Important changes to the UK competition regime as of 1 January 2025 

In April 2023, we provided a detailed overview of the changes to the UK competition law regime that would result from the eagerly and long-awaited Digital Markets, Competition and Consumers Act (the "DMCC Act" or the "Act"). See here.

The key provisions of the Act relating to these changes came into force on 1 January 2025 (the Act also ushers in changes to UK consumer law). This OnPoint provides an overview of these changes as a quick reference guide.

Changes to the merger control thresholds

The Act has amended the existing jurisdictional thresholds to review mergers.

Transactions now qualify for investigation by the CMA if one of the following thresholds are met:

1. The target’s turnover exceeds £100 million in the UK (an increase from £70 million in line with inflation);
2. The parties’ combined share of the supply or acquisition of a particular good or service in the UK, or a substantial part of it, amounts to 25% or more; or
3. One party (generally the acquirer) has a share of at least 33% (either supplied by or to it) of goods or services of any description in the UK and a UK turnover of at least £350 million; and the other party (typically the target) carries on activities in the UK, or supplies goods or services to persons in the UK (a “UK nexus”).

A small business ‘safe harbour’ exception is available for any transaction where each party has an annual turnover of less than £10 million in the UK.

The UK’s merger control regime remains ‘voluntary’ and ‘non-suspensory’ such that there is no requirement to notify the CMA of a transaction pre-closing. However, parties that choose not to notify run the risk of being subject to a post-close investigation of the transaction by the CMA, with the risk of an initial enforcement order (“IEO”) being imposed, amongst other things, to prevent (any further) integration. At the conclusion of a post-close investigation, the CMA may impose remedies or unwind the transaction.

SMS regime for the largest technology companies

The Act also introduces a new regulatory regime, the Strategic Market Status (“SMS”) regime. This regime is overseen by a new body within the CMA, the Digital Markets Unit (“DMU”).

The SMS regime empowers the CMA to designate large technology firms as having SMS in relation to a ‘digital activity’ linked to the UK. The CMA must be satisfied that the firm has ‘substantial and entrenched market power’ and a position of ‘strategic significance’ in respect of that digital activity or activities in order to designate it as having SMS. SMS firms will be subject to specific ‘conduct requirements’ in relation to the digital activity, e.g. a prohibition on applying discriminatory terms, conditions or policies, self-preferencing or requiring users to use the SMS firm’s other products alongside the digital activity.

The CMA can also impose ‘pro-competitive interventions’ (“PCIs”) if it considers that the digital activity is having an ‘adverse effect’ on competition. PCIs can be both ‘behavioural’ or ‘structural’ in nature (e.g. a divestiture).  

The CMA announced on 14 January 2025 that it is launching its first SMS designation investigation into Google and in particular, Google's position in search and search advertising. This includes Google’s AI interfaces (for example, its Gemini AI assistant). In parallel to the SMS investigation, the CMA is considering the appropriate conduct requirements if Google is designated as an SMS firm in relation to these activities.

The CMA has stated that a second SMS investigation will be announced later in January 2025.

SMS firm merger reporting

Firms with an SMS designation will be required to report, prior to completion, any acquisition of a target with a UK nexus where:

1. The SMS firm’s shareholding in the target exceeds 15%, 25% or 50%; and
2. The consideration for the acquisition is at least £25 million.