILs proposed to address any identified SLC(s)
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