Assessments and requirements when merging businesses

In broad terms, there are two types of merger:

• horizontal mergers - mergers between firms that supply competing products
• non-horizontal mergers - mergers between firms that operate at different levels of the supply chain (vertical mergers) or between firms supplying products at the same level in the supply chain which do not compete (conglomerate mergers)

What does the CMA look for?

In looking at horizontal mergers, the Competition and Markets Authority (CMA) focuses mainly on the impact of the merger on the markets in which both firms operate.

In non-horizontal mergers, the CMA looks at the impact of the merger on the markets in which each of the companies operate, as well as any related markets.

The CMA also takes into account:

• the definition of the market(s) that the parties operate in
• market share and concentration
• efficiencies
• entry and expansion
• buyer power

Decisions on mergers

When the CMA makes a decision on a merger, it will fall into one of four categories:

• The merger is not a relevant merger situation.
• The merger is not being referred for Phase 2 assessment, either because the merger does not raise any competition concerns or one of the exceptions applies.
• Undertakings in lieu of a reference are being considered or have been accepted by the CMA.
• The merger is being referred for Phase 2 assessment.

The CMA will contact the parties involved one hour before the decision is announced publically, and will tell them the timing and nature of the decision. In those cases where a press release is issued, this will be sent to the parties at the same time.

Merger assessment guidelines.