The Competition and Markets Authority (CMA) turns four
in 2018, and its merger regime is becoming more distinct from
the one it inherited from its predecessor organisations (the
Office of Fair Trading and the Competition Commission).
This year, we can expect the CMA to continue to focus its
resources on fewer, more problematic deals; to increasingly
consider dynamic effect theories of harm in relevant merger
cases; and, in anticipation of Brexit, to enhance its
reputation and links with agencies across the world.
Fewer, more problematic deals
The CMA increasingly triages deals via its Mergers
Intelligence Committee (MIC), and is selective over those it
calls in. The CMA is opening files on fewer mergers, which are
more likely to generate substantive concerns at phase 1. The
CMA is more willing to accept remedies to avoid references to
phase 2, including greater use of behavioural remedies. A
higher proportion of cases referred to phase 2 are cleared.
Deploying its resources in a targeted way has merit, for the
CMA and for merger parties. But the CMA's thresholds for
intervention, perhaps by design, appear to have shifted,
increasing the potential for uncertainty and cost to
Increasing reliance on MIC results in decisions on substance
– in effect, clearances – being taken by the
CMA in private, without published reasoning and with fewer
opportunities for third parties to comment.
Phase 1 case teams are exposed to a different balance of
problematic and non-problematic cases. The CMA may need to
ensure this bias in the case mix does not result in systemic
Given the low legal threshold for reference and high chance
of clearance at phase 2, a greater focus on resolving cases at
phase 1 may result in remedies that are not proportionate to
the likely consumer harm.
The impact of mergers on the competitive process over time
– so-called dynamic effects – have long been
considered by agencies in merger reviews. However, such
theories are inherently speculative and raise practical
challenges in relation to evidence.
The CMA has a wide margin of discretion in the conclusions
and inferences it draws from evidence, such as internal
documents. Agencies are increasingly interested and confident
in bringing cases on the basis of dynamic effects, with a
particular focus on innovation.
This is likely to continue. The CMA will be buoyed by the
Competition Appeal Tribunal's endorsement of its decision to
prohibit the merger between US exchange ICE and commodities
trading company Trayport on the basis of such effects.
Innovation theories are getting more traction at the EU and US
UK on the world stage
Brexit will increase the number of transactions notifiable
in the UK and raises practical transitional issues in relation
to deals being reviewed in Brussels at the time the UK leaves
the European Union.
As many of the new deals notifiable in the UK will be
international, that implies a need for stronger relationships
between the CMA and agencies across the world.
In addition to planning for the likely resource implications
of this increased workload, we should expect the CMA to
continue to raise its profile internationally, for example with
organisations like the International Competition Network.
Director, Fingleton Associates
T: +44 20 3730 9090