UK Competition Watchdog to Explore Less Restrictive Merger Approvals

The UK’s Competition and Markets Authority (CMA) announced Thursday it will review its merger review process, exploring the use of behavioral remedies to avoid forced asset sales, Bloomberg reports.

This shift follows Prime Minister Keir Starmer’s call for reduced regulatory red tape to boost economic growth and criticism of the CMA’s historically stringent approach to mergers.

The CMA’s current practice often involves mandating significant structural changes, such as forcing companies to divest assets, before approving a merger. However, CEO Sarah Cardell will state in a speech later today that the regulator intends to adopt a more nuanced approach.

This move marks a departure from the CMA’s past practices, which have drawn criticism for potentially hindering investment. The recent blocking of Microsoft’s $69 billion acquisition of Activision Blizzard, later cleared after a restructured offer, exemplifies this concern. While acknowledging that concerns about a “chilling effect” on investment are often based on perception, Cardell stressed the importance of addressing these perceptions.

The CMA’s review aims to streamline the merger approval process, potentially using behavioral remedies – such as altering company practices – instead of forced structural changes.