Mergers: when they will be investigated

The Competition and Markets Authority (CMA) may investigate a merger between your business and another to assess if it would reduce competition. For example, if the merger could result in lower quality goods and services, less choice or higher prices for consumers or businesses.

Merging businesses includes acquisitions, takeovers and joint ventures.

When a merger qualifies for investigation

There are 3 tests that the CMA applies when deciding whether to investigate a merger or not. These are the:

• ‘turnover test’
• ‘share of supply test’
• ‘hybrid test’

A merger has to meet the criteria in at least one of these tests to be investigated.

Turnover test

The business being taken over must have a UK annual turnover of at least £100 million.

Share of supply test

The combined businesses would have a share of at least 25% of the UK market (or a region of it, for example London) related to their product or service.

Their market share would also be expected to increase as a result of the merger.

One of the businesses must also have a UK annual turnover of at least £10 million.

Hybrid test

One of the businesses must both:

• supply at least 33% of their product or service in the UK (or in a part of the UK, for example Scotland, or in a region of it, for example London)
• have a UK annual turnover of over £350 million

The other business must either:

• be a UK business
• have a connection to the UK – for example, be an overseas business that sells to UK customers, has a UK website and advertises in the UK

If a merger is investigated

Find out more about:

• how mergers are investigated
• possible changes (‘remedies’) merging businesses may have to consider to address competition concerns
• merger assessment guidelines