EU, Competition and Regulatory partners Helen Kelly and Kate McKenna discuss Merger Control issues and their recommendations for companies in advance of the Brexit deadline, in particular relating to the UK Competition and Markets Authority and the possibility of more merger control filing requirements.
The UK Competition and Markets Authority (“CMA”) may ‘call-in’ large transactions under review by the European Commission which have not been finally determined by ‘Brexit Day’:
As the UK will no longer form part of the EU Commission’s ‘one-stop-shop’ regime in a ‘no deal’ Brexit, if the EU Commission has not issued a decision on a transaction by 29 March 2019, then the CMA could become an ‘extra’ jurisdiction where a merger control filing requirement which was not anticipated before ‘Brexit Day’ will arise.
Our recommendation:
Companies which have notified or intend to shortly notify the acquisition of businesses with activities in the UK will need to consider whether this issue is relevant to them, and if so, whether to begin pre-notification discussions with the CMA noting that the CMA is likely to monitor non-notified transactions falling under EU jurisdiction over which it may obtain jurisdiction after ‘Brexit Day’.
Potential for more merger control filing requirements:
As the UK will no longer form part of the EU Commission’s ‘one-stop-shop’ merger notification regime in a ‘no deal’ Brexit, large transactions involving companies active in Ireland and the UK which would have previously required a single EU merger notification may now be subject to additional merger control filing requirements and for example:
- require joint notification to the EU Commission and the CMA (where both EU and UK jurisdictional thresholds are met and the merger gives rise to material overlaps in the UK); or
- require joint notification to multiple EU countries, including the Irish Competition and Consumer Protection Commission (“CCPC”) and the CMA (where the exclusion of UK turnover means that the transaction no longer meets EU jurisdictional thresholds); or else
- continue, as per pre-Brexit, to require sole notification to the Commission (where its activities in the UK are not material
Our recommendation:
Companies contemplating the acquisition of businesses with activities in the UK will need to carefully consider where merger notifications will be required and what are the implications for timing and complexity.
Where multiple filings are required in parallel, companies should seek advice on ways to streamline this process to minimise the delay to completion.