Frontier Director speaks on substantive merger assessment at Law Society Competition Section annual conference

David Parker, a Director at Frontier, spoke today at the Law Society’s Competition Section annual conference in London about recent developments in the Competition and Markets Authority’s (CMA’s) approach to substantive issues in UK merger control.

David commented that the CMA’s substantive approach at Phase 1 can vary depending on the facts of each individual case. The appropriate test for parties to use in upfront risk assessment is  to understand how the CMA is likely to approach the case, rather than relying too heavily on approaches taken in previous cases, although these remain a useful starting point.

David also identified that surveys presented a particular challenge. These are often undertaken to calculate diversion ratios (which measure the extent to which one merging party is the second preference of the customers of the other merging party). While surveys can be the only way to identify diversion ratios in some cases, they can raise methodological issues, even in circumstances where they have been discussed with the CMA in advance. David commented that Parties should think carefully before undertaking survey work.  At Phase 2, the most significant new development has been in mergers with multiple local markets. For efficiency reasons, the CMA is increasingly looking for ways to predict diversion ratios which do not require surveys to be carried out in every area. These include conducting surveys in a small number of areas, or alternative approaches such as revenue impact analysis aimed at identifying underlying drivers of diversion ratios.

Frontier has assisted many merging parties to achieve CMA merger clearance at Phase 1 and Phase 2.

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