Frontier Economics has submitted its response to the Competition and Markets Authority’s (“CMA”) consultation document on the Draft Revised Guidance in relation to Phase 2 merger investigations.

We welcome the opportunity to respond to the CMA’s consultation. In our view the Draft Revised Guidance is clear and will introduce some positive changes that could help bring about more efficient and effective engagement between the CMA and the merging parties in the early stages of Phase 2. We also welcome the opportunities that the process will create for productive engagement between the CMA’s economists and the parties’ economic advisers, the potential benefits of which we discussed in our response to the CMA call for information last summer (available here).

While the new process will bring concrete benefits, it could also introduce some risks in the latter stages of Phase 2. In particular, the changes might lead to fewer opportunities for the parties to review and respond to the CMA’s evolving thinking in the more advanced stages of the investigation. The CMA should also be careful to ensure that the early publication of its provisional findings before the Main Party Hearing (“MPH”) has taken place does not encourage unconscious bias in remainder of its investigation.

In light of this, we would urge the CMA to make the most of its proposed update calls, as well as working-level meetings with the merging parties and their advisors, to allow for an open and productive dialogue throughout the investigation. We also think there would be merit in the CMA publishing a second interim report (“IR”) between the MPH and its final decision, even if its overall thinking remains unchanged. This would enable the first IR to set out the CMA’s developing thinking, with the second IR setting out a blueprint for the final decision.

Read our full response here