Thanks to Brexit, the United Kingdom has become, regarding MA activity, a very important jurisdiction. Any merger or acquisition which the United States Federal Trade Commission, or Antitrust Division of the Department of Justice, and European Commission will review, will most probably also affect competition in the United Kingdom. Thus the competition authority of the United Kingdom will almost inevitably also review this merger or acquisition.
The United Kingdom competition authority is very aggressive. It has blocked many an MA deal. It has blocked the acquisition of a target company even when both parties to the merger were in the United States. Thus those intent on making a deal must, as the private equity industry routinely does, seek legal advice regarding UK merger control. And they must seek this legal advice even if no UK companies are involved in the relevant transaction.
The Enterprise Act of 2002 established the UK merger control regime. The Enterprise Act, in general, will require the UK competition authority to consider the same competition concern as will the American or European competition authorities. [Links to How do the Antitrust Enforcers Regulate Horizontal Mergers in the United States? and European Commission Horizontal Merger Control].
But the UK competition authority applies its antitrust law very aggressively. As its Horizontal Merger Guidelines make very clear, this is particularly true in the areas of both killer acquisitions and digital markets. First, the competition authority will not hesitate to begin a Phase 2 investigation (comparable to a second request in the United States) and thus order the parties to a merger or acquisition to supply substantial information.
Second, the UK government allows its competition authority to review a transaction in which the competitive effects in the United Kingdom are slight. While UK turnover of the merging parties is one criteria the competition authority may use to determine if it has jurisdiction to review a horizontal merger, even if the transaction value is small the competition authority still may review the transaction. If just one party to the transaction—either the acquired firm or the acquirer—enjoys a 25% share of supply or purchase in only a “substantial part” the United Kingdom the competition authority can still assert jurisdiction to review the transaction. Such a geographic market can be very small. Thus at least one company to just about any deal of any size, in particular one regarding digital markets, will probably satisfy this unique market share requirement, and thus give the United Kingdom competition authority jurisdiction to analyze the transaction.
Third, the newly enacted NSI Act (National Security and Investment Act) allows the UK government to not only review, but even reverse a completed transaction, regarding selected business areas. This could even be a conglomerate merger. A potential shareholder of many UK companies will thus need to seek legal advice in this area before investing: reversing a completed transaction can easily destroy shareholder wealth.
As noted above, UK antitrust enforcement has been particularly aggressive in the areas of killer acquisitions and digital markets. In a number of cases the competition authority has, for jurisdictional purposes, defined the relevant market, the market in which the merging parties enjoyed a 25% share of supply, as including at least a “substantial part” of the United Kingdom. It has thus asserted jurisdiction over the transaction, and then blocked the transaction. It did this in a number of cases although neither of the parties to the transaction were UK companies. Indeed, it has blocked transactions involving American companies which even the American competition authorities did not block. And even ones in which the American authorities approved. Within antitrust law, as in many areas, Brexit is indeed a very significant event.