On 20 January, the UK Government announced a consultation on planned reforms to the UK’s merger and markets regime. Key proposed changes include narrowing certain jurisdictional thresholds, centralising Phase II decision-making within the Competition and Markets Authority (CMA) Board through removal of the Phase II independent panel (CMA Panel), and the introduction of a new “single-phase” market investigation review process.
Whilst reform may be welcome to businesses in some respects, the proposals are likely to further centralise decision-making power within the CMA, as well as increasing the oversight of Government in the administration of key aspects of the UK’s antitrust regime. For merger decisions in particular, the removal of the CMA Panel, combined with the Government’s commitment to retain the judicial review standard of appeal, may reignite calls for a full merits review standard to be introduced alongside the proposed reforms.
Why now?
Having gained a reputation for taking bold stances on global mergers with arguably limited nexus to the UK (e.g., Facebook/Giphy and Sabre/Farelogix), the CMA has sometimes been accused of deterring some transactional investments in the UK economy. As part of a wider Regulatory Action Plan, the Government in January 2025 replaced the incumbent CMA Chair, Marcus Bokkerink, with Doug Gurr (formerly a global VP and the head of Amazon UK). The Government also committed to reviewing and narrowing the UK’s notoriously broad jurisdictional thresholds under the Enterprise Act 2002.
A resulting flurry of activity has already seen the CMA prioritising cases that have a direct impact on UK consumers or businesses; adopting a more neutral stance towards behavioural remedies in suitable cases; and promising to increase the pace, predictability, and proportionality (the “4Ps”) of its enforcement activities, in particular for merger reviews.
The proposed reforms consolidate and entrench this direction of travel.
Theme 1 – re-shaping decision making in Phase II mergers and markets review
A key proposal is to change how decisions are taken in Phase II merger and market investigations (i.e., in-depth review stages). At present, such investigations are determined by the CMA Panel. The CMA Panel comprises a pool of more than 30 independent senior experts (drawn from legal, economic, and business backgrounds) whose role has been to “bring a fresh pair of eyes” to complex cases. Because Phase II decisions are made by the CMA Panel, rather than the CMA executive, there have been situations in which the CEO and other senior officials of the CMA have had to explain and defend Phase II decisions that they have not taken themselves.
The Government proposes to:
- Replace the CMA Panel with sub-committees of the CMA Board, comprising CMA executives, non-executive directors and non-CMA staff industry experts.
- Review the CMA Panel’s role in reviewing sectoral regulator decisions (e.g., price determinations) such as those in the energy and water sectors.
The Government’s stated objective is to provide greater clarity on decision-making roles and responsibilities and to “ensure that those ultimately accountable to Parliament are directly involved in the most significant mergers and markets decisions”.
The independent and expert nature of the CMA Panel has previously been cited by the Government as a reason for retaining the judicial review appeal standard for merger and markets cases, rather than moving to full merits review. However, the removal of the CMA Panel from Phase II decisions will centralise decision-making power within the CMA, without any change to the relatively high judicial review threshold for appeals of those decisions.
Theme 2 – increasing predictability in merger control review
The consultation also proposes changes to enhance certainty around when and how mergers are reviewed. Building on prior reforms and guidance updates that have sought to embed the CMA’s 4Ps policy objectives, these include:
- Clarifying the statutory tests that determine whether the CMA can investigate a transaction. Specifically, the Government proposes to:
- Clarify the “share of supply” and “hybrid” tests, which (among other limbs) allow the CMA to review transactions where the parties together supply or acquire at least 25% (share of supply) or 33% (hybrid) of a particular good or service in the UK or a substantial part of it. Currently, the CMA has broad discretion to define the relevant category of goods or services and how supply is measured. The proposals would narrow that discretion by limiting the CMA to a closed set of specified statutory criteria – value, cost, price, quantity, capacity and number of workers employed.
- Clarify the “material influence test” and “de facto” control tests,by specifying a closed list of factors that the CMA may take into account when establishing that the thresholds are met: (i) shareholding or voting rights thresholds; (ii) board representation or appointment rights; (iii) special voting or veto rights over strategic decisions; (iv) access to confidential strategic information; and (v) commercial, financial or consultancy arrangements. These largely codify factors the CMA already takes into account in practice. A delegated power would allow the list to be updated over time to reflect emerging competition risks.
- Extending the period following a Phase I decision for agreeing remedies. While merging parties would still be required to submit remedy proposals within five working days of a decision to refer a merger to Phase II, the overall decision period would double from 10 to up to 20 working days. This is intended to give both the CMA and merging parties more time to negotiate solutions, avoid “near miss” outcomes and potentially avoid a full Phase II investigation.
Theme 3 – streamlining the market investigation regime
Alongside the merger control proposals, the Government is also recommending reforms to the UK’s “markets” regime. Proposed changes include:
- A streamlined, single-phase “market review tool”, replacing the existing two-stage system. This would shorten timelines, reduce duplication and increase flexibility to scope investigations and remedies. Revised review timelines are expected to take between 18 and 24 months (subject to a statutory backstop of 24 months, extendable by six-months in exceptional circumstances), with many expected to finish sooner where less intrusive remedies are contemplated.
- A single, consumer-focused legal test replacing the current (alternative) tests applied at the market study and market investigation stages. Under the proposed framework, intervention would be based on the “adverse effect on consumers” test, rather than the current Phase II market investigations standard which requires the CMA to determine whether any feature of a market gives rise to an “adverse effect on competition”.
- Mandatory review periods and sunset clauses built into remedies, with the CMA required to undertake mandatory periodic reviews of remedies at least once every 10 years.
- Enhanced coordination between the CMA and concurrent regulators, to ensure that the market review tool is used more effectively across regulated sectors.
Theme 4 – cross-cutting reforms
The consultation also proposes broader reforms across the CMA’s competition and consumer protection responsibilities, including:
- Enhanced investigative powers for algorithmic and digital market enforcement. Proposals include enabling the CMA to require businesses to generate or simulate algorithmic outputs, vary how services or content are presented to users, and carry out specified tests or demonstrations. The aim is to improve the CMA’s ability to understand algorithmic behaviour, reduce investigative delays and more effectively address any harm.
- Enhanced role for the Government in a wider range of key CMA guidance documents. This could require the CMA to consult with or seek approval of the Secretary of State prior to finalising a wider range of guidance documents (including, for example, CMA guidance on mergers and markets work).
Next Steps
The consultation is open until 31 March 2026. Covington would welcome the opportunity to support clients in preparing responses or considering the potential impact of the proposals on their businesses. Please reach out to any of the authors or your usual Covington contact if you have questions or comments.