The substantive assessment of UK mergers
The substantive assessment of UK mergers

The following Competition guidance note provides comprehensive and up to date legal information covering:

  • The substantive assessment of UK mergers
  • Assessing mergers–the SLC test
  • Counterfactual
  • Market definition
  • Assessing horizontal mergers
  • Assessing non-horizontal mergers
  • Mitigating factors
  • Ancillary restraints
  • Special sectors

BREXIT: The law and practice referred to in this Practice Note may be impacted by Brexit. For further information on the potential impact, see: The effect of Brexit on UK competition law in a deal or no deal scenario.

The Competition and Markets Authority (CMA) can prohibit any mergers that qualify for investigation under UK merger control that may be expected to result in a substantial lessening of competition (SLC).

There are, broadly speaking, two types of mergers:

  1. horizontal mergers—transactions between firms supplying competing products/services

  2. non-horizontal mergers—transactions between either firms operating at different levels of the supply chain (vertical mergers), or firms supplying products/services at the same level of the supply chain but which do not compete (conglomerate mergers).

The CMA has adopted certain guidance issued by the former Office of Fair Trading (OFT) and Competition Commission (CC), in particular the joint OFT and CC merger assessment guidance (the Merger Assessment Guidelines).

For details of ongoing UK merger investigations, see further UK mergers–case tracker.

Assessing mergers–the SLC test

The test to be applied by the CMA when assessing mergers is whether a transaction will result in an SLC.

The CMA views competition as being a process of rivalry between competitors by offering customers a better deal. Such rivalry creates incentives for competitors to cut prices, increase output, improve quality, improve efficiency