Competition Commission (United Kingdom) - Mergers

Mergers

Under the Enterprise Act 2002 (the Enterprise Act), the OFT can review mergers to investigate whether there is a realistic prospect that they will lead to a substantial lessening of competition (SLC), unless it obtains undertakings from the merging parties to address its concerns or the market is of insufficient importance.

In order to qualify for investigation by the OFT, a merger must meet all three of the following criteria:

1. two or more enterprises must cease to be distinct;
2. the merger must not have taken place already, or must have taken place not more than four months ago; and
3. one of the following must be true:
   • the business being taken over has a turnover in the UK of at least £70 million; or
   • the combined businesses supply (or acquire) at least 25 per cent of a particular product or service in the UK (or in a substantial part of the UK), and the merger results in an increase in the share of supply or consumption.

In exceptional cases where public interest issues are raised, the Secretary of State may also refer mergers to the CC.

Where an inquiry is referred to the CC for in-depth investigation, the CC has wide-ranging powers to remedy any competition concerns, including preventing a merger from going ahead. It can also require a company to sell off part of its business or take other steps to improve competition.