WIREDGOV

The CMA has set out actions resulting from its review of the use of merger notice forms and initial enforcement orders (IEOs).

In its 2015/2016 annual plan, the Competition and Markets Authority (CMA) committed to review its use of both of these instruments to identify ways in which to improve their effectiveness and see where it could lessen the requirements and restrictions on merging businesses.

The review found that both merger notices and IEOs are generally being used effectively by the CMA and often work well for companies and their advisers. It also identified further steps it can take to ensure its information requests are more targeted and proportionate and to ensure more standardised use of IEOs.

The merger notice sets out the information required to notify a merger to the CMA whereas IEOs are imposed during phase 1 investigations to prevent merging companies taking steps which may prejudice subsequent actions by the CMA. Parties can ask for derogations to allow actions which would otherwise be in breach of the IEO.

As part of the review, the CMA looked in depth at a number of merger cases and also sought views from more than 20 law firms that regularly engage with it - of which 18 responded.

As a result of the review, the CMA plans to:

• clarify the existing guidance notes and make other changes to its merger notice so that companies understand information requests better
• where appropriate, hold pre-notification meetings with merging parties (and their representatives) to obtain relevant information and better understand markets earlier on in the process, which will be particularly helpful in mergers involving small and medium-sized enterprises
• publish additional guidance on the CMA’s approach to derogations from IEOs so that companies have a greater understanding about when these might be used

The CMA plans to implement these recommendations by September 2016.

Sheldon Mills, Senior Director of Mergers, said:

We are committed to striking the right balance between targeting those mergers which could harm competition - whilst at the same time streamlining the process and reducing the requirements on businesses where possible.

The review found that our use of merger notices and enforcement orders is working well. This review has been really useful in helping us set out some practical suggestions to further improve the pre-notification process and the merger notice.

Ultimately, pre-notification is most effective when the CMA works together with businesses and their advisers to ensure that the information and scoping work done in this period is efficient and effective. The recommendations, once implemented, will help that process work even better.