Category Archives: Review of 2022

Twenty Two Too

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Fully understanding the prospects for a UK merger control investigation – whether as an investor, a merging firm, or a merging firm’s rival – depends on how well you interpret the CMA’s stance towards mergers and over what period.

I find that the best-prepared look at the CMA’s track record in merger assessments over both the short- and the longer-term, in order to help evaluate what has changed and what is changing.

And they also recognise that developments in the UK can differ from the more global narratives that tend to dominate a lot of merger control commentary.

This is especially important for investors and companies from outside the UK.

With all that in mind, here’s a quick synopsis of key UK themes from my series of posts looking back at 2022 and putting it in the context of what came before:

Which of these themes is most relevant to your merger in 2023?

Phase 2 In 2022

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In my previous posts reviewing 2022 I have focused on Phase 1 outcomes.

To complete the picture here are the key figures regarding the CMA’s completed Phase 2 merger investigations in 2022…………………..

The Most To Date…

In 2022 there were 14 final decisions, the highest under the CMA and well above the previous years’ average of 10.

But for some of the merging companies involved there was good news……

Good News?…

First, the deal survival rate (8 out of 14) was the highest since 2017, the last time that survivors outnumbered terminated deals.

Second, the number of Phase 2 remedies accepted (5) was the highest number since 2016.

As I noted in my review of Phase 1 outcomes, remedies at that phase were also at their highest since 2017, a theme I’ll return to in a forthcoming post.

And third, the five Phase 2 remedies included two of the new ‘fast-track’ Phase 2 remedies that are now potentially available to merging parties – Sika/MBCC and Carpenter/Recticel.

Quick Fix Questions…

It will be interesting to see how this new policy works in practice.

Here are two questions about it worth keeping in mind….

1.How will this new fast-track process affect the incentives of the parties to offer undertakings at Phase 1 and overall case strategy at Phase 2?

2. And how might it affect the substantive competition assessment at Phase 2 and thereby change the overall enforcement pattern at Phase 2?

If you have thoughts on this, do feel free to comment.

Click here for an interesting piece on Phase 2 fast-track cases by Sofia Platzer and colleagues

More Problematic Than Not

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Number Four in my look back at 2022…..

This was the year in which there were more Phase 1 merger interventions than unconditional clearances (among Phase1 decisions published during the year) – for the first time.

Despite the very low number of published Phase 1 decisions, the number of remedy decisions was well above the CMA average (10 versus 6) and the highest since 2017.

The number of reference-to-Phase-2 decisions was just above the average for previous years (11 versus 10).

Also:

Between 2017 and 2021 the number of references had been more than twice the number of remedies.

In 2022 they were roughly even.

2022 is also, therefore, the year in which Phase 1 remedies came into their own again.

Basement Clearances

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This is the third of my posts looking back at UK merger control in 2022……….

The first looked at the low overall number of cases and the second at the near disappearance of so-called ‘de minimis’ cases.

In this post I look at Phase 1 clearance cases.

Here are the figures for Phase 1 clearance cases (in which I include ‘de minimis’ decisions)…

Four points stand out –

1.In 2022 there were just 20 Phase 1 published decisions that reported unconditional clearance, by far the lowest under the CMA.

2. And most of these were in the first half of 2022. The second half saw only 7.

3. It is the fourth successive annual fall and a sharp drop from 2021.

4. And the first year that fewer CMA Phase 1 published decisions reported clearance than did not.

Which all begs the question – Where have the clearance cases gone?

More on this in future posts………..

Much De Minished

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Continuing my look back at 2022….

One of the features of the very low number of cases in 2021 and 2022 is the tiny number of cases considered for application of the ‘de minimis’ (low market size) exception to the CMA’s duty to refer.

In simple terms this exception enables the CMA to decide that it is not worth taking further action against mergers where an investigation has shown that competition problems may arise but where the size of the markets involved and/or the effects of the competition harm are too small to justify a reference to an in-depth Phase 2 investigation

In 2021 and 2022 I am aware of only one case in each year where ‘de minimis’ was considered in a public investigation – and accepted in both cases.

In the CMA’s early years between six and nine were considered in each year, with many being unsuccessful.

It is true that, in 2017, the CMA increased the market size below which it would be likely to exercise the exception.

This inevitably takes some cases out of the CMA’s reach (by my calculation, perhaps about half of them at the original thresholds).

But it also shifted the lower de minimis boundary upwards, meaning that cases that would once not have qualified for de minimis treatment, now do so.

So where are these cases?

Perhaps there simply haven’t been many in recent times and they will reemerge in due course.

Perhaps the CMA’s Merger Intelligence Committee has paid them less attention than before.

Or maybe more are now being dealt with through the CMA’s non-public briefing paper system , under which – since 2016 – merging parties have been able to submit a short paper to the CMA setting out why the CMA should not formally investigate the deal.

If there were, say, 50-100 briefing paper cases during 2022, it would be quite plausible that 5-10 or so might feature de minimis aspects (though less clear why none would make it through to investigation).

In the absence of published data on the CMA’s briefing paper activity how likely is this scenario?

If you have views on this (or any of the above) do let me know, either in the comments box below or by dropping me a line.

A Low, A Low

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Happy New Year everyone.

As we look forward to 2023, what better time to review some of the key features of UK merger control in 2022?

Let’s start with the number of cases. (In coming posts I’ll look at other aspects).

Here’s my calculation of the number of Phase 1 published decisions by year (excluding those cases that were investigated but failed to meet the jurisdiction thresholds and national security-driven cases):

201462
201570
201660
201761
201855
201958
202047
202140
202241

The headline point is clear: the number of published Phase 1 decisions remained near its record low in 2022, despite the UK taking on responsibility for more merger cases after leaving the EU. Some predicted a big increase in the CMA’s caseload as a result.

A number of factors are relevant here, including:

  • Deal numbers – still affected by pandemic-related disruption
  • The type of deals being done
  • How selective the CMA is in the deals it chooses to investigate

What’s your view on the balance between these?

Do feel free to post your comments in the box below.