The UK’s merger control regime has been a focus of reform since the election of the current Government in mid-2024. The Government’s stated objective of kickstarting economic growth is widely seen as the driver behind reforms aimed at ushering in a more M&A-friendly regulatory environment.

Against this background, on 3 June the CMA published a consultation on draft revised guidance on merger efficiencies for inclusion in the CMA’s Merger Assessment Guidelines (MAGs), following a call for evidence issued earlier this year. 

In this article, we highlight some key changes proposed in the CMA’s draft guidance, and offer some reflections on areas where the CMA could go further in order to advance its “4Ps” framework focused on pace, predictability, proportionality and process, which the authority announced in 2025.

The CMA’s key changes

While the CMA’s draft guidance represents an important update to its approach to mergers, no fundamental change is proposed to the analytical framework against which efficiencies will be judged, which continues to be based on two separate categories:

• Rivalry-enhancing efficiencies (REEs): which induce the merging parties to act as stronger competitors to their rivals, and which may prevent a substantial lessening of competition (SLC). REEs must: enhance rivalry in the market(s) where an SLC may otherwise arise; be timely, likely and sufficient to prevent an SLC; be merger-specific; and benefit customers in the UK. REEs strengthen the ability and/or incentive of the merged entity to act pro-competitively for the benefit of consumers, for example reductions to the merged entity’s marginal or variable costs.
• Relevant customer benefits (RCBs): these are benefits which do not prevent a finding of an SLC, but which may outweigh the adverse effects of an SLC and therefore mitigate the need for a phase 2 investigation, or remedies. Unlike REEs, RCBs are not limited to the market(s) where an SLC may arise.

The key changes proposed by the CMA relate to its approach to assessing REEs:

Earlier engagement on efficiencies

The draft guidance encourages parties to engage with the CMA on efficiencies early on in its review process and clearly states that submission of evidence on efficiencies in no way implies that the parties accept the existence of an SLC. Indeed, under the draft guidance, for the first time, REEs will be assessed as part of the CMA’s overall assessment of the competitive impact of the merger, rather than assessed after the CMA has reached its conclusion on harm (though by definition, a post-SLC assessment will continue for RCBs). These welcome developments should mean that efficiencies are given a more prominent role in the merger assessment process, though the degree to which efficiencies can realistically offset competition concerns will vary from case to case.

More guidance on sufficiency of efficiencies

The draft guidance supplements the CMA’s existing position under the MAGs by expanding on the type of REEs which may be considered, and the CMA’s process for evaluating them, including the evidence required.  For example, the draft guidance notes that the CMA will place more evidentiary weight on materials generated in the ordinary course of business such as operational and financial data, strategy and merger rationale documents, transaction materials and data on the firms’ track record of realising similar benefits. However, the guidance recognises that internal documents may not address all requirements of the CMA’s efficiencies framework and that it may be possible to supplement them with bespoke analysis.

Under the revised approach, the CMA also recognises the relevance of both price and non-price factors (the existing approach focusing exclusively on the former). This means a greater role for factors such as improved quality and increased innovation.  The CMA’s consultation document notes that it is developing an information request template which it may send merging parties to facilitate gathering information on efficiencies at an early stage.

Potential for dynamic efficiencies recognised

The draft guidance gives greater prominence to “dynamic” efficiencies that increase the merged firm’s ability or incentive to innovate, invest, or undertake R&D, including through greater scale or complementary capabilities.  These differ from “static” efficiencies (such as one-off cost synergies) in that they can enable firms to improve performance on an ongoing basis.

When assessing the timeliness of any dynamic efficiencies, the draft guidance makes clear that the CMA will take a market and context-specific approach, recognising that some dynamic efficiencies may not be fully realised for a period of several years, influenced by factors such as investment and innovation cycles.

Greater openness to remedies aimed at securing efficiencies

At the end of last year, the CMA issued new guidance on its approach to merger remedies, which indicates greater preparedness on the part of the CMA to accept behavioural remedies than has historically been the case, though guidance still indicates that structural remedies such as divestments are more likely to satisfy the “clear cut” standard applied at phase 1.

Continuing this trend, the draft efficiencies guidance now indicates that where the CMA has concluded efficiencies would increase rivalry, benefit customers and be sufficient to prevent an SLC, but has concerns about their timeliness and/or likelihood, it may be possible for the parties to address such concerns via remedies.  In practice, such remedies are likely to be behavioural in nature, as was the case in Vodafone / Three, where phase 2 clearance was obtained based on a “Network Commitment Package” which involved delivering a joint network plan aimed at delivering upgrades in network quality, capping certain mobile tariffs, and offering pre-set prices and contractual terms for wholesale services.

The EU position: alignment or divergence?

Policy on merger efficiencies is also a live issue in the EU, where the European Commission has also recently consulted on new draft Merger Guidelines.

In some respects, the draft EU position remains broadly aligned with the CMA’s proposed approach to assessing efficiencies, with the assessment framework focusing on whether efficiencies: are verifiable (which includes assessment of timeliness, likelihood and sufficiency), are merger-specific, and whether they benefit consumers.

However, there are differences between the UK and EU approaches which merging parties should be aware of:

• Out of market benefits: the UK framework permits competition concerns to be resolved by RCBs, even if those RCBs arise in a different market to that in which competition concerns are identified, or where the benefits accrue to different customer groups.  In contrast, the EU requires efficiency benefits to arise in the same markets as the alleged harms to competition, where they will be balanced by the European Commission.
• Relevant types of efficiency: both jurisdictions propose to update the type of benefits which can qualify as efficiencies.  Both jurisdictions call out environmental sustainability as a potential benefit deriving from mergers.  In addition, the European Commission expressly contemplates that benefits from increased scale and resilience may be considered, such as securing access to critical inputs, reduced exposure to external disruptions and reinforced infrastructure.  Although similar proposals were made in the UK call for evidence, resilience is not an express consideration in the CMA’s draft guidance, though the CMA does propose to take into account “both price and non-price factors”.  Given that resilience remains an important issue for the UK economy, this is one area where the CMA’s draft guidance could be improved.
• Quantifying efficiencies: both authorities recognise that quantifying merger efficiencies is useful but the European Commission puts more emphasis on quantification, discussing technical analyses that parties might use such as pricing pressure tools, willingness-to-pay analysis for quality improvements, and net present value calculations for measuring the value to consumers of future merger benefits.  In contrast, the CMA is less prescriptive about the evidence it will be prepared to consider when assessing claimed efficiencies.

As both sets of guidelines are finalised, practitioners will be closely watching how much alignment the UK and EU approaches to merger remedies adopt.  Material divergence on this issue will create additional challenges for businesses pursuing transactions requiring parallel UK and EU clearances.