Competition | UK Regulatory Outlook July 2026

Childcare under the microscope – the CMA's market study 

On 1 July 2026, the Competition and Markets Authority (CMA) launched a market study into early years education and childcare services in England. The study will assess whether the sector is working for families, providers and the wider economy and will cover services from birth until children start school. This will include nurseries, childminders and other school-based settings. 

The market study was initiated following a request from the Education Secretary in May 2026, asking the CMA to undertake an independent assessment to inform the UK government's own review of childcare provision. Although the study focuses on England, the CMA will consider the relevance of its findings to other parts of the UK. 

The study will examine five key areas: access to high-quality services and barriers to entry and expansion; affordability and funding, including the impact of government subsidies on provider sustainability; information and choice, and whether families can make effective decisions; the role of local authorities and regulatory bodies; and the impact of different provider models and ownership structures on costs and choice. 

There are over 53,000 childcare providers in England, delivering approximately 1.6 million places for children aged 0 to 4 years old, representing an estimated £14 billion annual contribution to the economy. Government-funded support is substantial, with around £8.91 billion of taxpayer funds spent in 2025/26. Structural shifts in the sector are also notable: UCL research found that places offered by private equity providers doubled between 2018 and 2024, while the number of childminders fell by 39% between 2018 and 2025. 

The CMA will apply its "4Ps" approach (pace, predictability, proportionality and process), aiming to ensure an efficient and timely review. A call for views was launched, closing on 26 July 2026, with provisional findings expected by early 2027. 

Merger efficiencies 

In June 2026, the CMA launched a consultation on proposed changes to its approach to the assessment of rivalry-enhancing efficiencies in mergers (that is, how it assesses whether mergers can deliver benefits that outweigh any harm to competition). The proposed changes (the "Merger Efficiencies Review") would update the CMA's existing guidance on this topic. The review forms part of the CMA's broader "4Ps" framework and involved extensive evidence gathering, obtaining 23 written responses to a call for evidence. 

When two companies merge, the deal can sometimes result in something more than the sum of their parts: for example, by lowering overall production costs or giving the combined entity greater ability to develop new products. These are known as "rivalry-enhancing efficiencies." The CMA proposes to retain its established four requirements: the efficiencies must (i) genuinely strengthen competition, (ii) be achieved quickly enough and sufficient to prevent a substantial lessening of competition (SLC), (iii) only be achievable through the merger (not by other means), and (iv) benefit UK customers. 

On timeliness, the CMA accepts that some benefits, such as improved research and development, may take several years to materialise, and will take into account the norms of the industry in question.  

On likelihood, the CMA may impose conditions on the merger to ensure that promised efficiencies are actually delivered.  

On sufficiency, the CMA recognises that a merger might cause short-term harm to competition even if it delivers longer-term benefits.  

On merger specificity, the CMA will look at whether the same benefits could realistically be achieved another way. 

In terms of evidence, the CMA will hold efficiency claims to the same standard as its assessment of potential harms. Claims will only be accepted where they are backed by concrete evidence. The CMA will give more weight to contemporaneous documents created in the normal course of business (such as board papers or internal strategy documents), although companies can also submit additional analysis where needed. Companies considering an efficiency argument are encouraged to raise it with the CMA as early as possible; doing so does not mean they are accepting that the merger would otherwise harm competition. 

The draft EU merger guidelines: what does this mean for mergers in the EU? 

The European Commission has undertaken a comprehensive review of its merger guidelines, publishing new Draft Merger Guidelines on 30 April 2026. The review consolidates and updates the existing Horizontal Merger Guidelines (2004) and Non-Horizontal Merger Guidelines (2008), which together form the framework governing how the Commission assesses the competitive impact of mergers under the EU Merger Regulation. 

The Commission intends to finalise the guidelines in Q4 2026, following continued stakeholder engagement. The review signals a significant modernisation of the EU's approach to merger control. 

The primary objective of EU merger control remains unchanged: preserving a vibrant and competitive internal market that drives innovation, affordability and product quality for consumers. The review has involved three stakeholder workshops, a high-profile conference in March 2026, and a targeted public consultation on the draft guidelines, which closed on 26 June 2026. 

The Commission has published a summary of the key technical novelties. Three key themes are: 

• Dynamic effects. The Commission will place greater weight on how mergers affect firms' incentives to invest and innovate in the medium to long term. Parties should be prepared to address these forward-looking considerations, including potential innovation harms and investment effects, as a routine part of merger filings, supported by verifiable evidence rather than generalised assertions. 
• Efficiencies. These form one of the seven topics of the in-depth consultation. The Commission notes that the draft guidelines "significantly expand" the analytical framework for efficiency claims, referred to as "theories of benefits". Merging parties should consider preparing robust, evidence-based efficiency arguments at an early stage, drawing on internal business documents and, where necessary, supplementing these with bespoke economic analysis. The Commission will engage with efficiencies in the same way as it examines theories of harm, evaluating both symmetrically before concluding a merger can lead to a significant impediment of effective competition. 
• Early engagement. Given the breadth of reform and the introduction of new analytical considerations across digital, dynamic efficiencies and sustainability-related issues, among others, early pre-notification engagement with the Commission will be increasingly important. Engaging proactively allows parties to understand the Commission's evolving approach, identify potential concerns at an early stage, put forward substantive evidence of efficiencies, and ensure sufficient time for meaningful dialogue before formal proceedings commence. 

Beware of disparaging competitors 

The European Commission is seeking feedback on commitments offered by Sanofi to address the exclusionary disparagement of the only rival vaccine recommended for vulnerable patients. It is alleged that, since 2024, Sanofi pursued a misleading communication campaign aimed at healthcare professionals. This represents a growing trend in competition enforcement focusing on exclusionary disparagement by dominant companies. These commitments follow a dawn raid in September 2025 and the launch of a formal investigation into Sanofi on 26 June 2026. 

It is alleged that Sanofi (i) suggested the evidentiary basis for the competing vaccine is weaker than for its own (in contradiction to the findings of the European Centre for Disease Control), (ii) misrepresented national vaccine recommendations, and (iii) suggested that national vaccine recommendations were subject to unresolved scientific objections from medical professional societies. 

To address these concerns, Sanofi has offered to communicate proactively that the French and German recommendations regarding this type of vaccine have a robust evidence base showing equal efficacy of each type of vaccine. In addition, Sanofi has offered to refrain from criticising, casting doubt on or contradicting national vaccine recommendations issued in the relevant countries; portraying the competition in a negative light, or suggesting its product is safer or more effective than its competitor (unless such claims are based on summaries of product characteristics approved by the relevant competent health agencies or head-to-head comparative studies which meet specified criteria); implying or suggesting that the evidence base for the competing product is weaker. These commitments will remain in force until March 2030. 

The period for feedback is open until 21 August 2026. 

Disparagement of competitors is an area of significant competition law focus, particularly in the pharmaceutical industry, with multiple cases ongoing across the globe. 

Foreign subsidies review 

The European Commission has published its report into the functioning of the Foreign Subsidies Regulation (FSR). Although the Commission considers that the FSR regime has been successful so far, it intends to consult on certain targeted changes in the autumn, with the aim of adopting them in 2027. 

Among these changes, the Commission is considering introducing a simplified notification form to be used in relation to mergers, while also increasing the notification turnover threshold to €600 million. There are also changes suggested in relation to public procurement, including simplifying and clarifying the forms used and clarifying rights and obligations of all parties in relation to the processing of confidential information. 

In relation to both, the Commission considers introducing additional exemptions for foreign financial contributions not categorised as foreign subsidies (that is, those which are conducted in an open market on arm's-length terms). 

Given the nature of the changes being considered, the Commission appears to have been listening to practitioners' feedback, which has called for simplification of the FSR while also ensuring that the FSR remains a "strong and effective" tool to protect the European market. This is important as, since the law came into force, the Commission has seen 273 formal notifications of concentrations with only three of these requiring a Phase II review. However, the Commission will retain the power to "call in" below threshold mergers.