Merger Controls First Edition - J Sagar Associates

United Kingdom
Overview of merger control activity during the last 12 months
Number of OFT merger decisions
Nigel Parr & Mat Hughes
Ashurst LLP
In the year ending 31 March 2011, the UK’s first stage merger authority, the Office of Fair Trading (“the OFT”) reported
that it had published a total of 73 merger decisions, which is about the same number of decisions as in the two preceding
years (72 in 2009/10 and 80 in 2008/9). However, this is about a third of the level of merger decisions published by the
OFT in the peak year of 2005/6 (210 decisions).
First stage outcomes
Of the 73 cases decided by the OFT in 2010/11, 14 mergers were found not to qualify for investigation (19 per cent) and
43 mergers were cleared unconditionally (58 per cent). As regards the remainder, 8 mergers were referred to the
Competition Commission (“the CC”) (11 per cent) for a second stage merger review, 4 were cleared by the OFT subject
to undertakings in lieu of reference (5 per cent) and 4 were potentially problematic but were cleared unconditionally by
the OFT using the de minimis exception (5 per cent).
Considering the three years ending 31 March 2011, a similar picture emerges. 15 per cent of mergers were found by the
OFT not to qualify for investigation and 62 per cent of mergers were cleared unconditionally. As regards the remainder,
10 per cent were referred to the CC, 7 per cent were cleared subject to undertakings in lieu of reference and 7 per cent
were cleared by applying the de minimis exception. Since 2007, the de minimis exception has been applied 18 times.
The increased use of the de minimis exception in recent years is discussed in more detail under the section on “New
developments in jurisdictional assessment or procedure” below.
It is also notable that despite having a voluntary regime where parties are free to decide not to notify their transactions,
the OFT frequently concludes that a merger does not qualify for investigation. These cases are probably explained in part
by the UK jurisdictional thresholds (particularly the share of supply threshold – see further Chapter 48 of The International
Comparative Legal Guide to: Merger Control 2011 (The ICLG to: Merger Control 2011) not being “bright line” thresholds
which are simple to apply, and partly by the caution of some parties (or their advisers) in desiring the legal certainty of the
OFT’s conclusion on a case.
Second stage outcomes
Two general points can be noted as regards the CC’s decisions over the three years ending 31 March 2011. The first point
is that, of the 20 merger references made by the OFT during this time period, just under two-thirds related to completed
mergers (13) and just over one-third related to anticipated mergers (7). However, all except for one of the anticipated
mergers were abandoned by the parties following reference to the CC. Accordingly, almost all recent CC reports relate to
completed mergers. Against this background, it is perhaps not surprising that the UK government is consulting on whether
pre-completion merger filings should be made mandatory in the UK (see further the section on “Reform proposals” below).
Secondly, of the 12 merger inquiries that were completed by the CC in the 3 years ending 31 March 2011, 7 resulted in
unconditional clearances (58 per cent) and adverse findings were reached in 5 cases (42 per cent). This is similar to the
position over a longer time. Of the 57 second stage inquiries conducted by the CC under the Enterprise Act 2002 (all
concluded from February 2004 onwards), 31 were unconditionally cleared (54 per cent) and adverse findings (requiring
remedies or outright prohibition) were reached in 26 cases (46 per cent).
New developments in jurisdictional assessment or procedure
There have been a couple of significant developments in policy and procedure in UK merger control in the recent past.
First, the OFT has responded to criticism that its first stage procedures are too detailed and onerous for transactions which
the parties accept will inevitably require an in-depth second stage review by the CC. A “fast track” reference procedure
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