On 7 April 2016, the Competition and Markets Authority published a template merger enquiry letter, which will be used by the CMA when starting investigations into mergers that have not been formally notified to the CMA by the merging parties.
The CMA actively monitors the press for news of mergers and may also receive complaints from third parties. Once the CMA knows about a merger, it will consider whether to seek further information about the case from the acquiring party/parties by sending an enquiry letter. The CMA makes clear that it will not send an enquiry letter based solely on the fact that it has received an unsubstantiated complaint about the merger from a third party; it will consider whether the merger is one in which there is a reasonable prospect that the CMA’s duty to refer may be met.
Purpose of the enquiry letter
The purpose of the enquiry letters is twofold:
(i) to establish whether the jurisdictional thresholds under the Enterprise Act 2002 are met (the “jurisdictional information”); and
(ii) to ascertain more details of the transaction.
Provided that all relevant jurisdictional and substantive information is provided by the parties in the response to the enquiry letter, the CMA may then review the merger in the same way as if it had been formally notified. In such cases the CMA’s statutory timetable of 40 days will start on the working day after the CMA confirms receipt of the necessary information (i.e. once the CMA has given notice that it has received sufficient information).
Responding to the enquiry letter
Companies which receive an enquiry letter should respond as soon as reasonably practicable. Recipients are reminded that the specified deadline detailed in the enquiry letter must be adhered to. If a response has not been submitted to the CMA by the specified deadline, the CMA has the power to suspend the statutory timetables. This includes both the four month deadline to refer completed mergers for Phase II investigation and, where that period has commenced, the Phase I investigation timetable of 40 days. Where the parties do not provide a satisfactory response to the enquiry letter the CMA will, if appropriate, commence its investigation nonetheless.
Taking a decision on whether to notify a merger to the CMA can be a delicate balancing act. In some cases, the acquirer may decide to complete the merger, while being prepared for an enquiry letter from the CMA. This new template letter will assist the parties in these preparations, minimising delay if the CMA does send out an enquiry.