Addressing five criticisms of the CMA on mergers

In recent years there have been five main criticisms levelled at the CMA about its approach to mergers:

1. It is more aggressive than other antitrust authorities
2. It is more hostile to behavioural remedies
3. It doesn’t engage effectively with merging parties
4. Its decisions are subject to limited judicial oversight
5. It does all this in international deals that it had no business reviewing to begin with.

But the past year has seen important developments in each of the above areas.

1. In 2023/24 the CMA reviewed 54 mergers at Phase 1 and nine at Phase 2, of which only a single one was blocked – and even Microsoft/Activision was subsequently restructured and cleared. Meanwhile the European Commission took a harder line than the CMA on Booking/etraveli, having also done so previously on Amazon/iRobot and Meta/Kustomer.
2. Today’s announcement on Vodafone/3 makes clear the CMA is more open to accepting behavioural remedies where there is a sector regulator capable of overseeing them, so this should apply for example in telecoms (because of Ofcom) and big tech (the DMU).
3. The CMA has reformed its Phase 2 processes to give merging parties more opportunities to engage with the decision-makers and to do so earlier in the process, including on remedies.
4. The Court of Appeal’s judgment on Cérélia clarified that the Competition Appeal Tribunal can review CMA merger decisions not only on questions of vires and law; it can also review findings of fact and the CMA’s evaluations of those facts, and in doing so it could expect to be more critical than a non-specialist court.
5. If companies don’t believe their deal creates a competition issue in the UK they can engage early and informally with the CMA through an informal briefing paper to explain why. The use of this informal route has tripled since Brexit and in 2023/24 156 briefing papers were submitted, with only 15 being called in for further review.

A particular area of controversy at the moment is the CMA’s reviews of AI partnerships and acqui-hires. The CMA has wide jurisdiction to review these because, under UK law, a relevant merger situation can arise if one company has ‘material influence’ over another – a lower threshold than exists in the EU.

Given that, companies understandably want predictability on the CMA’s likely approach. The CMA finds it hard to give absolute predictability because these are fast-moving markets and the cases have few or no precedents (unless the CMA were to announce it will clear every such merger, or block every one, which is unlikely). Meanwhile the UK government wants to maximise investment in the UK in this space to contribute to its economic growth mission. There are important public policy issues here so the government is right to revisit the Strategic Steer to the CMA. I hope the new one will give some clear, actionable guidance to the CMA that is consistent with its statutory duties, and I would expect the CMA to take that properly into account.

It will take time to see how the above developments play out, and I don’t pretend the UK competition regime is perfect, but I do think it’s important for companies to understand the steps that the CMA is taking.