Loss of potential, rather than actual, competition as a theory of harm in merger control has been a hot topic in competition policy debate. The UK's Competition and Markets Authority (CMA) does not face the same jurisdictional constraints that have prevented some of its peer agencies from investigating transactions which give rise to loss of potential competition concerns, and it has adopted a number of recent merger decisions in this area, in many cases after the conclusion of a detailed Phase 2 review. This article outlines the applicable legal framework and explores the CMA's recent decisional practice by reference to three categories of transaction potentially giving rise to a loss of potential competition where the concern is that absent the transaction: (1) one party would have been a market entrant; (2) one or both parties would have become a greater competitive constraint on the other; and/or (3) there was an alternative purchaser which would have made the target more competitive. It then summarizes the CMA's approach to assessing such transactions, including its intention, ability and incentive framework. It concludes by setting out the case for revision to the CMA's Merger Assessment Guidelines to reflect explicitly its approach to these types of transactions.
The loss of potential competition in UK merger control – the emergence of an analytical framework in the CMA's recent decisional practice