On 20 June 2025, the Competition and Markets Authority (CMA) launched a consultation on proposed changes to its mergers guidance on jurisdiction and procedure (CMA2).

The consultation has been launched against the backdrop of the CMA’s 4Ps framework (Pace, Predictability, Proportionality and Process), which was first announced last year before being elaborated on earlier this year in response to the Government’s Strategic Steer.

The framework has been a key driver of a number of recent changes in the CMA’s approach to merger enforcement, and advancing the 4Ps is the central theme throughout this consultation, which builds upon the CMA’s review of its approach to merger remedies, launched in March 2025. 

The focus of the current consultation is on the Phase 1 process. We set out below the key changes the CMA has proposed. 

Clarifying the jurisdictional tests

In recent years, the jurisdictional tests under the Enterprise Act 2002 (EA02) have been criticised for giving the CMA too much discretion, leading to uncertainty for businesses over whether their transactions could be investigated by the CMA. 

The UK government has therefore committed (including in its recently published Modern Industrial Strategy) to consulting on legislative changes aimed at increasing certainty for business. Ahead of those changes entering into force, the current consultation proposes amending the CMA’s interpretation of the existing legislative provisions.

Material Influence

The lowest level of control that can give rise to a “relevant merger situation” – and therefore be caught by UK merger control – is the ability materially to influence the policy of the target entity in the marketplace. This “material influence” test has often generated business uncertainty, as the scope of the principle is very broad. 

The consultation attempts to address this uncertainty, including by:

• expanding on the factors the CMA will typically consider when assessing for material influence, including potential sources of material influence;
• clarifying that shareholdings with less than 25% of voting rights are “unlikely” to confer material influence in the absence of other factors; and 
• confirming that only in “certain limited circumstances” might a holding below 15% be considered to confer material influence, where “significant other factors” point toward that conclusion. 

Helpfully, the CMA confirms that the ability to appoint a single board member alone is unlikely to confer material influence. The CMA will instead consider: the total number of board members and the proportion appointed by the acquirer; the nature of the relevant board decisions; and the extent to which those decisions require the involvement of particular board members. 

As to other sources of material influence, the CMA draws from its experience of reviewing certain AI partnerships (including the protracted 15-month investigation into Microsoft’s partnership with OpenAI – on which see our previous article) to provide more detail on when financial/commercial arrangements might confer material influence. For example, the draft guidance suggests that material influence can be established where the recipient of an investment is financially dependent on an investor, conferring on that investor the ability to influence commercial policy through regular engagement with senior management, or where the terms of a commercial arrangement require the sourcing of a large proportion of an important input from the acquirer.

Share of supply test

The “share of supply test” is an alternative to the “turnover test[1]” and “hybrid test[2]” – at least one of which must be met for the CMA to have jurisdiction to review a transaction. 

For the share of supply test to be met, the parties must overlap in the supply or purchase of goods or services “of any description” and their combined share of the supply/purchase of those goods/services in the UK (or a substantial part of it) must be at least 25%. When applying this test, the CMA can refer to “such criterion (whether value, cost, price, quantity, capacity, number of workers employed, or some other criterion, of whatever nature), or such combination of criteria, as [the CMA] considers appropriate”. 

The CMA has interpreted this test increasingly expansively (and, some would say, unpredictably) in recent years, leading to a perception that it could assert jurisdiction over any merger in which it is interested. 

In response to those concerns, the CMA explains in its consultation that, going forward, it will “typically” only focus on the above mentioned criteria specified in the EA02 when determining whether the 25% threshold is met. Furthermore, when determining the description of goods/services, the CMA “will consider those which are relevant to the potential competition concern being investigated”. 

The CMA hopes that the revised guidance will make the application of the share of supply test and the exercise of its jurisdiction more predictable. However, it remains to be seen whether this objective will be achieved, since the CMA will continue to enjoy a very wide margin of discretion. For example, the draft guidance continues to state that the description of the goods/services used for the purposes of the jurisdictional test may differ from the relevant economic market used by the CMA in its substantive assessment.

Multi-jurisdictional mergers

The CMA is also keen to provide more clarity on how it proceeds when deciding whether to launch own-initiative investigations into (un-notified) transactions that are subject to merger control review in overseas jurisdictions.

The current guidance states that the CMA “may” decide not to open its own investigation where remedies imposed in overseas proceedings are likely to address any competition concerns in the UK (e.g. because the relevant markets are international in scope). The draft guidance adds to this a little, explaining that the CMA is “less likely” to investigate such transactions and “more likely” to prioritise investigations into those with a “UK-specific impact” (which “tend to involve” local or national markets). 

The changes here are subtle, but likely reflect the CMA’s stated intention of adopting, where possible, a “wait and see” approach in respect of multi-jurisdictional mergers, in response to directions in the new Strategic Steer that the CMA should take account of action by overseas competition authorities. No doubt it is hoped that this will reduce the risk of divergence with decisions of overseas competition authorities, as has happened in certain recent high-profile merger reviews.

Procedural changes 

Pre-notification 

Lengthy and protracted pre-notification discussions in UK merger control have become increasingly common in recent years, making it difficult for merger parties to anticipate at signing when Phase 1 clearance is likely to be achieved. 

Recognising the significant increases in the length of the pre-notification process, the CMA announced in February a new 40-working day KPI for the pre-notification phase (subject to some exceptions – including where the merging parties request more time). Whilst shorter pre-notification periods have already been observable in recent months, the draft guidance sets out in detail how this new KPI – which applies to all pre-notification discussions commenced after the launch of the consultation – will work in practice. It also provides more guidance on the pre-notification process as a whole.

Notably, the CMA will not begin the formal pre-notification period until it has received what it considers to be a sufficiently complete initial draft Merger Notice, together with supporting documents. The 40-working day KPI target therefore does not include the preceding period, which follows the submission of a Case Team Allocation Form. In effect, the CMA intends to delay the start of the “official” pre-notification period. In addition, the CMA also reserves the right to suspend the KPI where it deems the conduct of the parties to be inconsistent with its recently published Mergers Charter (which, amongst other things, requires parties to provide information in a timely manner). 

Importantly, unless the parties make a reasoned submission to explain why this would not be appropriate for their transaction, once it formally commences pre-notification the CMA intends to make a public announcement, publish a case page, and issue an invitation to comment – steps which it previously generally only took at the start of the formal Phase 1 review.

Further, the CMA is intending to introduce an expectation that pre-notification engagement with the parties will include: 

• an invitation to attend a "teach-in" session early on in the process. This is designed to allow the CMA to gain a better understanding of the merging parties’ businesses and hear directly from key individuals; and 
• “informal” update calls on case progress – including one approximately 20 business days into pre-notification, and another shortly before the end of pre-notification – in order to have more opportunities earlier on in the process for parties to engage with the CMA and to understand the areas of focus and the initial feedback received from third parties.

In sum, alongside its new 40-working day KPI, the CMA intends to introduce more publicity, formalism, and structure into the pre-notification process. While ostensibly this is done to prevent discussions from drifting and delaying the formal initiation of Phase 1, the changes the CMA is making also mean that the (formal) pre-notification process closely resembles the Phase 1 review itself. It is therefore too early to say whether the changes introduced by the CMA amount to more than window dressing, and will ultimately accelerate the process and reduce the overall length of CMA merger reviews – from first contact to Phase 1 decision.

Clearance 

As also previously announced, the CMA is targeting issuing clearance decisions in respect of straightforward mergers by working day 25, rather than the current working day 35 target. In order to facilitate this, it will issue substantially shorter decisions that more closely resemble its summaries of traditional Phase 1 decisions. 

As discussed in our recent article, we have already seen some evidence of the CMA putting these ambitions into practice, with clearance decisions (such as William Grant & Sons/The Famous Grouse) being issued significantly before day 35. The guidance is now therefore being amended to reflect this new approach.

Conclusion

Most of the changes set out in the consultation are unsurprising and formalise measures that were first announced several months ago to advance the 4Ps, and/or reflect what is now current CMA practice. 

On the other hand, the changes to the pre-notification discussion process (save as to its length) were not foreshadowed. Given the practical implications of some of these changes, the wisdom of implementing them before the CMA has completed its consultation could be questioned.

As to the CMA’s revised approach to jurisdiction, the proposals in the consultation take place within the constraints of the existing legislative framework, so the CMA can only move the dial so far. More interesting is the question of how willing the UK Government will be to shake up the regime as part of its forthcoming reopening of the EA02. 
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[1] This requires the target to have a UK turnover of at least £100m.
[2] This requires one party to have a UK turnover exceeding £350m and a share of supply of at least 33%, and other to have a connection to the UK.