Overview
For additional guidance, please refer to Steptoe's COVID-19 Resource Center.
The UK competition regulator, the Competition & Markets Authority (CMA) has provided guidance on its expected approach to merger assessments during the COVID-19 pandemic. While the timescales and substantive assessment of a merger's effects on competition remain unchanged, the CMA has made a number of adjustments to its working arrangements in order to meet deadlines and progress cases. However, it is likely that some aspects of investigations may be subject to some delay.
Information Gathering
Substantiated claims that a business (whether a merging party or third party) is encountering difficulties brought about by the current crisis will generally constitute a reasonable excuse for not responding by a specified deadline to a CMA's statutory information request under section 109 of the Enterprise Act. In such circumstances, the CMA is therefore unlikely to impose penalties and may "stop the clock."
The Timing of Investigations
Although the statutory deadlines applicable to the CMA's work have not been altered, it is expected that the COVID-19 pandemic will affect the expedient running of investigations, in particular during the pre-notification process because of difficulties in obtaining information from the merging parties and third parties. The CMA will take steps, where possible, to mitigate any delays in third party engagement (for example, by publishing Invitations to Comment during the pre-notification process). Unlike other competition authorities, the CMA is not currently asking merging parties to delay merger notifications. However, merging parties are encouraged to consider whether some filings could be postponed. They are also required to provide adequate information about the likely timing of the case when submitting the proper form to the CMA, as well as update the authority regularly regarding any changes.
Meetings and Hearings
All meetings and hearings during the formal investigation process are being conducted remotely via videoconferencing or telephone. The "site visits" occurring during the early stages of a Phase 2 investigation will not take place at present. The CMA will arrange alternative opportunities to meet (remotely) key operational staff and gain a better understanding of the parties' businesses.
Interim Measures
Any requests from merging parties for changes to interim measures in completed mergers resulting from operational challenges caused by COVID-19 will be assessed by the CMA on a case-by-case basis. The CMA will continue to impose interim measures in line with its usual practice, and is unlikely to lift existing interim measures, in order to ensure that the pre-merger competitive structure of the market is preserved during its review. Derogations (provided that they are fully specified, reasoned and evidenced) can be granted where merging parties prove that such steps are necessary to ensure the viability of their businesses, and appropriate safeguards are put in place to ultimately protect UK consumers as part of the merger review process.
Substantive Assessment
The standards by which mergers are assessed during the COVID-19 pandemic have not been changed. Notwithstanding the significant short-term impact across the UK as a result of fluctuations in market conditions, the CMA will carry out rigorous merger investigations based on evidence in order to carefully consider what lasting structural impacts a merger might have on the markets at issue and protect the interests of consumers in the longer term. The CMA is aware that the current circumstances may lead to additional submissions that firms involved in mergers are failing financially and would have exited the market absent the merger in question. These claims will be assessed on a case-by-case basis in a fair and transparent way.
The Guidance can be found here.
