Competition and Markets Authority consults on changes to reduce number of mergers it investigates in smaller markets

The CMA has a duty to refer mergers for an in-depth, phase two investigation if they could lead to a substantial lessening of competition (SLC). However, in certain circumstances it may not refer a merger, such as if it believes the relevant market is of insufficient importance.

The exception to the duty to refer is designed to avoid investigations where the costs involved would be disproportionate to the size of the market concerned. It enables the CMA to reduce the burden on companies and better target its resources for protecting consumers and businesses. The CMA can choose not to apply this exception in certain circumstances.

The CMA is now seeking views on the proposed amendments to its guidance. These state that the CMA will raise the threshold for markets generally considered as sufficiently important to justify a merger reference to above £15 million from the current £10 million. It also proposes changing the figure for markets generally considered not sufficiently important from below £3 million to below £5 million.

Where the size of the market is between these two thresholds, the CMA will continue to assess whether the expected harm resulting from the merger would be greater than the cost of an investigation.

It is expected that the changes will reduce the number of mergers that are subject to investigations, in particular those subject to initial phase one examination.

The CMA would welcome views on these proposals and those responding should also supply a brief summary of the interest or organisation they represent. The consultation is open until 13 February 2017 after which the CMA will consider responses received before finalising the guidance. To read the CMA press release in full and for a link to the consultation documentation, click here.