UK Merger Control - How (Not) To Respond To A Request For Information And Other Lessons

The UK's Competition and Markets Authority (the "CMA") has recently imposed financial penalties for procedural breaches under the UK merger control regime, including:

failure to comply with a statutory request for information under section 109 of the Enterprise Act 2002 (a "s.109 Notice");1 and failure to comply with an interim order imposed by the CMA.2 The CMA is also expected to make increasing use of s.109 Notices, particularly when seeking internal documents from the parties to a merger (the "merging parties").3

This update considers what parties should have in mind when (i) responding to s.109 Notices served by the CMA; and (ii) addressing interim orders imposed by the CMA, given the risks arising from non-compliance under the UK merger control regime.

Failure to comply with a s.109 Notice - Hungryhouse

s.109 Notices - Requiring information to be provided

Under a s.109 Notice, the CMA is able to require a person to provide information during a merger investigation, including requiring the production of certain documents in a person's custody and control.4

Where a person fails to comply with a s.109 Notice without reasonable excuse, the CMA may impose a fixed and/or a daily penalty, subject to certain statutory maxima specified by the Secretary of State.5

The CMA may also "stop the clock" where the s.109 Notice has not been complied with by the stated deadline, and can reject the merging parties' merger notice in the event of non-compliance. Both of these outcomes may clearly be expected to impact upon the transaction timetable.

In addition, it is a criminal offence to either (i) intentionally alter, suppress, or destroy any information that the CMA has requested;6 or (ii) knowingly or recklessly supply false or misleading information to the CMA (or to a third party knowing they will supply this to the CMA).7

Documents requested in Just Eat / Hungryhouse

Having referred Just Eat plc's anticipated acquisition of Hungryhouse Holdings Limited ("Hungryhouse") for an in-depth Phase 2 investigation, the CMA sent a draft s.109 Notice to Hungryhouse.

The draft was intended to enable Hungryhouse to raise questions regarding the requests, and to set out any concerns it had regarding the documents requested. Although Hungryhouse indicated that it could be challenging to respond to certain questions within the CMA's intended timeframe, it confirmed that it would seek to do so.

The CMA finalised its draft, and issued the first s.109 Notice. Hungryhouse responded to this by providing a limited number of documents and emails in relation to questions regarding (i) the appropriate counterfactual; and (ii) Hungryhouse's strategy to move customers onto its platform.

Having received Hungryhouse's response, the CMA sent an informal request for information, seeking certain clarifications. In responding to this, Hungryhouse provided documents that appeared responsive to the first s.109 Notice.

As a result, the CMA issued second and third s.109 Notices, in response to which Hungryhouse provided documents that again appeared responsive to the first s.109 Notice.

The CMA subsequently issued a fourth s.109 Notice, in response to which Hungryhouse provided 1,497 documents. As this evidence was provided at a late stage, the CMA extended its investigatory timetable by four weeks.

CMA's decision to impose a fine

The CMA held that Hungryhouse had no reasonable excuse for failing to provide documents that were responsive to the first s.109 Notice in response to that notice...