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The CMA's draft revised guidance on assessing merger efficiencies arrives at a pivotal moment for U.K. merger control. Appropriate assessment of efficiency claims is central to the CMA's duty to promote competition for the benefit of consumers, and directly relevant to the U.K. government's broader growth agenda. A credible efficiencies framework is essential to realising the CMA's 4Ps framework: pace, predictability, proportionality, and process.
Overall, the Draft Revised Guidance represents a meaningful and welcome improvement to the CMA's approach. Three clarifications stand out in particular: that advancing efficiency evidence does not imply acceptance of a substantial lessening of competition; that “efficiency offences” are likely to be rare in practice; and that remedies can be used to lock in efficiencies and enable pro-consumer mergers to be cleared. Each of these points should reduce the deterrent effect that has, to date, discouraged merging parties from bringing forward efficiency claims for pro-consumer and pro-competitive mergers.
Our response also identifies areas where the guidance could be strengthened further:
- As concerns the approach to assessing evidence, we welcome the CMA's recognition that bespoke economic analysis constitutes legitimate evidence, and its commitment to applying the same evidentiary standards to claimed benefits as to potential harms. We suggest the CMA could go further by acknowledging the practical constraints on documenting innovation-related efficiencies and clarifying what evidence would be sufficient to conclude that there is the incentive – as distinct from the ability – to realise efficiencies post-merger.
- As concerns the conditions that must be met for efficiency claims to be accepted, we suggest that the CMA could provide more guidance on the assessment of pass-on to demonstrate benefits to UK customers – particularly for non-price benefits such as quality, range, and innovation. We welcome the CMA’s more practical description of merger-specificity, though we note the CMA could explicitly anchor its assessment of whether an efficiency is merger-specific to its conclusions on whether that efficiency would be expected in the counterfactual.
You can find our full response below or download it as a PDF.
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