Relevant Merger Situation

The Competition and Markets Authority applies three tests when deciding whether a merger qualifies for investigation under the Enterprise Act 2002: the turnover test, the share of supply test, and (since amendments extending the regime) a hybrid test. Under the turnover test, the business being taken over must have a UK annual turnover of at least £100 million. Under the share of supply test, the merging businesses together must reach a share of at least 25% of the supply of goods or services of a particular description in the UK, or a substantial part of it, and that share must be expected to increase as a result of the merger; one of the businesses must also have UK turnover exceeding a lower threshold. A merger meeting at least one of these tests can be examined by the CMA to assess whether it may be expected to result in a substantial lessening of competition.

Merging businesses covers acquisitions, takeovers and joint ventures where two or more enterprises cease to be distinct. Where the CMA identifies a relevant merger situation and has competition concerns, it can accept undertakings, refer the case to an in-depth Phase 2 market investigation, or ultimately block or unwind the merger.