Thresholds for notification of mergers/acquisitions A merger or acquisition is a significant transaction involving the merging or acquisition of two or m...
A merger or acquisition is a significant transaction involving the merging or acquisition of two or more companies. These transactions can have a significant impact on competition, consumer welfare, and the economy as a whole. To ensure that such transactions are conducted in a fair and transparent manner, the Competition Act 1990 and the Consumer Protection Act 2011 impose threshold rules on mergers and acquisitions.
Thresholds are defined as the market share of the acquiring company and the market share of the acquired company combined together. If the combined market share exceeds these thresholds, the competition authorities can intervene to prevent the merger/acquisition from proceeding.
Examples:
Market share threshold: A combined market share exceeding 25% would trigger a challenge to a proposed merger between two companies.
Geographic threshold: A combined market share exceeding 15% would trigger a challenge to a proposed merger between two companies operating in different geographic markets.
Financial threshold: A combined annual turnover exceeding £250 million would trigger a challenge to a proposed merger between two companies.
These thresholds are crucial because they allow the competition authorities to intervene proactively to prevent potentially harmful mergers and acquisitions that may result in higher prices, reduced quality of goods and services, and other negative consequences for consumers.
By understanding the thresholds, companies can assess whether a proposed transaction is likely to trigger a challenge from the competition authorities and can develop appropriate strategies to ensure a fair and transparent merger process