Tag Archives: CMA At 500

A Prime Source Of Groupthink In CMA Merger Cases

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How Much Tougher On Mergers Has The CMA Become?

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As discussed in an earlier post, there is a widespread view that the CMA has taken a much harsher view of mergers over the past few years.

There are many different ways of trying to measure this.

Here’s one based on my ‘CMA At 500’ analysis……

The CMA has just published it 500th merger decision. What is the picture if one compares the first 250 with the second 250?

Three striking aspects to consider

1. Number of mergers not cleared unconditionally at Phase 1 –

  • Up 29 ……………(from 67)

2. Number of mergers referred for an in-depth (Phase 2) investigation –

  • Up 26…………….(from 33)

3. Number of these Phase 2 mergers not surviving Phase 2 –

  • Up 22…………….(from 10)

These rises look dramatic in the context of 250 cases.

On further examination they show:

  1. A big swing in Phase 1 cases towards those meriting remedy or a reference to Phase 2
  2. A big swing towards reference, rather than remedy at Phase 1
  3. A big swing from clearance to termination at Phase 2

But what do these movements actually mean?

To assume that changes such as these are wholly down to a tougher CMA stance would be a very big assumption – and one with the potential to deter more deals than it should or encourage firms to misdirect efforts in making their case.

How much, for example, might instead reflect change in

  • the composition of cases coming forward, and/or
  • the composition of the cases that the CMA chooses to investigate, and/or
  • the behaviour of merging parties, rather than harsher decisions by the CMA?

And to what extent are the changes evenly spread, rather than concentrated in particular parts of the case portfolio or particular periods of time (e.g. the Covid years)?

And maybe the answers vary for each of the three ‘swing’ movements listed above.

Searching For Answers

The only way to approach these questions is to delve below the headline statistics published by the CMA and look at the features of the cases themselves.

In my ‘CMA At 500’ research I have used my assessment of the features of all 500 cases to examine these questions, including through the type of analysis discussed in this blog from 2019.

Click here if you’d like me to say more about this topic in future posts.

Do get in touch if you’d like to know more about my ‘CMA At 500’ project

The CMA At 500 – What’s Trending – And What’s Not

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In June the CMA published its 500th merger decision.

There’s little doubt that the profile of UK merger decisions has developed a lot since the CMA began. No surprise there, as a great deal can happen over 9 years.

It seems that many readers (especially advisers) are sympathetic to the first of the somewhat tongue-in-cheek narratives I set out in my previous blog, although with a more measured overarching headline, along the lines that the CMA has become much stricter on mergers.

But what lies below that sort of headline?

What exactly does it mean? And for whom?

And what call to action should it have for merging parties, investors and others?

The reason these questions are important is revealed when one looks below the aggregated statistics that the CMA publishes by using data published in case decisions.

In future blogs I plan to say more on all of this, based on recent research I have been doing looking at the CMA’s first 500 merger cases – ‘The CMA At 500’.

Comparing the first 250 and the second 250 brings out many unexpected similarities and differences.

The ‘stricter enforcement’ narrative, it turns out, is much more nuanced that it might first appear from the headline numbers and applies unevenly across different types of case.

Many companies relying on the simple headline ‘stricter trend’ in thinking about merger control risk will be well wide of the mark. The average is different from the typical.

If interested, do watch out for my blogs on ‘The CMA At 500’ or contact me to find out more about my presentation on the research.