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CMA's merger enforcement powers could become more intrusive

  • United Kingdom
  • Competition, EU and Trade - Competition e-briefings


On 3 June 2019, the Competition and Markets Authority (“CMA”) published a report1 by economic consultancy firm Lear, commissioned by the CMA, on merger control in digital markets (“Report”). On the same day, Andrea Coscelli, Chief Executive of the CMA, delivered a speech on the same topic. The Report proposes changes to the CMA’s enforcement powers in order to enable it to intervene in acquisitions by large digital players of start-up companies effectively. The proposals include empowering the CMA to conduct dawn raids during merger reviews as a means to “uncover valuable evidence” such as the target’s future plans or whether the acquirer perceived the target as a competitive threat.


Key Findings

In the last five years, the large digital players including Google and Microsoft have made nearly 250 acquisitions, most of which were not scrutinised by competition authorities and none of them were blocked. A number of competition authorities and governments are considering the reason behind the under-enforcement of mergers in digital markets.2 

The Report found that, based on its evaluation of previous merger decisions taken by UK competition authorities, they had failed to accurately assess two-sided markets, neglected to analyze factors that drive advertisers’ choices and dismissed evidence based on uncertainty. It recommends that the CMA:

  • should enrich the information that it relies on as part of its assessment of mergers in digital markets by conducting dawn raids in certain cases. Mr Coscelli stated that this proposal underlined the increasing importance of the parties’ internal documents and of taking strong enforcement action where merging parties provided incomplete or misleading information in response to the CMA’s requests. However, his view is that there would be “questions around whether dawn raids of this type should ever be necessary”;

  • consider a longer time frame than two years, which is the default timeframe for assessing future market developments in UK merger investigations, when assessing digital mergers;

  • take account of the transaction value to screen the large number of transactions being undertaken by digital incumbents to help identify those which may warrant a more in-depth analysis. Mr Coscelli stated that “if the price paid by the acquirer seems hard to explain based on current or likely future earnings, [the CMA] would scrutinise the rationale for the acquisition with particular rigour” and consider whether the transaction value could reflect the “benefit of killing off emerging competition”. Unlike in jurisdictions such as Austria and Germany, the Report does not suggest that the UK merger control thresholds should be amended to take account of the transaction value. Instead, it suggests that the CMA’s analysis should reflect that the transaction value should in part represent the magnitude of its anti-competitive effects;

  • should undertake a market study into the digital advertising sector to better understand the market for online advertising;

  • should be willing to accept greater uncertainty in the counterfactual to a digital merger. Mr Coscelli agreed stating that the CMA should be “cautious in concluding that the absence of the same kind of compelling evidence [it] might have about near-term market developments should necessarily provide grounds for clearance.”



The Report’s proposal to enable the CMA to conduct dawn raids as a means to gather internal documents for its merger assessment in digital mergers is a far-reaching proposal. Although dawn raids have been used by the European Commission in merger cases, this was to determine if “gun-jumping” had taken place. Indeed, Mr Coscelli’s view is that overall the CMA’s merger assessment tools are fit-for-purpose and that they require “evolution, not revolution”. As part of this strategy, the CMA has launched a consultation for information on whether its Merger Assessment Guidelines should be amended to take account of the CMA’s approach to the assessment of mergers in digital mergers. The deadline to respond is 5pm on Friday, 12 July 2019.

1The Report follows other recently published reports relating to competition in digital markets including the Furman Report in the UK and the European Commission’s digital experts report. Please refer to our briefings on these reports, which are available here and here.

2Including in the EU, US and the UK.