Author-Naman Malik, LLM University of Hertfordshire,Hatfield, UK
TO THE POINT
Brexit has completely changed the legal system that used to regulate cross-border mergers and acquisitions between the UK and the EU. Previously, companies involved in international deals could rely on the EU Merger Regulation, which allowed their transactions to be reviewed through a single authority based in Brussels. This made the process far more straightforward, saving both time and money while also ensuring that businesses were treated fairly and consistently across all member states. However, once the UK left the EU, this smooth system no longer applied. As a result, the clear and unified structure was replaced by a more complicated and divided regulatory process, making cross-border deals more uncertain and difficult to manage. The UK’s departure reinstated the Competition and Markets Authority as an independent regulator with full jurisdiction over transactions affecting UK markets, even when those same deals simultaneously face European Commission scrutiny. The result is a fragmented dual-regime system where identical transactions undergo parallel reviews according to different legal standards, procedural timelines and evidential requirements. Companies now navigate overlapping jurisdictions that can reach conflicting conclusions about the same competitive concerns, creating unprecedented uncertainty for international deal-making.
ABSTRACT
Brexit represents a watershed moment for cross-border merger control between the United Kingdom and European Union. The withdrawal ended decades of regulatory integration under the EU Merger Regulation, replacing a unified one-stop-shop system with parallel UK and EU review processes that operate independently and often inconsistently. This article explores the multifaceted challenges facing businesses pursuing cross-border mergers in this fragmented environment. Through analysis of relevant case law including the Illumina-Grail litigation, the Microsoft-Activision review and the blocked Cargotec-Konecranes merger, this article demonstrates how the new dual-jurisdiction system creates substantial compliance burdens, increases legal uncertainty and fundamentally alters strategic planning for international transactions. The analysis reveals that while Brexit restored UK regulatory sovereignty, it simultaneously imposed significant costs on businesses operating across both jurisdictions.
USE OF LEGAL JARGON
Understanding post-Brexit merger control requires familiarity with specialized terminology that defines how both jurisdictions assess transactions. The European Union applies the Significant Impediment to Effective Competition test under Council Regulation 139/2004, evaluating whether concentrations would harm competitive dynamics within the internal market. The UK Competition and Markets Authority employs the Substantial Lessening of Competition test under the Enterprise Act 2002, examining whether mergers adversely affect competition in UK markets. Both frameworks address unilateral effects, coordinated effects and non-horizontal theories of harm, yet their evidential preferences and analytical emphasis differ meaningfully. Jurisdictional thresholds determine regulatory competence through turnover-based criteria in the EU and either turnover or share-of-supply tests in the UK. The EU system mandates suspensory obligations preventing completion before clearance, while UK law nominally permits voluntary notification subject to the CMA’s call-in powers and interim enforcement orders that effectively create standstill requirements. Procedural concepts including Phase I initial examination, Phase II in-depth investigation, market definition, remedies including structural divestments and behavioral undertakings, and cooperation mechanisms all form the technical vocabulary essential for navigating this complex regulatory landscape.
THE PROOF
The European Merger Regulation, first adopted in 1989 and substantially revised in 2004, was explicitly designed to eliminate the burden of multiple national reviews by centralizing jurisdiction in Brussels. This one-stop-shop principle provided legal certainty and operational efficiency, ensuring that companies contemplating cross-border mergers within the European Economic Area faced a single, predictable regulatory process. For transactions meeting Community dimension thresholds, the European Commission held exclusive competence, with its decisions binding across all member states.
Brexit dismantled this coherent framework entirely. The Competition and Markets Authority regained full independence to scrutinize transactions affecting British markets, regardless of whether those same deals simultaneously underwent European Commission review. This created a genuinely bifurcated system where the same concentration faces dual examination under different legal tests, procedural timelines and evidential standards. Companies must prepare evidence packages calibrated to satisfy both the Commission’s consumer-welfare framework emphasizing price effects and the CMA’s more forward-looking approach that places substantial weight on internal company documents and innovation theories of harm.
This regulatory fragmentation creates tangible business consequences. Transaction costs increase substantially due to duplicative legal fees, economic analysis and engagement with two separate authorities operating on non-aligned schedules. The EU system mandates notification and prohibits completion until clearance, while UK law technically permits voluntary notification but the CMA’s intervention powers create practical standstill requirements that pull in opposite directions. The possibility of asymmetric outcomes—clearance in one jurisdiction alongside prohibition in the other—has moved from theoretical concern to demonstrated reality.
The failed Cargotec-Konecranes merger clearly highlights the difficulties created by regulatory divergence. Although the European Commission appeared willing to approve the transaction after the companies proposed remedies to address competition concerns, the UK Competition and Markets Authority took a different view. It considered these measures inadequate and ultimately blocked the merger altogether. This situation exposed how differently the two authorities assess similar competition issues. A similar pattern can be seen in the Microsoft-Activision case, where the CMA adopted a firm stance on a deal of global importance, showing that approval from the UK can effectively determine whether a transaction succeeds, even when other jurisdictions are prepared to give clearance.
Statistical evidence reinforces these practical concerns. Since 2021, the CMA has undertaken a marked increase in complex Phase II investigations, many involving global transactions with only indirect connections to UK markets. In 2021 alone, DG Competition reviewed 403 merger notifications, while the CMA simultaneously expanded its own enforcement activities.
Procedural differences compound substantive divergence. Commission Phase I reviews run 25 working days, extendable to 35 days with remedy proposals, while UK Phase I lasts 40 working days. Phase II investigations take 90 working days in the EU with possible extensions, compared to 24 weeks in the UK with potential eight-week extensions. These misaligned timelines force companies into complex sequencing strategies that rarely succeed cleanly.
Remedies illustrate execution risk most clearly. Both systems prefer structural divestments, but acceptance thresholds for behavioral commitments diverge significantly. A remedy package satisfying the Commission’s analysis may fail to cure UK concerns due to different market definitions or varying document interpretations. Companies must therefore build substantial complexity into transaction documentation, including dual-clearance conditions, cooperation provisions tailored to both authorities and realistic long-stop dates accounting for potential delays.
CASE LAWS
Hutchison 3G UK / Telefónica UK (O2) (Case COMP/M.7612)
In 2016, the European Commission prohibited Hutchison 3G UK’s proposed acquisition of Telefónica UK, which would have reduced UK mobile network operators from four to three. The Commission found serious unilateral competition concerns, as the combined entity’s market share would exceed forty percent in key segments. The consolidation threatened consumer choice, pricing and service quality. Following Phase II investigation, the Commission prohibited the merger, concluding it would significantly impede effective competition. This case demonstrates the practical application of the SIEC test in concentrated market scenarios.
Illumina Inc v European Commission (Case C-611/22 P)
The Court of Justice’s September 2024 judgment fundamentally clarified jurisdictional limits under Article 22 of the EU Merger Regulation. Illumina acquired Grail, a transaction falling below EU and national thresholds, yet several Member States referred it to the Commission under Article 22. The Commission accepted jurisdiction and prohibited the merger. The CJEU reversed, holding that accepting Article 22 referrals for deals lacking national jurisdiction was ultra vires. The Court reaffirmed that turnover thresholds provide essential legal certainty and cautioned against regulatory overreach, limiting Commission reach and highlighting tensions between aggressive enforcement and jurisdictional constraints.
Cargotec Corporation / Konecranes Plc
The proposed merger between these Finnish industrial equipment manufacturers exemplifies post-Brexit regulatory divergence. While the European Commission appeared prepared to accept proposed remedies, the CMA rejected those remedies and prohibited the merger in March 2022, reflecting different analytical approaches between authorities examining identical competitive concerns. This case demonstrates precisely the type of conflicting outcome that the one-stop-shop system was designed to prevent.
Microsoft Corporation / Activision Blizzard
Microsoft’s proposed $68.7 billion acquisition of Activision Blizzard tested the CMA’s post-Brexit assertiveness. In April 2023, the CMA initially blocked the transaction based on cloud gaming concerns. Following Microsoft’s restructured proposal, the CMA ultimately cleared the transaction in October 2023. The case illustrated the CMA’s willingness to intervene in globally significant deals and its capacity to influence transaction structures materially, demonstrating how the authority exercises influence disproportionate to UK market size.
Facebook Inc / Giphy Inc
The CMA’s prohibition of Facebook’s Giphy acquisition in November 2021 represented significant assertion of independent UK jurisdiction post-Brexit. The authority found concerns about input foreclosure and harm to innovation in digital advertising. Significantly, the European Commission did not conduct parallel proceedings, meaning the CMA’s intervention occurred independently of European oversight, illustrating how regulatory divergence enables different enforcement priorities.
CONCLUSION
Brexit has fundamentally transformed cross-border merger control, replacing a unified regulatory system with a fragmented dual-jurisdiction framework that creates substantial challenges for businesses. The end of the one-stop-shop principle represents more than administrative inconvenience; it reflects fundamental restructuring of how companies navigate regulatory approval, manage legal risk and structure cross-border deals.
The practical consequences are clear. Companies face duplicative filing requirements, non-aligned procedural timelines and potentially conflicting substantive assessments. Transaction costs increase materially due to parallel legal representation and engagement with two authorities that may reach different conclusions. The possibility of asymmetric outcomes has moved from theoretical risk to demonstrated reality.
For legal practitioners and corporate strategists, the post-Brexit landscape demands sophisticated risk management and careful transaction structuring. Dual-clearance conditions, remedy-allocation provisions and extended long-stop dates have become essential contractual protections. Companies must develop evidence strategies calibrated to satisfy both authorities, recognizing that what persuades one may not satisfy the other.
Ultimately, the post-Brexit environment reflects broader tensions between national sovereignty and economic integration. The UK’s regulatory independence enables tailored approaches to domestic concerns, yet this flexibility comes at the cost of increased complexity for cross-border commerce. Whether this proves sustainable will depend on how effectively authorities balance regulatory autonomy with practical recognition that fragmented oversight imposes real costs on international business activity.
FAQs
What was the one-stop-shop system under EU merger control?
The one-stop-shop mechanism meant that transactions meeting Community dimension thresholds underwent a single regulatory review by the European Commission, with its decision binding across all member states. This eliminated multiple national filings, reduced costs and ensured consistent treatment throughout the European Economic Area.
How has Brexit changed merger control for UK-EU transactions?
Brexit ended UK participation in the unified EU system, restoring the CMA as an independent regulator. Companies now face parallel review processes in both jurisdictions for identical transactions, creating duplicate filing requirements, non-aligned timelines and the possibility of conflicting conclusions.
What are the main differences between the CMA’s and Commission’s approach?
The Commission generally applies a consumer-welfare framework focusing on price effects and market concentration. The CMA exhibits greater willingness to act on forward-looking theories emphasizing innovation competition and places substantial weight on internal company documents, meaning evidence optimized for one authority may not persuade the other.
Can a merger be approved in the EU but blocked in the UK?
Yes, the Cargotec-Konecranes case exemplifies this, where the Commission appeared prepared to accept remedies that the CMA found insufficient. Similarly, the CMA’s Facebook-Giphy prohibition occurred without parallel Commission proceedings, reflecting genuine execution risk for cross-border transactions.
What practical steps should companies take when planning UK-EU mergers?
Companies must build dual-clearance conditions into transaction documentation, establish cooperation provisions managing information flow with both authorities, include remedy-allocation clauses and set realistic long-stop dates with genuine headroom for two independent regulatory processes.
