The Competition Commission (CC) is an independent public body established by the Competition Act 1998.
The CC conducts in-depth inquiries into mergers, markets and the regulation of the major regulated industries, undertaken in response to a reference made to it by another authority.
It makes decisions against the competition tests set out in the Enterprise Act 2002. In the event of adverse findings it decides on appropriate remedies.
Most merger references are referred to the CC by the Office of Fair Trading. The mergers may be either completed or anticipated.
The group of CC members selected to decide on a reference is required to consider a set of questions for mergers. The questions are:
whether a relevant merger situation has or will be created; and
if so, whether the creation of that situation has resulted, or may be expected to result, in a substantial lessening of competition within any market or markets in the UK for goods or services.
A relevant merger situation is created if one of the following thresholds is met:
the value of the UK turnover of the enterprise acquired (or to be acquired) exceeds £70m (the turnover test); or
the share of supply of goods or services in the UK or in a substantial part of the UK held (or to be held) by the merged enterprise is at least 25 per cent (the share of supply test).
"Substantial part" is not defined but the takeover by South Yorkshire Transport of four local bus operators in August 1990 was referred.
If at least two-thirds of the group decide both questions in the affirmative, there is an anti-competitive outcome from the merger and the CC must go on to consider remedies.
When making its decisions on remedial action, the CC must have regard to the need to achieve as comprehensive a solution as is reasonable and practicable. It may also have regard to the effect of any remedial action on any relevant customer benefits arising from the merger. If the benefits are significant the Commission may decide to take lesser action, or even no action, so as not to jeopardise them. Relevant customer benefits may take the form of lower prices, higher quality or greater choice of goods or services, or greater innovation.
Following consultation on its provisional findings and proposed remedies the Commission will publish its report.
