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LONDON, UK - MAY 13, 2012: Leadenhall market in London. It is one of the oldest markets in London, dating back to the 14th century.

Colin Raftery, director of mergers at the CMA, discusses policy developments, priorities and Brexit


Colin Raftery leads the Competition and Markets Authority's (CMA) team on merger policy and initiatives. The department has had a busy year, with its prohibition of ICE's acquisition of the Trayport trading platform vindicated in appeal. It also gave the green light on phase II clearances for the much debated Tesco/Booker and Just Eat/Hungryhouse acquisitions. The CMA's 'shares of supply' approach has also continued to hold water in the context of digital markets transactions. Meanwhile Brexit looms on the horizon, and with this new chapter in the CMA's life, Raftery predicts a significantly increased workload and focus on large cross-border M&A.

What have been the biggest achievements for the CMA's merger department and what in your view have been the most compelling cases of 2017?

2017 was an important year on a number of fronts. We implemented several changes to our practices, all broadly intended to streamline the merger review process. We issued new guidance on initial enforcement orders – the orders used to 'freeze' integration, typically in completed mergers, while the CMA's investigation remains ongoing. This new guidance provides additional clarity around when these orders are likely to be used, what form they're likely to take and what kinds of derogations are, and are not, likely to be granted to them. We also updated our guidance in relation to the use of the de minimis exception, maintaining the same general approach to the application of the exception but increasing the threshold limits at which a phase 2 investigation typically will, or will not, be justified. We also carried out some minor tidying up of the merger notice and of our guidance relating to the operation of the CMA's Mergers Intelligence Committee (which monitors non-notified merger activity) and issued updated commentary on the CMA's approach to retail mergers.

2017 was also an important year in terms of cases. Perhaps most significantly, the Competition Appeal Tribunal, in March, upheld the CMA's prohibition of ICE's completed acquisition of the Trayport trading platform, with the judgment providing considerable support for the CMA's approach to the substantive assessment of vertical competition issues.

Within the CMA's phase 1 caseload, JD Sports/Go Outdoors provided important insights into the assessment of how online-only retailers compete with more traditional bricks-and-mortar outlets. NFA/Acorn and MasterCard/Vocalink were both cases that required a novel approach to assessment and showed the CMA's continued capability to manage complex remedies packages at phase 1. Wood Group/Amec was an interesting case procedurally because the merging parties pursued the twin-track approach of working on potential remedies from an early stage of the case, while the CMA's review of the substance remained ongoing. This is an approach that the EU Commission has frequently used, but the CMA to date has not, and the experience in Wood Group/Amec shows it can help to significantly reduce the end-to-end length of a major merger investigation.

Two significant phase 2 clearance decisions were issued towards the end of the year. Tesco/Booker involved the merger of the UK's largest groceries retailer with the UK's largest groceries wholesaler. There was little head-to-head competition between the merging parties so the case largely focussed on vertical competition concerns, which were ultimately dismissed because of Booker's limited influence over the competitive offering at the retail level. The case also provides useful guidance on the CMA's approach to the assessment of whether competition concerns might arise out of the procurement synergies brought about by an increase in buyer power.

Just Eat/Hungryhouse was similarly cleared following a phase 2 investigation, primarily because Hungryhouse provided limited competition to Just Eat and other platforms were found to be more important competitors. The CMA has, however, also imposed a penalty fine on Hungryhouse for failing to comply with a statutory document request without reasonable excuse during the CMA's investigation – the first fine of this kind in a UK merger case. This penalty highlights the importance of putting in place the right kind of processes to respond to internal document requests. This is an issue that has arisen in a few other recent cases and is something that we'll be keeping a close eye on in 2018.

Is current UK merger control policy well adapted to digital markets?

In general terms, yes. Mergers in digital markets typically raise two main issues for regulators: whether you have jurisdiction over the transaction and, if so, how you should look at it.

On the first issue, it's clear that there can be companies who play an important role in competition in a given market that doesn't generate much in the way of revenues – at least not yet. This means that the acquisition of this kind of company can escape the review of regulators that have jurisdictional thresholds based only on the revenues of the merging parties. One of the CMA's jurisdictional thresholds is based on the merging parties' shares of supply. This has previously allowed us to assert jurisdiction over transactions in digital markets such as Google's acquisition of Waze and Facebook's acquisition of Instagram. So, we don't think that we need to consider any changes to our jurisdictional thresholds – like the 'size of transaction' tests recently introduced in Austria and Germany – to be able to look at these kinds of cases.

On the second issue, by and large the principles applied in cases in other sectors also provide the best route map for looking at cases in digital markets. For example, in Just Eat/Hungryhouse, which involved the merger of two web-based food delivery platforms, the analysis was based on assessing which competitors most effectively constrained Hungryhouse – the kind of assessment that's carried out in almost all cases. The particular challenge in digital markets lies in working out how to make this assessment in markets that are often novel and fast-moving.

How will Brexit affect the CMA's approach to merger control, its priorities and way of operating? What preparations are underway in the CMA?

It's not yet clear what the precise implications of leaving the EU will be for UK merger control. But assuming that this exit will lead to the UK no longer being part of the one-stop-shop for EU merger control, as seems likely at present that the impact on the CMA's work is likely to be considerable.

JD Sports/Go Outdoors provided important insights into the assessment of how online-only retailers compete with more traditional bricks-and-mortar outlets

The number of cases that the CMA will look at each year will significantly increase, we think by somewhere around 30 to 50 cases per year, which might be expected to give rise to an additional half dozen or so phase 2 cases. By way of context, the CMA has typically investigated around 50 to 60 cases annually in recent years, so this will involve a significant increase in our workload.

These new cases are likely to be a slightly different type of case – large, cross-border transactions, typically involving business-to-business markets – which will often require a different type of analytical approach to many of the cases we see at present. The cases will also involve a slightly different way of working. Rather than being the only authority looking at a merger, as the CMA often is at present, we'll frequently be working as a partner authority with a number of international regulators on the analysis of global competition issues and the development of global remedies.

All of this means that additional resources will be required, if the CMA is to be able to continue to apply the same standards of review to its merger cases, and that our processes will need to be able to accommodate meaningful engagement with other regulators, on both questions of substance and potential remedies, at an appropriate stage in a case.

For the most part, the UK merger control regime is working well at the moment and should be able to accommodate the required changes – although some tweaks clearly will be necessary. To this end, we've been working closely with the Government to advise them on all of the implications of an EU exit for UK merger control. We've also been working hard within the CMA to plan for and put in place the changes that may need to be made to our own practices and processes.

How closely aligned is the CMA with the EU Competition Commission in terms of its approach?

The substantive tests that the CMA and the Commission use for the assessment of mergers are similar – which means, in practice, that the theories of harm we look at and the kinds of evidence we use to test these theories tend to be pretty similar as well. So, while there are obvious differences between the two regimes – the most obvious being that the UK is a voluntary system – we do tend to think about competitive harm in broadly the same way.

Do you have specific priorities for inbound M&A by foreign enterprises?

In general, the objectives that we pursue – to operate an efficient and effective rule-based system of review that provides legal certainty, limits itself to proportionate, economically-justified interventions, and inspires business and consumer confidence – apply equally to mergers that involve foreign investment and to wholly domestic mergers.

The government is, of course, currently consulting on proposed reforms to its scrutiny of investments in infrastructure for national security purposes through the recent Green Paper. While the consideration of these reforms remains work in progress, we're encouraged that the government has stated its commitment to maintaining an open and reliable mergers regime.

There has been a growing public debate on the interplay between M&A, productivity and wage growth. What role should merger control play in this balance?

It's clear that competition policy, including the competition-focussed review of mergers, can play a key role in increasing productivity. In every merger we look at, we seek to ensure that the structure of the market post-merger will continue to drive suppliers to compete with each other – on the price and quality of the products (or services) that they provide and on bringing product improvements or new products to market. An anti-competitive merger, left unchecked, could certainly play a role in lowering productivity. But through the work that we do to address or prevent anti-competitive mergers, we hope to avoid these kinds of negative effects on productivity.

Is there any advice you would give merging parties about how to approach a merger control review?

In practice, the cases that seem to run best are those where the merging parties, and their advisers, have a clear strategy and are prepared to engage proactively and transparently with the regulator. In working out what that strategy should be, I'd also encourage clients to explain to their advisers what their business priorities are – in terms of outcomes and timing – at the start of a case, so that these can be reflected in the way that the case is run. Finally, as the key to most cases is getting to the bottom of how commercial decision-making plays out in practice, I'd encourage merging parties to ensure that the business people who best understand this play an active role in making the case to regulators.

About the author



Colin Raftery

Director of mergers, Competition and Markets Authority

London, UK

T: +44 20 3738 6533


W: organisations/competition-and-markets-authority

Colin Raftery is director of mergers at the Competition and Markets Authority (CMA), where he leads the CMA's team on a variety of merger cases and policy initiatives. Prior to joining the CMA, Raftery advised on all aspects of EU and UK competition law at Freshfields Bruckhaus Deringer in London and, before that, at Cleary Gottlieb Steen & Hamilton in Brussels and Washington DC. Raftery holds an undergraduate degree in law from the University of Edinburgh and postgraduate degrees in law from the College of Europe, Bruges, and the University of Chicago.

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