Navigating the new UK antitrust landscape

Alert
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11 min read

The UK's Competition and Markets Authority (CMA) has published a suite of guidance documents that set out how it intends to exercise its powers under the Digital Markets, Competition, and Consumers Act (Act). The Act, which entered into force on 1 January 2025, grants the CMA significant new powers and procedural flexibility. The CMA guidance offers important insight into how the CMA will apply its strengthened powers and flexible procedures, and will inform the CMA's work on identifying "strategic market status" which it will commence immediately.

The Act and the CMA's new guidance

The Act introduces substantial changes across merger control, digital markets, competition, and consumer protection. Key changes relating to antitrust (as set out in more detail in our previous alert) include:

  • New merger control thresholds (known as the "hybrid test") to capture acquisitions involving targets with little or no turnover in the UK (addressing "killer acquisitions"), as well as vertical and conglomerate mergers;
  • Enhanced CMA investigatory and enforcement powers; and
  • A new regime for regulating large digital firms designated with "strategic market status" (SMS). 

The CMA has now published a suite of guidance to accompany the Act, as follows:

# Date published Name of guidance
1. 19 December 2024 Digital markets competition guidance (CMA194)1
2. 19 December 2024 Guidance on the merger reporting requirements for SMS firms (CMA195) and the SMS merger reporting notice
3. 19 December 2024 Guidance on administrative penalties: statement of policy on the CMA’s approach (CMA4)
4. 20 December 2024 Updated mergers guidance on the CMA’s jurisdiction and procedure (CMA2)
5. 20 December 2024 An updated quick guide to UK merger assessment (CMA18)
6. 20 December 2024 Updated guidance on mergers exceptions to the duty to refer and undertakings in lieu (CMA64)
7. 20 December 2024 Updated guidance on interim measures in merger investigations (CMA108)
8. 20 December 2024 Updated guidance on rules of procedure for merger, market and special reference groups (CMA17)
9. 20 December 2024 Updated guidance on energy network mergers (CMA 190)

The digital markets competition regime guidance – A snapshot overview

Set out below is a snapshot overview of the key content of the 220-page digital markets competition regime guidance (and the accompanying merger reporting guidance relevant for firms designated with SMS).

The assessment of SMS
  • Focus on a Select Group of Firms: The SMS designation and the new regime are expected to apply to a small number of firms, targeting those with significant influence in digital markets.
  • Broad Definition of "Digital Activity": Unlike the EU Digital Markets Act (DMA), which specifies a list of "core platform services", the Act adopts a broader definition of "digital activity". This provides the CMA with much more flexibility in identifying relevant digital activities. 
  • Jurisdictional Tests: The digital activity under investigation must be linked to the UK. The guidance outlines when the CMA will consider the conditions for a UK nexus are fulfilled. They include when the digital activity has a significant number of UK users (context specific – the CMA may consider the firm's absolute position and/or the number of UK users it has relative to other companies). They also include when a firm does not directly sell goods/services in the UK, but provides a key input or component for a good or service that is ultimately supplied in the UK (e.g. software chosen on the basis of UK customers/consumers' preferences which is integrated in a platform providing services in the UK). 
  • Assessment of "substantial and entrenched market power": "Substantial and entrenched market power" in respect of a digital activity is a legal concept distinct from that of dominance in abuse of dominance investigations. However, factors used to establish dominance may also support the assessment of "substantial and entrenched market power". 
  • Criteria for "position of strategic significance": These include broad metrics such as number of users, frequency of use or time spent, number of purchases or transactions, amount of data gathered or accessed, or revenue generated. The CMA will consider whether the firm's position will allow it to extend its market power to a range of other activities, or whether it allows it to determine or substantially influence the ways in which other firms conduct themselves (e.g., where the firm has a major role in setting standards). 
  • Evidence Hierarchy and CMA Discretion: The CMA retains sole discretion in deciding the "weight" between evidence and confirms that no set hierarchy exists between quantitative and qualitative evidence.
Conduct requirements (CRs) and pro-competition interventions (PCIs)
  • Distinction between CRs and PCIs: A description of the relationship between CRs and PCIs and on whether a CR may be applied to non-designated activities. CRs are intended to guide the practices of SMS firms; PCIs are targeted interventions used to remedy, mitigate, or prevent competition problems.
  • CR/PCI design approach: An outline of the three-step approach for designing CRs/PCIs. This is to identify: (i) what the CR/PCI is intended to achieve; (ii) the CRs/PCIs that would be effective in achieving the aim; and (iii) to consider the proportionality of the identified CRs/PCIs. 
  • Focus of PCIs: An explanation of the sort of problems that PCIs can be used to address. This will include when there are any factors or combination of factors relating to the digital activity that are having an adverse effect on competition. This is the case where a factor of combination of factors prevents, restricts or distorts competition in connection with the relevant digital activity in the UK. A factor can be related to firm's conduct or may be a structural characteristic of a sector such as high barriers to entry or expansion. 
  • Procedure: Details of the procedure for CRs and PCIs and on the main stages of engagement. 
  • Remedies: A non-exhaustive list of examples of behavioural and structural remedies that may be imposed as PCIs. Examples of behavioural remedies include prohibiting the SMS firm from combining user data collected from different products and or activities that it carries out; requiring the SMS firm to provide rivals with access to its data, ensure interoperability, provide customers with information to help them make informed choices; price caps and supply commitments.
Monitoring compliance and enforcement
  • Sources: A non-exhaustive list of information sources that the CMA expects to use in monitoring. These include outputs of the CMA's horizon scanning work, consumer surveys, submissions from SMS firms and third parties, SMS firms' compliance reports, and complaints and information from whistleblowers.
  • Officer: The requirement for SMS firms to have a "nominated officer" in place (and the potential liability of that individual).
  • Reporting: Details on the requirement for periodic compliance reports by SMS firms (and publishing of these reports).
  • Enforcement processes: Details on how the CMA will enforce CRs (including an interim enforcement order, enforcement order and final offer mechanism).
  • Countervailing Benefits Exemption: Explanation of the evidence that should be provided to demonstrate the conditions for the countervailing benefits exemption, e.g. where the conduct gives rise to wider benefits to consumers like privacy.
Additional merger reporting requirements for SMS firms
  • Reporting: The requirement for SMS firms (or any member of their corporate group) to report certain acquisitions with a UK nexus prior to completion (known as reportable events), irrespective of whether an acquisition relates to the digital activity for which an SMS firm is designated. 
  • UK nexus: Details on when a transaction may be considered to have a nexus to the UK under the hybrid test. This test is broad and the CMA will consider it fulfilled even where only preparatory steps have been taken by an enterprise concerned towards potentially supplying goods or services to the UK. An example provided is where an overseas enterprise makes available its goods or services to UK consumers and actively targets UK consumers through a UK website, advertising, or tailoring products/services for UK customers.
  • Suspension: Details on the standstill obligation, i.e. preventing a merger from closing pending feedback from the CMA (which is a major departure from the UK's voluntary merger regime).
  • Notification form: Details on the "approximately five page" SMS report (based on this template notice) which must include an explanation of the rationale for the acquisition (including on any integration mechanisms and "synergies…expected") and on whether the SMS firm has undertaken R&D activities in product or service areas that may overlap with the target.

The EU's Digital Markets Act (DMA) (as discussed in our alert here) entered into force in November 2022, and has similar provisions to the Act. Whereas the DMA's designation of large digital actors (known as "gatekeepers") relies on rebuttable presumptions based on quantitative criteria, the CMA adopts a qualitative assessment for SMS designation.2 While the gatekeeper obligations are prescribed in the DMA itself, the CMA will be able to impose tailored CRs under the Act. The CMA considers various forms of evidence without prioritising a single type or establishing a hierarchy on the type of evidence. While this flexibility gives the CMA wide discretion in applying the Act, it has raised concerns about potential unpredictability and the risk of arbitrary decisions. A broader question remains as to whether this qualitative assessment will lead to uncertainty (and potentially have a chilling effect on M&A activity).

On 7 January 2025, the CMA published a statement on its initial plans under the new digital competition regime, stating that it plans to launch SMS designation investigations in relation to three areas of digital activity over the first six months.

The revised mergers guidance documents

The CMA has updated several key mergers guidance documents3 to reflect the jurisdictional and procedural changes introduced by the Act. 

The snapshot overview below summarises the key changes introduced.

# Key changes Updated guidance
1. Increased Turnover Thresholds: The increased £100m turnover threshold and a new £10m turnover "safe harbour" threshold (with examples of how the thresholds work in practice). CMA2 and CMA18 and CMA190 (in the context of energy network mergers meeting the £100m threshold).
2. "Killer Acquisition" Threshold: Detail on the new £350m threshold (with examples), including on how the share of supply and turnover test is "acquirer focused" and guidance on the intricacies of the "UK nexus test". CMA2 and CMA18
3. Statutory Phase 2 Fast-Track Process: Detail on the new expedited Phase 2 Review process4 and new powers for the CMA to provide parties with more flexibility in the Phase 2 process. CMA2 and CMA18
4. Extended Information Request Powers: Detail on the CMA's power to formally request documents and information held by parties outside of the UK (as well as documents and information located outside of the UK), subject to certain conditions.5 CMA2
5. Procedural Changes in Phase 2: Clarification that appointed groups no longer need to consider a need for public hearings at the Phase 2 stage; removal of the opportunities for parties interested in the relevant reference to cross-examine witnesses, and clarification that the CMA's discretion not to refer a Phase 2 investigation is different from the £10m "safe harbour" threshold. CMA17 and CMA64 
6. Interim Measures: Changes to imposition of interim measures (including new procedural steps and the entities who may be subject to interim measures) and guidance on the likely availability of derogations from an interim measure. CMA108
7. Monitoring Trustees: Clarification on the CMA's requirements for appointing monitoring trustees (at either the Phase 1 or Phase 2 stage) to ensure compliance with an interim measure, distinguishing their role from that of hold separate managers. CMA108

Considerations for businesses

The new and updated guidance documents clarify the scope and processes under the new digital markets regime, covering both mergers and wider enforcement activity. The headlines typically refer to the new rules for SMS firms. However, it is critical for non-SMS businesses to carefully assess planned M&A transactions against the new thresholds to manage the risk that the CMA may wish to investigate a deal. Non-SMS firms should also review and revise compliance policies to ensure that they are adapted to the CMA's enhanced investigatory and enforcement powers. The few firms likely to be designated as having SMS should start preparing for a potential SMS investigation and the additional obligations that designation entails, including compliance requirements and potential CRs and PCIs. 

Shruthi Madhusudan (White & Case, Trainee, London) contributed to the development of this publication.

1 The draft version of the digital markets competition guidance document was published for consultation in May 2024. In the large, the final version tracks the draft consultation version. The main additions consist of further guidance on the calculation of turnover for jurisdictional purposes and penalties, clarification on what is meant by "substantial market power" for the purposes of (SMS) designation, and detail on when and how stakeholders can engage in the CMA's processes.
2 Guidance, pg. 24, para 2.70 and para 2.72, where the CMA confirms that the most appropriate metric for assessing a potential SMS firm's size and scale is likely to "depend on the specific context".
3 This followed a six-week consultation between August to September 2024.
4 Note, the ability for parties to refer a merger to Phase 2 (and bypass statutory requirements in relation to a "substantial lessening of competition" finding) is not available for mergers of water enterprises or mergers of energy networks (as further clarified in CMA190).
5 The condition required to be met by a person holding the relevant document or information outside the UK is either (1) a merger parties' connection condition, or (2) a UK connection condition. In the case of the merger parties' connection condition, the CMA includes as examples a non-UK parent or TopCo, the seller of the target business, minority shareholders, financial advisers or management consultants, and lenders/debt financers involved in the transaction.

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This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.

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