What Are the Notification Requirements for Mergers in the UK?

Posted by: Olexandr Kyrychenko
Posted in: Corporate solutions
Date published: 16/03/2022

If you are considering merging your business with another, you may be concerned about notifying the authorities about your proposed merger. In this article, we look at the requirements and thresholds for notification under the UK competition law regime, as well as the reasons why you may wish to voluntarily notify the Competition and Markets Authority (CMA) about a merger.

When do I need to let a CMA know about a proposed merger?

Under UK law, merger notification is not compulsory, which means that there is no requirement to notify the CMA about a proposed merger. There is no law preventing companies from completing a merger transaction without clearance from the CMA. However, there are risks involved in failing to make a voluntary notification and benefits of doing so prior to carrying out a merger.

Why would you voluntarily notify the CMA about a merger?

If you fail to notify the CMA about a merger, you may leave your transaction open to the risk of investigation. When a merger meets certain jurisdictional thresholds, the CMA can open an investigation into the merger. The CMA may open such an investigation where it has a reasonable belief that the investigation will identify a merger situation that could result in a substantial lessening of competition. The CMA may discover an issue with the merger using its own intelligence facility or it can be notified by a complaint from another party.

Should you notify the CMA about a merger?

There are many commercial factors to consider when deciding whether to notify the CMA about your merger voluntarily, but also whether to make the merger transaction conditional on getting advance clearance from the CMA. You will need to take into account the following considerations:

The likelihood of the CMA opening an investigation, and the potential outcome.
The likelihood of another party making a complaint about the merger.
How the notification process may affect the timetable of the proposed merger and how important this is for your business operations. In cases where the transaction must be carried out quickly, you may wish to take advantage of the voluntary scheme to move forward with the transaction without any additional delays.
The relative bargaining positions of buyer and seller. The specific circumstances of the parties to the merger may impact whether you might notify the CMA voluntarily.

Submitting a Merger Notice

Although merger notification is voluntary, you must follow the prescribed procedure if you choose to notify the CMA about a merger for clearance. There is a pro-forma Merger Notice which must be used unless the CMA has granted an official waiver.

If you fail to complete the Merger Notice correctly, the CMA can reject it. Similarly, the CMA may reject your notice where it suspects that:

Your notice contains misleading or false information
You do not intend to carry out the arrangements you have set out
You fail to provide the required information, or any additional information requested by the CMA

What happens after I have submitted a Merger Notice?

After the CMA has confirmed that you have correctly submitted a Merger Notice, the body has 40 working days to provide clearance or to open an investigation. This period cannot be extended, but the CMA may ‘stop the clock’ where it attests that you have not complied with certain requests to produce documents or supply requested information. After you have supplied the requested documents or information, the CMA will start the clock on the 40-day period again. In 60 per cent of cases, the CMA issues a decision within 35 working days. If you suspect an investigation will be opened, you can request that the CMA fast track your case. To do this, you must make a request to the CMA, and if accepted, the body will aim to make a decision within 10-15 working days.

The merger notification process can be complicated; contact us today for specialist advice from our experienced team.

Contact IMD Solicitors Mergers and Acquisitions Specialists

At IMD Solicitors, our corporate solutions team specialise in the coordination and management of merger and acquisition projects and in providing advice on the legal implications of a proposed transaction. For more information, please contact Olexandr Kyrychenko on 0330 107 0106 or email us at business@imd.co.uk.

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.