By John Colahan, Jonathan Parker and Calum Warren
On 16 June 2017, following a public consultation on proposed changes, the UK Competition and Markets Authority (CMA) published the “Mergers: Exception to the duty to refer in markets of insufficient importance” guidance, which increases the thresholds for the application of the CMA’s so-called “de minimis” (or small markets) exception. Of lesser significance, the CMA’s updated de minimis guidance also incorporates a number of other minor textual clarifications and now includes references to the CMA’s more recent decisional practice and other guidance.
By way of background, the CMA has a duty to refer a merger to an in-depth Phase 2 investigation under section 22 or 33 of the UK Enterprise Act 2002 if it believes there may be a realistic prospect that the merger will result in a significant lessening of competition. In accordance with the current guidance contained in the CMA’s “Mergers: Exceptions to the duty to refer and undertakings in lieu of reference guidance”, the CMA may apply the de minimis exception to the duty to refer if the aggregate size of the market(s) concerned are below certain specified thresholds. The current thresholds are set at £10 million below which the CMA may apply its de minimis exception, and £3 million below which the CMA generally will not consider a reference to a Phase 2 investigation justified.
The increased thresholds in the CMA’s updated de minimis guidance are as follows:
- The threshold below which the CMA may apply its de minimis exception is now set at £15 million. Namely, the aggregate size of the market(s) concerned must now be below £15 million, as opposed to £10 million previously
- The threshold below which the CMA generally will not consider a reference justified is now set at £5 million. Namely, the CMA generally will not consider a reference to an in-depth Phase 2 investigation justified if the aggregate size of the market(s) concerned is below £5 million, as opposed to £3 million previously — unless a clear-cut divestiture remedy is, in principle, available.
The CMA’s updated de minimis guidance follows the publication of a consultation document in January for the purposes of eliciting feedback from third-party stakeholders on the proposed increases in the de minimis thresholds that the CMA has adopted. In addition to the updated de minimis guidance, the CMA has also published a summary of the stakeholder responses to the CMA’s consultation document — this summary contains views on the key themes covered by the responses.
The CMA’s updated de minimis guidance replaces the current guidance contained in Chapter 2 of the CMA’s general “Mergers: Exceptions to the duty to refer and undertakings in lieu of reference guidance” — the remainder of which continues in force.