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Competition Act 1998 and the Enterprise Act 2002. Where the impact of the anti-competitive behaviour extends beyond the UK and affects trade between EU Member States, it is prohibited by Articles 101 and 102 of the EU Treaty (which mirror the Chapter I and Chapter II prohibitions). Following BREXIT, the CMA no longer has powers to enforce Articles 101 and 102 – these are therefore the sole preserve of the European Commission. In practice, the UK rules are interpreted consistently with their EU counterparts and so it makes little difference which of them are applicable to a particular situation. The Chapter I and Chapter II (and Article 101 and 102) prohibitions apply to two main types of anti-competitive activity: • restrictive agreements or arrangements between enterprises which have an appreciable impact on competition (as set out under the Chapter I/Article 101 prohibitions); and • conduct which amounts to an abuse of a dominant market position (as set out under the Chapter II/Article 102 prohibitions). The penalties for breaching these rules are significant. Parties can be liable for fines of up to 10% of global turnover, whilst provisions in agreements that breach Chapter I or Article 101 are void and unenforceable. Companies can also be subject to actions for damages from competitors and/or customers who are able to demonstrate that they have suffered loss(es) as a consequence of the competition law breach. The most serious infringements of Chapter I/Article 101 can result in individuals being subject to criminal sanctions and directors facing disqualification orders. As well as the CMA, various UK “sectoral” regulators have powers to apply the
competition law rules in particular industries, for example Ofcom within the communications sector and Ofgem in the gas and electricity sector. These authorities (in common with the CMA) have significant powers to investigate suspected anti-competitive activity, including entering and searching business and private premises without any prior warning. Competition law cases are also increasingly being prosecuted through the UK courts and via the specialist Competition Appeal Tribunal ( CAT ). Merger control Mergers in the UK are governed by the Enterprise Act 2002. A qualifying transaction for UK merger control purposes is one which involves (at least) the acquisition of material influence by one enterprise over another and where either: • the UK turnover of the target enterprise is more than £100 million; or • the merging parties’ combined share of supply of goods/services of a particular description in the UK/a substantial part of the UK is 25% or more (unless each party has a UK Turnover of less than£10 million, in which case the transaction is exempted); or • (for any transaction completed after 1 January 2025), (a) one party has a share of supply of goods or services of a particular description of 33% or more and UK turnover of more than £350 million, and (b) the other party meets certain UK nexus criteria The third test above known as the hybrid test has been introduced to catch in particular so called “killer transactions”, where a large acquirer (e.g. a tech company) seeks to acquire any smaller entity with low/little UK turnover. Such transactions would previously have been
ILN Corporate Group – Establishing a Business Entity Series
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