The Treatment of Efficiencies in Merger Review: An International Comparison

Previous | Table of Contents | Next

10 Appendix C - Relevant UK Merger Provisions

Relevant provisions of the UK Fair Trading Act 1973

S. 64 Fair Trading Act

A merger situation qualifying for investigation is taken to occur if:

(a) two or more enterprises cease to be distinct enterprises, or there are arrangements in progress which will lead to enterprises ceasing to be distinct;
(b) at least one of which was carried on in the United Kingdom or under the control of a body corporate incorporated in the United Kingdom;
(c) Either the merger has not yet taken place or it has taken place not more than four months before the reference is made, unless it took place without public notice and without the Secretary of State or the Director-General being told about it (in which case the four-month period starts from the announcement or the time the Secretary of State or the Director-General is told); and
(d) Either:

• Those enterprises would together supply or receive at least one-quarter of the goods or services of a particular description supplied in the United Kingdom or a substantial part of it; or,
• The value of the assets taken over exceeds £70 million.

S. 65 Fair Trading Act

Enterprises are taken to cease to be distinct enterprises if either:

(a) they are brought under common ownership or common control - whether or not the business to which either of them formerly belonged continues to be carried on under the same or different ownership or control - or,
(b) either of the enterprises ceases to be carried on at all and does so in consequence of an arrangements or transaction entered into to prevent competition between the enterprises.

Enterprises are taken to be under 'common control' if they are:

(a) enterprises of interconnected bodies corporate; or,
(b) enterprises carried on by two or more bodies corporate of which one and the same person or group of persons has control; or,
(c) an enterprise carried on by a body corporate and an enterprise carried on by a person or group of persons having control of that body corporate.

A person is regarded as 'having control' of an enterprise if he is able directly or indirectly materially to influence the policy of that enterprise, although not having a controlling interest in it.

S. 73 Fair Trading Act

If as a result of a reference to the Monopolies and Mergers Commission, a merger situation qualifying for investigation is found to exist and it is found that it operates or may be expected to operate against the public interest the Secretary of State is empowered to take action to remedy or prevent any adverse effects specified in the Commission's report.

S. 84 Fair Trading Act

In determining whether any particular matter operates, or may be expected to operate, against public interest, the Commission shall take into account all matters which appear to them in the particular circumstances to be relevant and, among other things, shall have regard to the desirability

(a) Of maintaining and promoting effective competition between persons supplying goods and services in the United Kingdom;
(b) Of promoting the interests of consumers, purchasers and other users of goods and services in the United Kingdom in respect of the prices charged for them and in respect of their quality and the variety of goods and services supplied;
(c) Of promoting, through competition, the reduction of costs and the development and use of new techniques and new products, and of facilitating the entry of new competitors into existing markets;
(d) Of maintaining and promoting the balanced distribution of industry and employment in the United Kingdom; and
(e) Of maintaining and promoting competitive activity in markets outside the United Kingdom on the part of producers of goods and of suppliers of goods and services, in the United Kingdom.