Britain’s competition watchdog has thwarted more deals than its European counterpart over the past five years, as antitrust screening tempers the pace of mergers and acquisitions (M&A).
Average UK deal mortality rate over the five year period from 2019 to 2023 was 57 per cent, while in the EU it stood at 41 per cent, according to new data from law firm Linklaters, shared with City A.M.
The Competition and Markets Authority (CMA) has blocked more tie ups than the European Commission (EC) every year bar one in the past half a decade.
Linklaters’ analysis focused on Phase 2 investigations by the regulators, where a fifth of cases have undergone or are undergoing simultaneous review, totalling 11 cases.
Verity Egerton-Doyle, partner in Linklaters’ antitrust and foreign investment team, highlighted that outcomes are “broadly aligned” between the watchdogs. But instances of divergence are increasing, particularly in the last year, with the CMA clearing two of the tech deals that the EC had blocked.
“Neither of these were typical mergers of ‘horizontal’ competitors,” she said.
“While intervention rates for different authorities are instructive – albeit highly influenced by what cases come before them in a given year given the small sample size – the key from a dealmaker’s perspective is that if one major authority blocks a deal, it cannot proceed: lightning only needs to strike once.”
Last year only three parallel cases were cleared unconditionally on both sides of the Channel. Two of these were at Phase 1 and one at Phase 2, which was the Viasat and Inmarsat tie up.
“High intervention rates in the UK and EU, along with a more hostile environment in the US, have shifted the cost-benefit analysis for taking on regulatory risk, meaning there are more deals that don’t leave the board room and when they do, it is often with stringent contractual protections,” Egerton-Doyle added.
It comes as the UK is now the second most targeted nation for M&A globally, following the US. The value of deals in the country hit $76.1bn (£60.2bn) in the first three months of the year, an 88 per cent increase compared to 2023.
However, this remained below the value of the previous three years and the actual number of deals fell by a quarter, according to data from the London Stock Exchange Group.