Significant changes to the UK's merger control thresholds will take effect from 1 January 2025. These include the introduction of a new one-party or "hybrid" threshold, as well as the first changes to the main UK merger control thresholds (the "turnover" and "share of supply" tests) in more than 20 years. In addition, there will be new mandatory reporting requirements for certain transactions by digital firms designated as having "Significant Market Status".

1. The current position

The UK currently has two alternative jurisdictional tests for merger control – the "turnover test" and the "share of supply" test:

(a) the "turnover test" is met when the target has UK turnover of more than £70 million; and

(b) the "share of supply test" is met when the parties' share of the supply or purchase of goods or services of any description will increase to 25% or more in the UK or a substantial part of the UK as a result of the transaction. 

Merger control notification in the UK is not mandatory, though the CMA can "call in" transactions over which it has jurisdiction, for review. 

2. Changes from 1 January 2025

The Digital Markets, Competition and Consumers Act 2024 sets out changes to the existing UK merger control thresholds, as well as introducing two entirely new thresholds:

(a) the "turnover test" will increase, from target UK turnover above £70 million to more than £100 million;

(b) a £10 million qualifier will be added to the share of supply test, so that the test will only be met where the parties' share of the supply or purchase of goods or services of any description will increase to 25% or more in the UK (or a substantial part of the UK) as a result of the transaction and at least one party has UK turnover of more than £10 million (in any goods or services);

(c) an entirely new "hybrid" test will capture transactions where: (i) at least one party has UK turnover of at least £350 million and a share of supply or purchase of goods or services of any description in the UK (or a substantial part of it), of 33% or more, and (ii) the other party is a UK business or body, or has at least part of its activities in the UK, or supplies goods or services in the UK (a UK nexus); and

(d) for digital firms designated as having "strategic market status" (SMS), there will for the first time be mandatory notification, under the digital regulatory regime, for transactions with a deal value of £25 million or more and which see the SMS firm crossing certain thresholds in target shares or votes (from less than 15% to more than 15%; from less than 25% to more than 25%, or from less than 50% to more than 50%). 

Neither the updates to the turnover test nor to the share of supply test will apply for interventions in media mergers on the basis of plurality. For these, the pre-existing thresholds will remain in place.

3. Reasons for, and key implications of, the changes

The c.£30 million increase in the threshold under the turnover test reflects the need for adjustment to (at least partially) reflect inflation, so the CMA's resources are focused on transactions of a certain scale. Similarly, the addition of the £10 million qualifier to the share of supply test is a sensible adjustment to focus the CMA's attention and resources on transactions where at least one party achieves meaningful sales in the UK. 

The most interesting change (aside from the new mandatory reporting regime for certain transactions by SMS firms – for this, please refer to the article here, is the addition of the all-new "hybrid" threshold. As noted above, the test will be met if one party has a share of supply or purchase of 33% or more in the UK (or a substantial part of it) and £350 million or more in UK turnover, and the other has a UK nexus. Unlike the share of supply test, there is no requirement for any overlap in the parties' activities – and unlike the turnover test, there is no minimum scale for the target. This means that the new threshold can capture vertical and conglomerate transactions, as well as acquisitions of nascent entities which may as yet have little or no sales in the UK.

The new hybrid test has significant implications for companies (and groups of companies) with UK sales of £350 million or more. The considerable discretion allowed the CMA in the assessment of shares of supply for jurisdictional purposes (see below) will also apply to the assessment of the 33% threshold under the new hybrid test. As there is no requirement for any overlap with the target business under the new hybrid threshold, it will therefore be advisable for any business or group with UK turnover of £350 million or more to consider whether there is any plausible basis on which it could be assessed to have a 33% share of supply. If so, then potential UK merger control implications should be considered for M&A transactions involving any target with a UK nexus.

4. CMA discretion remains

Save for certain transactions for SMS firms, as above, UK merger control notification will remain voluntary. This is contrary to the general trend for increased oversight, seen in, for example, Australia, where the previously voluntary regime will move to a mandatory notification system in January 2026. The voluntary nature of UK merger control notification brings the benefit of flexibility. However, given that this voluntary approach is combined with the potential for an own-initiative review by the CMA (and onerous "hold separate" orders where the CMA does intervene), up to four months from the transaction being closed or made public (whichever is the later), there is the accompanying downside potential for uncertainty. Parties will continue to require detailed and nuanced assessments of the risks and costs of the available options in borderline cases.

The CMA will continue to have considerable flexibility in how it applies the share of supply test. Although the share of supply test formally requires an overlap, the CMA can refer to "any reasonable description of a set of goods and services" when assessing the parties' combined share, which may be held either in the UK or "a substantial part of it" (which can for example be one London borough). In previous cases, despite the requirement for an overlap, the choice of a "set of goods and services" has sometimes been flexed to allow the CMA to take jurisdiction over apparently vertical transactions (i.e. those involving a supplier and a purchaser of goods or services, rather than two direct competitors). The new hybrid test offers a clearer route for review of such vertical or conglomerate transactions. 

In summary, the new thresholds will increase the CMA's powers to review mergers involving parties doing business in the UK. The CMA's discretion in assessing shares of supply, and consequent unpredictability, will remain a key feature of both the share of supply test and the new hybrid threshold.