CMA jurisdiction under the old rules

Until the end of 2024, the CMA had jurisdiction to review a transaction where:

• the target generated turnover in the UK in its last financial year of more than £70 million; and/or
• the parties both supplied goods or services in the UK of a particular description and together had a share of supply of those goods or services in the UK or a substantial part of it of 25% or more.

New CMA thresholds

As of 1 January 2025:

• the £70 million turnover threshold has increased to £100 million;
• the 25% share of supply threshold will continue to apply; and
• a new ‘hybrid’ threshold applies, giving the CMA jurisdiction where:
  • one party (likely the acquirer) has a 33% share of supply in the UK (or a substantial part of it), and total UK turnover of more than £350 million, and
  • the other is either a UK entity which carries on activities in the UK, or supplies goods or services in the UK.
• A new ‘de minimis’ threshold has also been introduced which excludes from CMA jurisdiction any transaction where both parties generated turnover in the UK in their last financial year of £10 million or less.

Unlike the 25% share of supply threshold which has been brought forward from the old regime, the new hybrid test does not require any overlap in the parties’ UK activities. Given the CMA’s considerable discretion to establish the goods or services to which it applies the share of supply test, it is likely to be relatively easy for it to find that a business which generates £350 million turnover in the UK also supplies 33% of a particular category of goods or services in the UK.

Note also, that the second limb of the hybrid test can be met simply on the basis that the party in question:

• has an office, branch or any kind of facility in the UK;
• has a business in the UK;
• has intellectual property rights in the UK;
• has obtained a licence or regulatory approval to enable it to supply goods or services (whether directly or indirectly) in the UK; or
• makes available its goods or services to consumers in the UK.

The new thresholds apply to any deals that did not complete before 1 January 2025, provided the CMA had not already launched a Phase 1 review into the transaction by that date.

Other changes to the regime

Further changes that have been implemented since 1 January 2025 are that:

1. The CMA has the power to impose larger penalties on parties for failing to respond to compulsory requests for information or for providing false or misleading information. It also has wider powers to fine companies for breaches of any orders, undertakings or commitments imposed or agreed as part of a merger control investigation.
2. The CMA has new powers to require persons outside the UK to produce documents or supply information and to require persons located in the UK to produce documents or supply information held outside the UK.
3. A new ‘fast track’ route allows parties subject to a CMA investigation to request referral to a Phase 2 investigation at any stage of pre-notification of the transaction or during Phase 1. Unlike under the old system, this does not require them to concede that the transaction may create a substantial lessening of competition.
4. Firms designated by the CMA as having strategic market status (SMS) will now have to report to the CMA acquisitions of shares/voting rights which surpass thresholds of 15%, 25% or 50%, and the creation of joint ventures where they will hold at least 15% of the shares/voting rights where:
5. the target/JV entity is a ‘UK-connected body corporate’; and
6. the consideration is £25 million or more.

Addressing merger control risk

The UK continues to operate a voluntary merger control regime and, unlike in many other jurisdictions, parties are free to complete a transaction which satisfies the merger control thresholds without notifying the CMA or obtaining its prior approval. However, where a transaction meets the jurisdictional thresholds, the CMA has four months from the date of completion and material facts about the transaction being made public to decide whether to refer it for an in-depth Phase 2 investigation. If, following such an investigation, the transaction is found to give rise to a substantial lessening of competition, the CMA can take various steps, including ordering full or partial divestment of the target business.

Firms which are party to an acquisition involving a target with UK sales or activities should therefore consider at an early stage whether the CMA may have jurisdiction to review a transaction under the new rules and if so, the best strategy to address the risk of a “call-in”.

Depending on factors such as the substantive competition issues raised by the transaction, the parties’ risk appetite and the deal timetable, options will include:

• proceeding to completion without notifying the CMA;
• submitting a formal merger notice to the CMA, either pre- or post-completion; or
• providing a briefing note to the CMA explaining why the parties have not submitted, or do not propose to submit, a formal merger notice.

Once the first firms are designated as having SMS (which is expected to be in October 2025), parties will also have to consider if their deals trigger the mandatory reporting obligation described above. On 14 January 2025, the CMA launched an investigation into whether Google should be designated as having SMS in respect of general search and search advertising. Just a week later, the CMA announced a further investigation, this time into both Google and Apple in respect of their mobile ecosystems.

UK merger control: How we can support you?

Our Competition team has extensive experience advising firms on the application of the UK (and non-UK) merger control rules to their transactions and, as appropriate, shepherding them through the filing and clearance process.