UK Competition and Markets Authority receives increased merger control and enforcement powers | Cooley limited liability company

(co-author: Mo Swart)

The Digital Markets, Competition and Consumer Act (DMCC), which came into force on 24 May 2024, is a major change to the UK’s digital protection, competition and consumer law.

In particular, DMCC:

1. Introduces a new regulatory regime for large digital companies (discussed in Cooley’s May 2024 client alert).
2. It significantly expands the UK Competition and Markets Authority’s (CMA) powers to protect consumers – particularly in relation to online activities.
3. It gives the CMA broader powers to review and investigate mergers.

Regarding the CMA’s powers in merger and antitrust jurisdictions, the DMCC makes the following significant changes:

• New merger thresholds. While the UK will continue to use a voluntary merger control regime, the DMCC introduces the following new jurisdictional thresholds to the existing regime (i) raising the UK turnover threshold from the current £70 million to £100 million (approx. USD$125 million); (ii) introducing a new threshold under which the CMA can review transactions where one of the parties to the transaction has a 33% (or more) share of UK supplies and UK turnover exceeding GBP 350 million (approximately USD 440 million ), provided that the other party to the transaction has links in the UK (e.g. by virtue of having a legal presence, carrying on business and/or supplying goods or services in the UK), thereby eliminating the need for overlapping activities of the merging parties in the UK ; and (iii) creating a new safe harbor for smaller transactions where each party has a UK turnover of less than GBP 10 million (approximately USD 12 million)

• Expanded powers for the CMA to investigate and enforce breaches of competition law. The DMCC expands the CMA’s powers to conduct dawn raids by injunction and expands hearing powers in antitrust investigations. It also changes the scope of the jurisdiction of the prohibition on anti-competitive agreements to now also cover agreements outside the UK where the effects are or are likely to be immediate, substantial and foreseeable in the UK.

• Extraterritorial information collection powers backed by higher penalties for non-compliance. The DMCC Act clearly states that requests for information and documents may be served on non-UK companies if the company is the subject of merger or antitrust proceedings or has links with the UK. The DMCC Act also increases the penalties the CMA can impose on companies for failing to respond to requests for information and documents.

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