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New UK merger thresholds for specific sectors will take effect from 11 June 2018

Published on 18th May 2018

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In March 2018, we reported that the government had formally decided to change the UK merger control thresholds in three specific sectors: (i) military and dual-use good which are subject to export control; (ii) computer processing units; and (iii) quantum-based technology.

In these sectors, the turnover threshold applicable to such transactions will be reduced from the standard £70 million to just £1 million. Accordingly, whenever a target company with annual UK turnover above £1 million is acquired, it may be investigated on competition and public interest grounds. In addition, even where the target company's turnover does not exceed £1 million, the transaction may also qualify for investigation if the target has a 25% or more share of supply in any relevant market, even if the buyer does not compete with the target (and so there is no increase in the share of supply as a result of the merger). This contrasts with the standard way in which the share of supply test will continue to be applied in all other sectors.

The intention of these changes is to enable the government to intervene in a wider range of transactions that could potentially have a national security impact. The changes will also, however, give the Competition and Markets Authority (CMA) scope to intervene in more transactions in these sections on competition grounds.

The statutory instruments required to bring these changes into effect were published on 14 and 16 May 2018 respectively. The new thresholds will apply from 11 June 2018.

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* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

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