09 Apr 2021

UK’s CMA Updates Guidelines on Merger Assessment

In these times of rapidly changing markets, the UK’s competition law determined the need for more clarity in existing rules, as well as an appetite to revise the ones which proved to be obsolete.   This resulted in updated guidelines on merger assessment, following a comprehensive public debate.  So, let’s check out the latest news from UK’s competition watchdog!

The Competition and Markets Authority of the UK (“CMA”) highlighted its mandate to promote competition across the UK and beyond.  The CMA’s goal is to protect consumers through its merger work and help companies and their advisers assess whether competition concerns might be raised in given circumstances.  For these reasons, following a public consultation, the CMA published the updated Merger Assessment Guidelines (“Guidelines”) on March 18, 2021, to be applied as of March 19, 2021.

Key changes to the Guidelines are summarized below, notably: (a) inclusion of examples of scenarios which may lead to a substantial limitation on competition and illustrations which could be considered “substantial”; (b) provision of additional detail on the role of price and non-price competition, the latter being an important element for a more realistic assessment; (c) explanation about how the CMA assesses and assigns weight to evidence; (d) introduction of greater flexibility with the timeframe in the counterfactual depending on a given market’s maturity and removal of limb 3 of the failing firm scenario, i.e., the consideration of what would have happened to the sales of the firm in the event of its exit; (e) more attention to two-sided or even multi-sided platforms in the times of increased significance of digital technologies; (f) additional details on the CMA’s assessment of elimination of potential competition where a merger involves a potential entrant or competitors with substantial investments in innovation; (g) re-framing of the focus of the CMA’s assessment of a merger firm’s ability to foreclose; (h) finding redundant the buyer power as a countervailing factor; and (i) introduction of a simpler approach to market definition since the CMA’s practice demonstrated that it is unnecessary for the assessment of competitive effects.

This was a short retrospective of important changes in CMA’s framework, which we find to be informative for users.  We are keeping an eye on new developments and will keep you posted.


Authors: Miloš Brkić and Nikola Vjetrović