UK Law and Practice Contributed by: Alex Stratakis and Marc Freedman, Van Bael & Bellis
As the term “enterprise” is broadly defined under the EA as ”the activities, or part of the activi - ties, of a business”, acquiring the assets of a business may be considered 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 attributable to the fact that the assets were previously used in combination in the “activi - ties” of the target business. In its assessment of economic continuity and the facts related to the transaction, the CMA will also take account the transfer of specific types of assets, such as intellectual property rights (trade marks, trade names and domain names), business data, employees, tangible/intangible assets and/or good will. 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 determine 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 com - mercial policy and conduct on the market, which may be evidenced through share - holding, board representation, contractual, financial or other arrangements. In general, the CMA considers that material influence 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 conferred by a lesser shareholding (eg, a shareholding of – or, in exceptional cases, even below – 15%). Whilst this is accurate at the time of writing, it should be noted that: • in March 2025, the UK government announced plans to consult in the coming months on legislative reform proposals to address uncertainty with the existing (share of supply and) material influence tests; and • separately, in June 2025, the CMA launched a consultation on various proposed updates to some of its mergers guidance, in which the CMA intends – amongst other things – to clarify its approach to these tests (to the extent possible under the current legal framework). The CMA will also take account of transactions that increase control in stages. Where there are multiple transactions or events increasing con - trol over a target in a single two-year period, the CMA may consider the transactions as a whole and, for the purposes of review, take the date of the most recent transaction as the date of completion. In this context, the CMA may also take account of transactions that have not yet
completed but are in contemplation. 2.5 Jurisdictional Thresholds
Under the general UK merger control regime, there are three alternative jurisdictional thresh - olds that apply, and the CMA can open an inves - tigation if one is met.
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