UK Law and Practice Contributed by: Paolo Palmigiano, Rachael Roberts, Helen Farr, Debbie Heywood and Louise Popple, Taylor Wessing LLP
6. Competition Law 6.1 Merger Control Notification
• The CMA must be provided with the draft, and any additional queries from the CMA must be responded to. • When the CMA is satisfied that the draft notification is complete, the parties must make the transaction public and formally file the merger form, and the CMA will start the formal Phase 1 process. • Phase 1 will take up to 40 working days, and the CMA will consider whether the transac - tion may lead to a “substantial lessening of competition” (SLC). • If there are no competition concerns, the CMA will proceed to clearance and issue a decision, which will be publicly announced. • If it is determined that there is the risk of an SLC, the CMA has a duty to refer to a more in-depth Phase 1 review. • To avoid a Phase 2, it is open to the parties to offer remedies to address competition concerns, in the form of binding undertakings in lieu of reference (UIL). • Generally, the CMA will accept UILs where the problem is easily severable – for example structural remedies (ie, divestment of all or part of the business). Behavioural remedies may also be considered, but this is uncom - mon. • If UILs are offered, the CMA will begin the process of a detailed consideration of wheth - er they are suitable. The timeframe for final determination is 50 working days from when the SLC decision was announced to the par - ties, with the possibility of a 40 working-day extension. • If the CMA refers to Phase 2, a more in-depth and detailed examination of the possible SLC that was identified in Phase I is undertaken. The entire process is complex and time- consuming, and the CMA has up to 24 weeks from reference (extendable by up to eight weeks) to make a final decision.
The UK’s merger control regime is overseen by the Competition and Markets Authority (CMA), which will have jurisdiction to review a transac - tion where a relevant merger situation has been created. This will be the case where two or more enterprises cease to be distinct and either: • the target has turnover in the UK of in excess of GBP100 million (the “turnover test”); or • at least one of the parties has a UK turnover of more than GBP10 million and, as a result of the transaction, the parties have a combined share in excess of 25% of the supply of any goods and services in the UK or a substantial part of it (the “share of supply test”). The UK has a voluntary notification system, so even where either of the thresholds is met, the parties are not required to seek clearance before completion of the transaction. The rules are triggered when enterprises cease to be distinct – ie, brought under common own - ership or control. This covers any joint venture or acquisition of shares that give total or partial control over any other entity. 6.2 Merger Control Procedure The parties will need to determine whether to notify to the CMA for clearance. If they choose to do so, the following steps must take place. • The CMA must be informed of the transac - tion, and pre-notification discussions on a draft merger notice are entered into, which can last up to three months (longer in com - plex cases).
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