CMA consults on changes to its merger control guidance on jurisdiction and procedure

CMA consults on changes to its merger control guidance on jurisdiction and procedure

On 20 June 2025 the CMA launched a consultation on a number of proposed changes to its current merger control guidance on jurisdiction and procedure in order to reflect its 4P's framework embedded in the CMA's new Mergers Charter. The framework, which consists of the principles of pace, predictability, proportionality and process, was adopted in response to the Government's Strategic Steer which calls for the CMA to support and contribute to its overriding national priority of economic growth and prioritise pro-growth and pro-investment interventions and minimise uncertainty for businesses. The proposed changes were foreshadowed in Sarah Cardell's announcement of 13 February 2025  (see our blogpost here).

The proposed amendments consist of:

• Clarifications to the CMA's approach to the 'material influence' and 'share of supply' tests
• Changes relating to the CMA's approach to global mergers
• Changes relating to the pre-notification and phase 1 merger process and to the current Merger Notice template

Announcing the consultation Joel Bamford, Executive Director for mergers at the CMA, said that "with all these measures we are delivering on our commitment to operate a best-in-class merger regime for everyone involved – and ultimately deliver great outcomes for UK businesses and consumers".

Responses to the consultation are invited by 1 August 2025.

 

Clarifications to the CMA's 'material influence' and 'share of supply' tests

Compared to other leading international merger control regimes, the jurisdictional thresholds of the UK regime are broad and can create uncertainty for businesses over whether or not their transaction will be reviewed by the CMA. The threshold for material influence is low and the share of supply test is widely defined, resulting in an unusually wide jurisdiction for the CMA.

Material influence test

The ability to exercise material influence is the lowest level of control that may give rise to a relevant merger situation. It refers to the acquirer's ability to materially influence, directly or indirectly, the policy of the target. The test is vague and has been a source of uncertainty for businesses. The CMA has taken jurisdiction based on material influence in several cases, sometimes at very low levels of shareholding.

The Draft Revised Guidance aims to clarify the CMA's approach to the assessment of material influence by expanding on the main factors that can either individually or collectively confer material influence, including examples of situations or factors that are unlikely to confer material influence.

It confirms that shareholdings with voting rights of less than 25% will be unlikely to provide material influence in the absence of other factors, and that only in limited circumstances a shareholding of less than 15% could provide material influence where there are other significant factors.

Share of supply test

The share of supply test, under which the CMA can take jurisdiction over transactions that give rise to a 25% share of supply of goods and services in the UK, has the potential to be widely defined and can result in an unusually wide jurisdiction for the CMA.

The Draft Revised Guidance clarifies that the CMA will typically only focus on the criteria listed in the Enterprise Act 2002 when determining whether the 25% threshold is met, and that in determining the description of goods or services it will consider those that are relevant to the potential competition concern that is being investigated. Reference is also made to the case law where the CMA has considered the application of the share of supply test.

The CMA recognises that it can only operate within the boundaries of the legislation itself and is therefore limited as to the changes it can make in practice, but the Government has also announced that it will launch a consultation on proposals for legislative reform in order to improve the pace, predictability and proportionality of the current regime. It has identified the material influence and share of supply tests as creating unpredictability for businesses which it will seek to address through legislative changes.

 

The CMA's approach to global mergers

The current guidance provides that the CMA can take into account any merger control proceedings in other jurisdictions when deciding whether to call in a transaction for investigation on its own initiative. The Draft Revised Guidance provides greater clarity around the circumstances under which it is likely to apply this discretion.

The CMA intends to take a more proportionate approach to global transactions and will distinguish between transactions that have a direct impact on the UK, which it is more likely to prioritise for investigation, and those that mainly concern global markets and where measures taken by other enforcers are able to address any UK concerns, which it is less likely to investigate. This should reduce the burden of duplicate investigations for businesses.

These changes will be reflected in the CMA's Guidance on the mergers intelligence function.

 

Updates to the pre-notification and phase 1 merger processes and the Merger Notice template

The CMA has set itself a new target to complete pre-notifications within 40 working days as opposed to the current 65 working days. Proposed changes to the Merger Notice template are designed to ensure that the CMA is able to meet this target, by focussing on information that is most relevant to the CMA's investigation, such as prioritising the most relevant theories of harm and engaging with third parties. The CMA will also publish a case webpage announcing that it is starting pre-notification, unless the parties are able to explain why the merger should not be made public.

The Draft Revised Guidance contains a new section on interaction with the merger parties during pre-notification which will typically include an invitation for the merger parties to provide a teach-in session for the case team in the early stages of pre-notification, to provide relevant background on the merger parties and the industries concerned.

The case team will arrange an informal update call at around 20 days into pre-notification and a further call shortly before starting its formal investigation, setting out the case team's current thinking and an overview of the initial feedback received from third parties, to allow the parties to provide relevant submissions and consider potential remedy proposals.

The current target for straightforward phase 1 decisions will be reduced from 35-working days to 25-working days. The CMA expects that such clearance decisions will be substantially shorter than under current practices and will be more akin to the summaries published of current decisions.

The CMA will apply the new 40 working days pre-notification target for draft Merger Notices received after 20 June 2025 and it will implement the new 25-working day for cases where the initial draft Merger Notice is received after 20 June 2025.

 

Comment

The consultation follows a recent CMA consultation on its approach to remedies, including making greater use of behavioural remedies and remedies that lock in efficiencies or preserve customer benefits. In addition, the Government is expected to bring forward a consultation on legislative changes to the UK merger control regime, with particular focus on improving the clarity around the jurisdictional thresholds of material influence and share of supply, which are notoriously broad and vague. Whereas it is still early days, and we are awaiting the outcome of the CMA's responses to these consultations, increased clarity and possibly a narrowing of the CMA's currently very broad jurisdictional thresholds will of course be welcome news for those looking to invest in the UK.