M&A and merger control: What key trends should parties know for 2025?

Parties planning deals in 2025 should be aware that the regulatory environment regarding merger control continues to evolve and is increasingly complex, with important implications in terms of whether/where transactions trigger reviews and particular areas of scrutiny. 

Below we set out some of the key themes and developments to know and keep an eye on.

The challenging geopolitical climate

Geopolitical and macroeconomic change and uncertainty may impact the outcome of merger control reviews in 2025, and parties should plan accordingly. Cost of living pressures remain a concern and 2024 saw significant elections and political shifts, not least in the US and UK, while Teresa Ribera replaced Margrethe Vestager as the Commissioner responsible for EU competition policy.

The UK Competition and Markets Authority (CMA) is under significant pressure from the new Labour government to do more to prioritise economic growth, with the CMA’s Chair, Marcus Bokkerink, recently replaced due to concerns in this regard. The new government is keen to reduce the burden for business, but it remains to be seen how this will play out with the CMA taking independent decisions in its cases under the existing legal regime.

An area where this might have an impact is the CMA’s willingness to accept behavioural remedies in merger cases, with the CMA having a reputation as being less receptive to behavioural remedies than the European Commission. Its recent decision clearing Vodafone/Three with behavioural commitments – which include the parties having to invest billions rolling out a combined 5G network across the UK – has generated much debate. The CMA will launch a review of its approach to merger remedies in 2025 and the outcome of that may best indicate whether this a watershed moment.

The “AI race” is another area to watch.

Artificial intelligence (AI) is already of considerable interest to the CMA and other competition authorities globally – seeking to understand AI, potential areas of competition concern, and reviewing relevant AI partnerships and collaborations under merger control rules. But the UK government’s flagship new strategy to embrace AI and embed the UK’s position as a global leader in AI, and broader growth agenda, might be expected to impact the CMA’s work in this area.

At EU level, there are several proposed areas of reform, set out in the Draghi report on the future of EU competitiveness and President Ursula von der Leyen’s mission letter to Teresa Ribera. These include revising the Commission’s Horizontal Merger Guidelines and a possible new “innovation defence”.

Continuing focus on “below threshold” reviews

An ongoing hot topic is whether/how authorities may take jurisdiction over “killer acquisitions” (or “reverse killer acquisitions”) – high-value deals where large acquirers buy smaller, innovative rivals with little or no turnover or market presence, usually in sectors where innovation and research and development are vital. Such transactions tend to fall below traditional turnover-based thresholds, but authorities may nonetheless want to probe potential competition concerns.

Germany and Austria introduced transaction value thresholds to review such deals. Controversially, the European Commission expanded its approach to Article 22 referrals under the EU Merger Regulation (EUMR), whereby Member States can ask the Commission to review transactions not meeting the EUMR turnover thresholds.

In 2021, the Commission for the first time began encouraging referrals for transactions not even qualifying for national review in any Member State, but, in September 2024, the Court of Justice of the European Union (ECJ) overruled this interventionist approach in Illumina/GRAIL.

While the ECJ’s judgment is a setback for the Commission, its practical impact may be limited. Several Member States – including Denmark, Ireland and Italy – have revised their national regimes with the aim of catching acquisitions of this type, meaning (in turn) that such transactions can still be referred to the European Commission under Article 22.

This means that parties and their advisers must navigate ongoing uncertainty about whether/where deals may be reviewed. Similar concerns arise from suggestions that the general competition law rules prohibiting anti-competitive agreements or abuse of dominance might be used to challenge M&A transactions, although we expect that this will remain unusual.

UK merger control reforms

Important changes to the UK merger control regime came into force on January 1, 2025 under the Digital Markets, Competition and Consumers Act 2024 (DMCC Act), including regarding the CMA’s merger control thresholds.

The target UK turnover threshold has increased to £100 million (from £70 million) and the 25 percent “share of supply” threshold is now met only if at least one relevant party has UK turnover exceeding £10 million.

There is also a new “hybrid threshold” – catching transactions where one party (typically the acquirer) has UK turnover exceeding £350 million and a 33 percent UK share of supply and another party has a specified UK nexus – strengthening CMA jurisdiction over killer acquisitions and other non-horizontal transactions involving large acquirers and small targets.

Other notable changes include higher procedural penalties. That would ordinarily mean that we would expect to see the CMA especially ramping up penalties where parties fail to comply fully with information requests in merger cases, but in the rapidly evolving landscape such actions may be perceived as anti-business and so anti-growth. In that case, the new procedural powers could be a damp squib.

While notifications remain voluntary under the UK’s general merger control regime, “SMS firms” – large tech firms designated with “Strategic Market Status” under the UK’s new digital regulatory regime introduced by the DMCC Act – will be subject to new mandatory reporting requirements for qualifying transactions involving their groups.

Finally, parties facing a possible UK Phase 2 review should familiarise themselves with changes to the CMA’s Phase 2 procedures introduced in 2024, and now starting to be applied in practice. These reforms have largely been welcomed, especially changes increasing engagement with CMA decision-makers.