Beyond Brexit: Planning For Changes To The Application Of EU Merger Control

• Published date: 06 August 2020
• Subject Matter: orporate/Commercial Law, Anti-trust/Competition Law, M&A/Private Equity, Antitrust, EU Competition
• Law Firm: Mayer Brown
• Author: Mr David Harrison and Julian Ellison

Overview

The deadline for the UK government to make a request to extend the Brexit transition period under the Withdrawal Agreement has now passed. While it may technically be possible for an alternative form of extension to be negotiated later in the year, this would give rise to significant legal and practical issues and would involve agreement on a continuing UK contribution to the EU budget. It is therefore prudent for businesses to assume that the transition period will end on 31 December 2020 (Completion Day).

The interface between the EU and UK merger control regimes may therefore present businesses with some challenges in the coming months. This update (i) outlines the transitional arrangements for 'live' EU merger investigations at the end of the year; and (ii) examines the practical impact of these arrangements on transaction planning.

The transition period

During the transition period, the jurisdiction of the European Commission (Commission) and the UK Competition and Markets Authority (CMA) over notifiable mergers and acquisitions remains unchanged, with the EU one-stop-shop principle continuing to apply in relation to the United Kingdom. The relevant UK turnover of merging parties will therefore need to be taken into account when establishing whether a transaction satisfies the EU Merger Regulation (EUMR) jurisdictional thresholds. Where this is the case, the Commission will retain exclusive jurisdiction over that merger, including with respect to any effects in the United Kingdom. The CMA will not open an investigation unless jurisdiction is transferred under the referral request mechanisms set out in the EUMR.

At the end of the transition period (Completion Day), there will be a number of 'live' merger cases which are still under review by the Commission but where a final decision has not yet been taken. The Commission will retain exclusive jurisdiction over these cases if the date of notification falls before Completion Day (or if the Commission has accepted a referral request). Where the Commission retains jurisdiction, it will also continue to be responsible for monitoring and enforcing any commitments accepted by the merging parties, unless it agrees to transfer responsibility to the CMA.

However, the Commission will not retain jurisdiction over transactions which have not been formally notified at that time, even where pre-notification discussions are already underway.

The CMA will therefore monitor the Commission's cases towards the...