For those of you interested in UK merger control here are some headline facts and figures from the third quarter of the year:
– Only eight Phase 1 cases opened
- Half the average number for Q3 in previous years and a record low for any quarter since the CMA was established in 2014.
- This follows on from a record Q2 low
– Six Phase 1 decisions announced (also a record low), comprising
- 2 unconditional clearances
- 4 references to Phase 2 subject to undertakings being offered and accepted
Taking the past 50 merger cases, the proportion of Phase 1 cases involving remedies or reference to an in-depth Phase 2 investigation is at its highest since mid-2017.
– Ten Phase 1 decisions published, including much of interest
- Diversion analysis using Google Adwords
- Useful event analysis based on product exit
- Many examples of problematic internal documents – some very problematic!
- A rare finding of coordinated effects
- CMA concern over post-completion worsening of terms
- Evidence given in a previous case coming back to bite the parties
- CMA exhortation not to solicit customer views in the way the parties did
- Merger rationales that added to competition concerns
- A rare fast-track reference case
- A strikingly different conclusion from German and U.S. authorities
- An entry threat from Google not seen as sufficient to mitigate competition concerns.
– Three Phase 2 cases completed, comprising
- 1 case abandoned
- 1 divestment remedy
- 1 clearance
Taking the past 20 Phase 2 merger decisions, 60% have been prohibited or abandoned by the parties – a record high.
– One Phase 2 Provisional Finding
- Adverse finding
A few things to watch out for:
- October has been the peak month for the number of CMA investigations opened. This will be an interesting test of whether the number of cases shows signs of recovery.
- To date the rate of Phase 1 clearance for cases opened in the fourth quarter has been the lowest of the four quarters. Will this be repeated and maintain the high apparent rate of CMA intervention?
- The profile of cases awaiting decision is skewed towards sectors with a record of CMA intervention well above average. Will they buck the trend?
As in the previous quarter – a low level of public investigations but a high proportion of these deemed problematic.
But are the published figures really what they seem? And are companies interpreting them correctly when they assess UK merger control risk?………
My next Merger Insight discussion (‘What’s Wrong With The UK’s Merger Control Statistics – And What It Means For Merging Companies) on October 14th will be discussing these questions.
Here is a chart showing the overall pattern of CMA merger decisions in its first six years.