The Competition and Markets Authority (CMA) has implemented changes to the way it conducts in-depth Phase 2 merger investigations – with guidance published today setting out the new process.



Phase 2 investigations are led by an independent panel of experts. The updated guidance sets out the way the CMA and inquiry groups will conduct investigations under the new process, with changes which:


  streamline the start of the Phase 2 investigation – enabling an earlier focus on the key issues at stake in the case
  improve the opportunities provided for all businesses affected by a merger to engage with the CMA Inquiry Group overseeing the investigation
  incentivise merging parties to bring forward credible remedies to address concerns at the earliest possible stage. 




The revised guidance is a result of extensive engagement last year with a broad range of stakeholders including businesses and their advisers on how to improve the CMA’s merger review practices and a public consultation on draft guidance that ended in January.



Respondents to the consultation welcomed the changes to the way Phase 2 investigations are conducted. Further revisions to clarify parts of the guidance were made by the CMA as a result of this feedback, which is set out in the summary of responses.



Joel Bamford, Executive Director for Mergers at the CMA, said:


  

The CMA’s phase 2 merger investigations have delivered great outcomes for businesses and consumers over the last decade, but we should always be prepared to listen to feedback and seek to improve our processes where we can.

  

Following an initial call for inputs we engaged extensively on our proposed changes to the way these in-depth investigations are conducted and have listened to the businesses and other stakeholders that responded. Having reviewed their feedback, I’m particularly pleased at the positive reaction to the new process.

  

New Phase 2 investigations using this process will allow for more agile decision-making, for example giving more scope for important discussions between the inquiry group and merging firms to take place sooner and to facilitate more engagement on remedies.




Martin Coleman, Chair of the Independent Panel of Experts, said:


  

My experience as a practitioner, and now as a CMA inquiry chair, has taught me that interaction between leaders of the merging businesses and CMA decision makers is vital to ensure robust decision-making and confidence in the system.

  

Our new process will facilitate early engagement with the merging businesses and allow for feedback as the process develops. There will be clear opportunities for the businesses to tell us in person why they believe the merger should be cleared and to discuss potential remedies at an early stage. 

  

I hope that merging businesses will take the opportunities now offered for constructive engagement.




New Phase 1 cases opened by the CMA from today (25 April 2024) which are referred for an in-depth Phase 2 investigation will be run under the new Phase 2 process.



The CMA has also made changes to its guidance on exceptions to its duty to refer mergers for a Phase 2 investigation. The revised guidance updates the CMA’s approach to the ‘de minimis’ exception, including increasing the market size threshold beneath which it may decide not to refer a merger for in-depth review. Responses from the consultation were positive, and the changes will allow the CMA to focus resources on mergers that have the biggest impact on UK consumers and businesses. 



The updated guidance documents relating to the new Phase 2 investigation process and the exceptions to the duty to refer have been published on the CMA’s website.

Notes to editors:


  The revisions to the Phase 2 investigation process are not statutory and do not change the legal framework of the Enterprise Act 2002. The major components of the CMA’s merger process, such as the use of independent panels to make final decisions at Phase 2, remain unaffected.  
  Phase 2 mergers are investigated by groups drawn from an independent panel of experts who are not employees of the CMA. 
  The CMA has updated its rules of procedure for merger, market and special reference groups (also known as CMA17). These rules have been revised to reflect changes to the phase 2 merger process.
  All media enquiries should be directed to the CMA press office by email on press@cma.gov.uk or by phone on 020 3738 6460.

CMA Introduces New Phase 2 Merger Investigation Process

The Competition and Markets Authority (CMA) has introduced changes to its Phase 2 merger investigation process, aiming to streamline the start of investigations, improve engagement with affected businesses, and incentivize merging parties to propose remedies early on.

The updated guidance follows extensive engagement with stakeholders and a public consultation, resulting in positive feedback and revisions to clarify certain aspects of the process.

The new process for Phase 2 investigations will enable more agile decision-making, early engagement with merging businesses, and increased discussions on potential remedies.

Additionally, the CMA has revised its guidance on exceptions to referring mergers for Phase 2 investigations, updating the approach to the 'de minimis' exception to focus resources on mergers with significant impacts.

The revised guidance documents for the new Phase 2 investigation process and exceptions to the duty to refer have been published on the CMA's website.



CMA Introduces New Phase 2 Merger Investigation Process

The Competition and Markets Authority (CMA) has announced changes to its Phase 2 merger investigation process, aiming to streamline investigations, enhance engagement with businesses, and encourage early remedies.