New year, new UK merger control thresholds

What is changing?

On 1 January 2025 the UK merger control thresholds changed, which come at a time when there is a real focus on the merger activities of the UK Competition and Markets Authority (CMA). The changes form part of a global trend of competition regimes capturing an increasingly broader set of M&A deals, allowing regulators to focus their time and resources on deals that have the most impact regardless of size or type.  Keeping these changes in mind as we start the new year is crucial for appropriately managing competition law risks in transactions.

Previously, the CMA could review transactions when either: (a) the target’s UK turnover exceeds £70 million (turnover test) or (b) the transaction results in the parties having a combined share of supply or purchase of goods or services of any description of 25% of more (share of supply test). The Digital Markets, Competition and Consumers Act 2024 (DMCCA) increases the turnover test from £70 million to £100 million, but makes no change to the share of supply test.

In addition, the DMCCA introduces:

• a new threshold allowing the CMA to review mergers where:
  • one party has a 33% or more share of supply in the UK and UK turnover exceeding £350 million; and
  • the other party is either a UK entity, carries on activities in the UK or supplies goods or services in the UK (UK nexus)
• a ‘de minimis’ threshold excluding transactions from review where both parties’ UK turnover is £10 million or less. The de minimis test does not apply to transactions in the media sector.

These changes came into force on 1 January 2025.

Why are these changes being made?

The last major changes to the UK’s merger control thresholds were over 20 years ago.  Since then, the landscape of business and competition has evolved substantially. 

The most significant change is the addition of the new threshold.  This allows the CMA to review acquisitions involving targets with little or no turnover in the UK, and to review mergers that involve parties that operate at different levels of the supply chain or in entirely separate industries.  In particular, it enables the CMA to review “killer acquisitions,” which refers to dominant companies acquiring a smaller, nascent competitor to eliminate potential future competition.  This is often seen in dynamic markets and has recently been an area of concern for the CMA and other competition authorities around the world.

The change to the turnover threshold is to reflect inflation adjustments and to enable the CMA to focus its resources on transactions of a certain scale.  Similarly, the de minimis test is to enable the CMA to exclude transactions where neither party achieves meaningful sales in the UK from its remit.

Impact of the changes

Previously, the CMA adopted a flexible approach when applying the merger control thresholds to enable it to have jurisdiction over a wide range of deals.  The changes in the DMCCA explicitly grant the CMA the latitude to review a broad spectrum of transactions.

In addition, later in the year, firms which are designated as having ‘strategic market status’ under the new digital markets competition regime, will be required to report M&A deals above a certain threshold to the CMA, which it may then investigate using its existing merger powers.  This change will further expand the CMA’s powers to investigate transactions.

For more information

To learn more about the changes to UK merger control under the DMCCA, please listen to episode 7 of our DMCCA podcast series.

For a summary of the key changes to UK competition law under the DMCCA, please see our briefing here.

Further readings

• The UK's Digital Markets, Competition and Consumers Act 2024 webinar: key highlights
• A new dawn for UK competition law
• A new dawn for UK consumer law