M&A – reforms to UK merger control in the Digital Markets, Competition and Consumers Act

The Digital Markets, Competition and Consumers Act 2024 (DMCC Act), which received Royal Assent on 24 May 2024, will introduce significant changes to the UK’s competition law regime, including new merger control thresholds.

The changes to the UK merger control regime introduced by the DMCC Act include:

• Jurisdictional thresholds – There are a number of changes to the jurisdictional thresholds under the UK merger control regime:

  • the turnover-based threshold relating to the target of a merger will be raised from the current £70 million to £100 million;

  • there will be a new “small merger safe harbour” which will exempt transactions from merger review where each party’s UK turnover does not exceed £10 million; and

  • under a new acquirer-focused threshold, the CMA will have jurisdiction to review a merger where: (i) one party has an existing share of supply of a category of goods or services of at least 33% in the UK (or a substantial part of the UK), and a UK turnover exceeding £350 million; and (ii) another party has sufficient UK nexus. This is aimed primarily at capturing certain vertical and conglomerate mergers, in particular acquisitions perceived as reducing dynamic competition and risking the development of new products or services.

• Merger control timetable – There will be a new “fast-track” route for parties subject to merger review in the UK, allowing parties to request a fast-track referral to Phase 2 at any stage of pre-notification or Phase 1 (with discretion for the CMA as to whether or not to accept the fast-track referral request).

• Duty to preserve documents – Where a person knows or suspects that an investigation is being, or is likely to be, carried out by the CMA, they must not falsify, conceal, destroy or otherwise dispose of a document (or cause or permit the same) which a person knows, or suspects, is or would be relevant to an investigation. The duty arises from the point a person knows, or suspects, that an investigation is being carried out or is likely to be carried out (e.g. receiving a case initiation letter).

The scope and implications of the DMCC Act are wide-ranging. In addition to merger control, other key reforms introduced by the DMCC Act include implementing the UK’s new digital markets regime, which will see the most powerful technology firms with strategic market status having their conduct regulated by the CMA and being subject to a new mandatory merger reporting requirement, and strengthening the CMA’s role in the enforcement of consumer protection legislation.

Secondary legislation is required to implement the changes, so it is not yet clear when the various changes will take effect.

For more information on the DMCC Act, see our Competition, Regulation and Trade ebulletin here.