Merger Control in a 'No Deal' Brexit

With the UK’s planned exit from the European Union on March 29, 2019 looming and the likelihood of an exit without a withdrawal agreement (a so-called 'No Deal' Brexit) increasingly probable, merging parties should be aware of the potential impact on competition reviews in the event of a No Deal Brexit.

Today, the EU regime precludes the UK (or any other EU member state) from exerting concurrent jurisdiction over reviews of mergers or acquisitions that have been notified to the European Commission. According to the UK Competition and Markets Authority’s (CMA) guidance, should there be a No Deal Brexit—and subject to the applicable jurisdictional requirements being met—once the UK leaves the EU, the CMA would obtain jurisdiction over:

1. transactions notified to the European Commission for which no decision has been issued on or before March 29; and
2. transactions notified to the European Commission after March 29. 

The CMA would be barred from reviewing a merger that has received EU clearance ahead of Brexit (unless the clearance decision is subsequently annulled), regardless of whether the parties have yet to close the transaction when the UK leaves the EU.

In light of the potential for a 'No Deal' Brexit, merging parties should consider the risk that the CMA exerts concurrent jurisdiction with the European Commission after March 29 when drafting conditions precedent and, where advisable, in formulating a strategy for engaging with the CMA, the European Commission, and other antitrust authorities.  While the UK government has confirmed that UK merger control filings will remain voluntary, the CMA will expect parties to engage and notify in appropriate cases.

This post comes to us from Wachtell, Lipton, Rosen & Katz and has been authored by Nelson O Fitts and Katharine R Haigh.