UK Law and Practice Contributed by: Alex Stratakis and Marc Freedman, Van Bael & Bellis
• the jurisdictional thresholds may not be met; and • in any event, the transaction does not give rise to any competition concerns in the UK. If such a briefing note is persuasive and the CMA does not decide to investigate immediately, the merging parties will obtain a level of comfort that the CMA does not, at that moment, intend to investigate. Many purchasers will decide to pro - ceed to closing on that basis. That being said, the CMA also has the power to investigate – and take action against – mergers that have complet - ed, provided that completion has taken place not more than four months before the reference to an in-depth Phase 2 investigation is made. In light of this, parties may decide to make com - pletion of the transaction conditional on a posi - tive response from the CMA to the briefing note (ie, “no further questions” – indicating that an investigation will not be immediately opened). For completeness, it should also be noted that – under the new UK digital markets regime intro - duced by the DMCCA – firms designated as hav - ing “strategic market status” (SMS) will (once designated) be required to notify the CMA of certain transactions. This obligation applies, for instance, where an SMS firm acquires shares or voting rights in an entity with a UK connection, that acquisition results in the 15%, 25% or 50% threshold being crossed, and the considera - tion for those shares or voting rights is at least GBP25 million. 2.2 Failure to Notify As the UK merger control regime is voluntary, there are no penalties for failing to notify a merg - er to the CMA.
However, if the transaction raises substantive competition concerns and the CMA decides to investigate, it is typical for the CMA to issue interim orders preventing any action that may prejudice or impede its investigation (see 2.1 Notification ). Moreover, following a Phase 2 investigation, the CMA may also require termination of a com - pleted transaction, and thus the disposal of the acquired businesses or assets (see 5.4 Negoti- ating Remedies With Authorities ). 2.3 Types of Transactions The UK merger control rules apply to “relevant merger situations”. Although purely internal restructurings or reorganisations will not usu - ally 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; • the applicable jurisdictional thresholds are 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 trans - action for a Phase 2 investigation. Note that in the case of a transaction being com - pleted either without the CMA being notified or without any public notification (such as a press release), the four-month period will start running from the date the CMA was notified or the date when completion was publicised, whichever is earlier.
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