The Competition and Markets Authority (CMA) is shaking up how it investigates mergers in smaller markets

 
Rebecca Smith
The watchdog announced earlier this week the Heineken Punch Tavern deal will need to address problem areas
The watchdog announced earlier this week the Heineken Punch Tavern deal will need to address problem areas (Source: Getty)

The Competition and Markets Authority (CMA) has announced changes to its approach for investigating mergers in smaller markets to reduce the number of them.

After consulting on raising the threshold for markets where mergers may not warrant investigation, the CMA said it has received sufficient support to raise the figure for markets considered important enough to warrant a merger reference, from above £10m to above £15m.

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It is also changing the figure for markets generally considered not sufficiently important to warrant a merger reference from below £3m to below £5m.

The competition watchdog said:

Where the size of the market is between these figures, the CMA will continue to assess whether the expected harm resulting from the merger would be materially greater than the cost of an investigation.

The CMA has a duty to refer mergers for an in-depth, phase two investigation if they could lead to a substantial lessening of competition, but in certain circumstances it may not refer a merger, if it feels the relevant market is of "insufficient importance". The exception is to help the watchdog avoid investigations that would likely lead to disproportionate costs, and reduce the burden on firms.

The CMA expects these changes to reduce the number of mergers that are subject to investigations, including those subject to initial phase one examination, and help it better target resources for protecting both consumers and businesses.

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