Lessons from the Fox/Sky bid: know the merger rules

The UK’s Competition and Markets Authority (CMA) recently decided that the proposed takeover of Sky by 21st Century Fox (Fox) would not be in the public interest. The decision was based on media plurality concerns with the CMA wanting to ensure a diverse range of viewpoints are made available to consumers.

This proposed takeover was ongoing when The Walt Disney Company (Disney) made a bid to take over Fox, the latter of which owns 39% of Sky. If the Disney takeover is successful and if the Fox takeover of Sky is also authorised by the CMA (a final verdict is expected in June this year), Sky will come under the full ownership of Disney. The Takeover Panel also ruled that if only the Disney takeover is successful, they will be required to make a full takeover bid for Sky.

So, how could the merger rules affect you? A company looking at a potential merger or acquisition in the UK, in a similar sector, should consider the importance of the CMA’s competition rules. Alternatively, a company could be affected by a merger of similar businesses and want to know if, and how, it will be protected to ensure competition remains fair.

Investigation

A merger may qualify for investigation by the CMA where:

  • two or more enterprises (the activities of a business) cease to be distinct; or
  • there are arrangements in progress or in contemplation which, if carried out, would lead to enterprises ceasing to be distinct;
  • and either:
    • the combined enterprise would have a market share of 25% or more in the UK or an existing market share of 25% or more would be enlarged; or
    • the UK turnover of the target business exceeds £70 million.

The review process

When investigating a merger, the CMA follows a two stage process. The first stage is an initial review of the merger to establish whether it raises any competition concerns – the ‘phase one’ investigation. The second stage, the ‘phase two’ investigation, is an in-depth review of more controversial mergers.

Following the phase one review the CMA is under a ‘duty to refer’ mergers for a phase two investigation where that merger has resulted, or is likely to result, in a substantial lessening of competition in a UK market. The CMA can investigate a merger based on its own initiative using information available in the public domain or following notification from one of the parties to the merger. It is also possible for a third party to challenge a proposed merger.

Click to view all articles for the EPIC:
Or click to view the full company profile:
    Share on facebook
    Facebook
    Share on twitter
    Twitter
    Share on linkedin
    LinkedIn
    Gateley Holdings Plc

    More articles like this

    Hardman & Co

    Gateley Plc Excellent full-year results

    Gateley reported another strong set of results, again beating market expectations, underlining its consistency and predictable performance. A broad-based, legal and professional services group, Gateley is a leader in serving the UK mid-market. It continues to deliver on

    Gateley Holdings Plc

    Gateley Holdings plc Revenue up 20.1% to £46.4m

    Michael Ward, CEO of Gateley, said: “I am delighted with the performance of the business in the first half of the financial year. Our proven strong and resilient business model and our focused diversification strategy has continued to

    Hardman & Co

    Gateley Plc Strong trading and industry opportunity

    Gateley Plc (LON:GTLY) trading statement in respect of 1H 2019 was sparkling, with 20% revenue growth in 1H and a highly confident outlook for 2H. We expect to revise our forecasts up by £2m at the revenue line

    Gateley Holdings Plc

    Gateley Holdings strong financial performance continues

    Commenting, Michael Ward, Chief Executive Officer of Gateley, said: “Our strong financial performance continues to enable the Board to invest in the future of the Group. It’s been a busy six months, including the acquisitions of GCL Solicitors

    Gateley Holdings Plc

    Gateley (Holdings) Plc Acquisition of Kiddy & Partners

    Commenting on the acquisition, Michael Ward, Chief Executive Officer of Gateley said: “This acquisition significantly broadens and strengthens our Employment and People Services offering. There will be clear opportunities for us to collaborate and deliver integrated advice and