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Merger control within the TMT sector

  • United Kingdom
  • Corporate
  • Technology, Media and Telecoms


With the growth in digitalisation, competition authorities worldwide have implemented or are considering changes to their merger control regimes to address a perceived enforcement gap in relation to certain M&A transactions in digital markets.  These proposed changes mean that deals in the TMT sector which would previously have not been subject to merger control review could in the future be investigated. This could have a significant impact on deals in the TMT sector.

Merger filings are usually triggered where the parties to a transaction meet certain turnover thresholds.  In most jurisdictions, those thresholds have proven insufficient to catch transactions involving the acquisition of nascent, potential competitors or firms whose early stage business model is to initially offer free services to consumers generating little or no turnover.  To close this gap the German and Austrian governments both introduced a supplementary merger control test based on the transaction value rather than the target’s turnover.

In March 2021, the European Commission (“Commission”) adopted a new merger control policy to expand its ability to investigate these types of transactions. This new policy encourages national competition authorities to refer transactions to the European Commission for investigation where those M&A deals do not qualify for investigation under national merger control rules but where the national competition authority is concerned that the M&A deal:

-      may affect trade between Member States; and

-      threaten to significantly affect competition within the Member State(s) making the request.

A number of transactions have already been referred to the Commission based on this new guidance including Illumina’s proposed acquisition of Grail, which the Commission has referred for an in-depth phase II investigation despite the deal falling below national merger control thresholds. 

Both the EU and UK government are also considering adopting new reporting obligations for the most powerful digital players.  Under the EU proposals, all large digital platforms would be required to inform the Commission of all of their proposed transactions involving businesses providing any services in the digital sector regardless of whether they meet the EU merger control thresholds. The proposed UK rules would go even further requiring such businesses to notify the Competition and Markets Authority of all of their transactions within a short period after signing.  Furthermore, the UK government is proposing to introduce a new mandatory merger control regime (the UK currently operates a voluntary regime only) which would apply to certain transactions in digital markets.

Every transaction should already be assessed to determine whether it meets any merger control thresholds.  However, transactions in digital markets will need to be assessed more vigorously following the Commission’s new policy and the increased scrutiny of digital markets by competition authorities worldwide