Significant reforms to UK competition law brought about by the Digital Markets, Competition and Consumers Act 2024 will come into force beginning 1 January 2025. Importantly for dealmakers, revised merger thresholds will apply for deals that have not completed or for which the Competition and Markets Authority (CMA) has not opened an investigation by 31 December 2024. Parties with ongoing or planned M&A with a UK nexus should consider whether their CMA engagement strategy should be adapted accordingly.
Earlier in 2024, the Digital Markets, Competition and Consumers Act 2024 (Act) received Royal Assent. We summarised in an earlier LawFlash the key changes that the legislation would bring. The UK Parliament has passed the Digital Markets, Competition and Consumers Act 2024 (Commencement No. 1 and Savings and Transitional Provisions) Regulations 2024 (Regulations) which sets out the timeline for key parts of the legislation coming into effect from 1 January 2025.
The UK’s revised merger control thresholds will apply from 1 January 2025. Specifically, the CMA will now have jurisdiction over deals where any of the following tests are met:
We summarised in a previous LawFlash the implications of these revised rules, in particular how the new threshold is likely to enable the CMA to take jurisdiction over a greater number of deals involving smaller targets or that pose non-horizontal concerns (e.g., vertical or conglomerate concerns).
The Regulations provide that in the transitional period before 1 January 2025 any deal which has completed or where the CMA has launched a formal Phase 1 investigation will be subject to the old thresholds.
For all other deals—including deals which have signed or where the parties are in prenotification discussions with the CMA—the new thresholds apply. As such, dealmakers engaged in M&A with a nexus to the UK, who do not expect their transaction to close by the end of this calendar year, should ensure they revisit their original CMA assessment to confirm that they have adequate protection in the event the CMA is able to assert jurisdiction under the new threshold.
Likewise, it may be plausible that deals which would otherwise have been subject to CMA jurisdiction owing to the target having turnover of more than £70 million may now be out-of-scope given the increase in that threshold to £100 million.
Importantly, it remains the case that the UK’s merger regime is voluntary, meaning there is no positive obligation to notify the CMA of a transaction or seek approval in advance, except for specific firms active in the digital space (discussed below). However, the new thresholds expand the CMA’s ability to call in deals for review, including after closing, so parties with planned M&A that could be caught by the new rules should consult with counsel to discuss engagement strategy.
The other major aspect of the Act which will come into force from 1 January 2025 is the UK’s regulatory framework for regulating the largest firms involved in digital activities.
The CMA is likely to begin the formal process of designating firms as having Strategic Market Status as soon as possible in the new year. Those firms will be subject to special rules on how they may conduct themselves and will also be under a duty to report prospective merger activity to the CMA.
The Regulations provide for certain other measures, including the CMA’s powers to gather information about how competition is working in the motor fuel industry and provisions in relation to the CMA assisting overseas competition and consumer agencies in their investigations.
Separate regulations in relation to the widespread changes to the UK’s consumer protection regime, which would see the CMA have equivalent powers to enforce consumer protection law alongside its competition functions, have yet to be implemented.
If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following: