Merger control thresholds lowered in three sectors

The thresholds at which the merger control regime is triggered in the UK has been lowered for three further sectors. This follows changes made in June this year in relation to businesses involved in the response to a pandemic (see our corporate update 2020/13) and changes in June 2018 for businesses involved in military, or military and civilian, use items; quantum technology; or computing hardware (see our corporate update 2018/10).

Under the Enterprise Act 2002 (Turnover Test) (Amendment) Order 2020 and the Enterprise Act 2002 (Share of Supply) (Amendment) Order 2020, lower thresholds apply to businesses involved in:

• artificial intelligence;
• advanced materials; and
• cryptographic authentication.

The UK merger control regime under the Enterprise Act 2002 now applies to transactions involving businesses in these sectors where:

• the target’s UK turnover exceeds £1 million (as compared with £70 million in most other sectors); or
• where a merger involves an enterprise which has a 25% or more share of supply of the relevant goods/services in the UK (as well as where the merger leads to an increase in the share of supply to, or above, the 25% threshold).

The amended thresholds in these sectors apply if the change of control takes place after 21 July 2020. Guidance on the changes to the turnover and share of supply tests for mergers from the Department for Business, Energy and Industrial Strategy has been updated to reflect these Orders.