The CMA’s revised merger assessment guidelines: a more workable route for efficiencies?

The UK Competition and Markets Authority (CMA) has published revised Merger Assessment Guidelines (MAGs).  The main change is the introduction of a substantially expanded section on merger efficiencies, although the CMA has also taken the opportunity to make other tweaks (primarily to smooth out some of the more “pro-intervention” messaging that featured in the previous version of the MAGs published in 2020).

The revised guidance does not alter the statutory test and the same framework for assessment will apply – i.e., merging parties must still demonstrate that: (1) the claimed efficiencies enhance rivalry in the market in which a substantial lessening of competition (SLC) may arise; (2) are timely, likely and sufficient to prevent that SLC; (3) are merger-specific; and (4) benefit UK customers.  But the new guidance provides important new direction on how the CMA can be satisfied that the test is met.

Why now?

The revised guidance is the product of the CMA’s 2026 Merger Efficiencies Review, launched in January with a call for evidence, followed by the publication of draft guidance in June.  The guidance forms part of the CMA’s wider so-called “4Ps” agenda – to enhance the pace, predictability, proportionality and process of the UK merger control regime – to support the government’s pro-growth Strategic Steer.

The changes also come against the backdrop of the CMA’s landmark Vodafone/Three decision (Freshfields advised CK Hutchison in this case), which brought into sharper focus the role that credible, well-evidenced efficiencies can play in the CMA’s assessment.

What has changed?

With the statutory test and analytical framework for assessing rivalry-enhancing efficiencies remaining unchanged, the new guidance is primarily intended to provide a clearer “roadmap” to establish efficiencies to the standard that the CMA will expect.  The new guidance therefore primarily deals with operational detail, identifying common sources of efficiencies, explaining the evidence the CMA will consider, and providing a more structured discussion of each limb of the framework.

Relevant evidence: The guidance is clear that efficiencies will be assessed case-by-case, and only given weight where supported by sufficiently convincing evidence.  The guidance confirms that the obvious evidence (e.g., operational and financial data, strategy and merger rationale documents and other transaction materials, and evidence of historic practice) will be relevant, but now (in an important change to the draft guidance) recognises a more significant role for bespoke analysis.

Dynamic efficiencies: The updated MAGs confirm the greater weight that can be placed on “dynamic efficiencies” – i.e., where a transaction strengthens the parties’ ability or incentive to innovate and invest in ways that bring benefits to customers.  The new guidance recognises, in particular, that these benefits can take longer to emerge than conventional cost synergies, and therefore that the appropriate assessment period should reflect market-specific investment and innovation cycles.

Merger specificity: The new guidance also provides further helpful clarification on the requirement that efficiencies should be merger-specific.  The MAGs now make clear that the CMA will consider whether alternatives are feasible and commercially rational and would deliver the same scale of benefits (while also considering the relative costs, risks and barriers associated with any alternatives), moving away from considering whether a theoretical alternative to the transaction is “technically possible”.  The CMA’s commitment to taking into account the earlier delivery of benefits should also help support the basis for efficiencies claims in “buy or build” scenarios.

Effect on price and non-price parameters: The MAGs confirm a clear recognition that efficiencies can be relevant across price and non-price parameters of competition. This is likely to be particularly important in innovation-led, infrastructure-intensive and rapidly evolving sectors, where the principal benefits of a transaction may not be captured by immediate marginal cost savings.

Process matters

Crucially, the CMA has confirmed that submitting evidence on efficiencies does not amount to accepting that the transaction gives rise to an SLC.  In keeping with this position, the revised guidance strongly signals the importance of early engagement (making clear, in particular, that efficiency claims raised only at an advanced stage of Phase 2 proceedings will stand limited chance of success).

While the CMA is signalling a willingness to take efficiencies into account, it’s clear that merging businesses are also going to be “put to test” to back up any claims made. The CMA has indicated that it will provide feedback on submissions and on the evidence or analysis it considers probative (or not).  It intends, in due course, to publish a template request for information for rivalry-enhancing efficiencies, including examples of the evidence it might request. In practice, this is likely to increase the importance of effective evidence-gathering, to ensure that a strong efficiencies case can be constructed while the “cut and thrust” of the CMA’s investigation of possible competition harms remains in full flight.

A wider European debate

The CMA’s revisions form part of a wider debate about the treatment of efficiencies in merger control.  The European Commission (EC) consulted on draft revised merger guidelines, which also give greater prominence to efficiencies and innovation, earlier this year.  As set out in our previous blog, those draft guidelines also recognise that pro-competitive mergers can generate benefits beyond short-term price effects, while maintaining demanding requirements around verification, merger specificity and customer benefits.  With the EC and CMA signalling an intention to work closely on investigations that are significant in both jurisdictions, a joined up efficiencies strategy that can effectively move the needle with both authorities is likely to be an important attribute for businesses involved in this kind of deal.

The practical message: build the case early

The revised guidance should not be seen as a shortcut to clearance. An efficiencies case will remain demanding, and the success of any claim will turn on the facts, the market context and the quality of the evidence.

But the practical lesson is clear: merging businesses should build the case convincingly – and early.  This will include, in particular, explaining (and backing up with convincing evidence) precisely how the transaction will improve outcomes for customers and why non-merger alternatives will not deliver the same benefits at the same scale or speed. A large part of this will be working out how “real life” evidence (such as contemporaneous strategy and transaction materials, synergy and integration plans, and operational and financial data) support the efficiencies case, and what added value can be provided by additional bespoke evidence, as well as input from customers, experts or sector regulators.

Whether the new guidance will make a real difference will also depend on how it is applied in practice. The CMA has signalled a genuine willingness to engage with well-evidenced efficiencies claims, but applying the framework in practice – faced by forward-looking evidence that is inherently uncertain to some extent – may be more challenging.

Get in touch

If you have questions on the new revised MAGs or the CMA’s approach to efficiencies, please reach out to a member of the team or your usual Freshfields contact.