How new reforms and the Mergers Charter aim to speed up UK competition reviews

On Christmas Eve, 2024, Prime Minister Keir Starmer, Business Secretary Jonathan Reynolds and Chancellor Rachel Reeves wrote to watchdogs, including the Competition and Markets Authority (CMA), telling them to remove barriers to economic growth. Subsequently, on 22 January 2025, various news sources reported that Marcus Bokkerink, head of the CMA was effectively ousted by the Business Secretary Jonathan Reynolds, though Chancellor Rachel Reeves said he had resigned so a new chair could be found in line with the government's new strategic direction. 

In his stead, Doug Gurr was appointed to serve as interim chair. Mr Gurr is the director of the Natural History Museum and the former country manager of Amazon UK.

Each Parliament, the government publishes a strategic steer to the CMA and on 13 February 2025 the Department for Business & Trade published a consultation on the subject of ‘Strategic steer to the Competition and Markets Authority’.

That steer offered obvious elements such as ‘free and fair competition and effective consumer protection support growth by driving forward innovation, increasing productivity, and encouraging investment’, but more telling given the context are elements such as ‘the steer applies to all aspects of the CMA’s activity over which it has discretion, including how it engages with … businesses affected by its work’.

The announcement by Sarah Cardell, CEO of the CMA, announcement on 13 February, the same day as the government’s draft strategic steer was published, of the 4Ps (pace, predictability, proportionality and process) is telling of the urgency and importance the CMA senior staff placed on the underlying message in the draft steer. 

The 4Ps

In relation to pace, Sarah Cardell’s announcement focused on mergers and the reduction of the time it takes to deal with mergers, particularly those that ultimately are cleared (either unconditionally or with remedies). As an example, the suggestion was to adopt a new KPI such that the pre-notification phase for mergers would be reduced to 40 working days from the then current 65. In relation to predictability, noting the voluntary regime in the UK, it was noted that the two jurisdictional tests of ‘material influence’ and ‘share of supply’ can create uncertainty. 

The announced framework identified greater clarity on those tests through guidance. 

In relation to proportionality, the framework identified a review of the CMA’s approach to remedies, particularly for transactions that deliver pro-competitive investment benefits. 

In addition, consideration will be given to transactions where the actions of non-UK competition authorities may be sufficient and appropriate to address any issues not of a distinct and direct UK impact. As regards to the process, the framework announcement identified the publication in March of a Mergers Charter.

The Merger Control 4Ps

As summarised in a speech by the CMA’s Chief Strategy & External Affairs Officer, Jessica Lennard, on 25 March 2025, the CMA launched a package of substantial reforms including:

• Development of new KPIs for significantly shorter end-to-end merger reviews.
• Consultation on the approach to merger remedies, focusing on both the efficiency and pace of the merger control process, and ensuring a balanced application of different types of remedies.
• Issuance of new guidance to elucidate how the CMA will apply the tests to determine its jurisdiction over investigating deals.
• Government announcement regarding a consultation on refining merger control tests to support the CMA’s evolving approach with legislative backing.
• Implementation of a targeted outreach series to reduce barriers to direct engagement, including more senior meetings early in the process and fostering deeper relationships with startups and investors.
• Introduction of a Mergers Charter that consolidates the above initiatives and outlines what businesses can expect from a CMA merger review, as well as the expectations the CMA has from businesses and their advisors in return.

In a little over one thousand words, the CMA’s Mergers Charter sets out the CMA’s statement of how the 4Ps will apply to mergers reviews and investigations. The Mergers Charter is a high level, principles document, a statement of intent which will be supported by more guidance, designed specifically for businesses and investors to explain the CMA merger review process. As the Mergers Charter is not published pursuant to a specific statutory requirement, it is doubtful that the Mergers Charters is legally binding. However, stakeholders are likely to consider using the Mergers Charter as a basis for holding the CMA accountable, where there is material digression between a particular case and the expressions in the Mergers Charter.

While the Mergers Charter has many good words it is two-sided. The message to business is we, the CMA, will act consistent with the intent of the 4Ps, but to do so businesses need to reciprocate.

Pace

The document identifies that to operate at pace the CMA’s information gathering exercise will be targeted and proportionate, that investigations will be streamlined to focus on the important emerging areas of potential concern and seek to reach milestones ahead of statutory time limits and in line with the CMA’s KPIs. To do this, businesses must make the effort to attend meetings with appropriate personnel, provide information in a timely and complete manner and provide responses that are comprehensive but also streamlined.

Businesses and in particular their advisors can be reluctant to respond to questions without having fully digested the evidence and considered the ramifications of their responses. A classic example would be a Request for Information from the CMA, with several key questions, one of which is ‘what is the relevant market’, and the parties have one week to respond. Naturally, the CMA would like a natural response to this question, but businesses and their advisors will be wary of communicating in this fashion, given the consequences in terms of market share of statements they might make in haste.

Predictability

In relation to the CMA’s jurisdiction, the main issue is that the legal test includes a ‘share of supply’ test, which applies if purchaser and target businesses are active in the supply or purchase of goods or services of the same description, and if the aggregate share of such supply is 25% or more of all such supply in the United Kingdom or a substantial part of it. This test is much broader than a market share test that is a common element of the jurisdictional test in many countries. To quote the CMA’s own guidance document, ‘the group of goods or services to which the jurisdictional test is applied need not amount to a relevant economic market’, and ‘the share of supply used may correspond with a standard recognised by the industry in question, [but] this need not necessarily be the case’. 

In the Mergers Charter, inter alia, the CMA identifies it will encourage engagement with CMA staff and encourage the use of informal briefing papers to seek comfort on whether the CMA is likely to review a deal. The quid pro quo demanded by the CMA is that engagement between business executives and the CMA should be conducted in a full and frank manner, and that businesses should keep the CMA updated and share relevant information directly with the CMA, rather than the CMA learning of it through other channels. An example, this author suggests, is that if there are potential competition issues, these should be raised by the businesses, not avoided only for the CMA to find out itself following enquiries of customers. 

Proportionality

The Mergers Charter states the CMA is committed to acting proportionately, including decisions on which deals to call-in for review and minimise burdens on business while conducting the review necessary to reach a robust outcome. To do so, the CMA expects businesses to provide clear, complete and accurate information and make submissions that are focused on the main issues. 

Akin to the earlier comment regarding predictability, businesses and their advisors tend to be reluctant to be definitive on some key issues, such as market definition. To a material extent, this is a function of the law. A business is at liberty to buy another business. It is for the authority to claim and prove, in court, if necessary, that the relevant anti-competitive test has been met and so block the transaction. A frank approach in this scenario is only likely when P buys T from S, and P recognises that there is an issue concerning a part of the business acquired, so P seeks to retain the part of T it believes it should be able to keep, and decides to seek as quick and easy a resolution with the CMA in relation to the ‘issue’ part of T’s business (typically through partial divestment).

Process

A key element in the Mergers Charter regarding process is that the CMA is committed to ensuring businesses have a clear understanding of the issues that remain of potential concern. The quid pro quo is that the CMA expects senior business personnel to engage directly with the CMA, and advisors to provide and facilitate constructive and timely engagement.

The comment on this is a leitmotif of the Mergers Charter. The CMA will be more ‘business like’ if in return businesses and their advisors focus on the key points, engage on them with the CMA and, by strong implication, do not sit on the fence or seek to hedge their bets on key aspects, including market definition.

Observations 

The need for the Mergers Charter is clear if somewhat subtly expressed by Jessica Lennard in her speech. She notes that approximately 50,000 deals are announced each year as regards the UK, and identifying 2024 as a typical year, 38 were formally investigated, six were subject to a Phase 2 (ie, in-depth) investigation, one was abandoned by the parties, and one was prohibited by the CMA.

She then states, “but that’s almost beside the point if perceptions of our approach, and the real-life experiences of companies going through these processes, are undermining confidence”. It seems to this author that of the approximate 1,000 deals considered by the CMA each year, the experience has been less than positive for many businesses whose transactions are considered but which are not then investigated (i.e., about 960 deals, so approximately 4 deals every working day of the year).

In this regard it should be noted that businesses whose transactions are being considered but ultimately are not investigated by the CMA are typically subjected to significant information demands, require the purchaser to spend significant money on external advisors and consume material management resources, at a time when if the transaction has already completed the management want to get-on with integration and realisation of transaction synergies.

To many, a quick read of the Mergers Charter would likely solicit the reaction, ‘I thought they would do this already’. For example, in relation to predictability, there is the statement that the CMA will be ‘as clear as possible about our jurisdictional remit and make use of mechanisms (such as guidance, business and advisor outreach sessions, and clear explanations in decisions) that can help give businesses greater certainty’. Competition practitioners study CMA decisions and, in this author’s view, considers them to be succinct and in general helpful. 

There is the weakness common among all competition authorities’ decisions that having analysed the transaction, if their findings do not ultimately turn on market definition, then the authority will not make a clear determination as to market definition. There are many reasons for this, and, in this author’s opinion, this aspect is unlikely to change.

Time will tell how useful the Mergers Charter is in changing from ‘business as usual’ to a new environment where, as stated at the start of the Mergers Charter, ‘we reach the right decisions as quickly as possible, while minimising the burden on business’. Either way, it will be interesting to see if the government takes up a point raised by Sarah Cardell in her framework announcement, “It is open to government to go further, through legislative change, both by locking some of these changes into the statutory framework and making further legislative changes to embed our 4Ps approach”.