On 12 March 2025, the CMA launched a formal review of its approach to merger remedies (the Review), examining “both process and how the CMA can strike the right balance between different types of remedies”. In this article, we take a closer look at the consultation and consider the extent of the changes that might result from it. 

Introduction

The Review was first announced in November 2024, shortly after the CMA provisionally concluded that (hitherto rare) behavioural remedies – in the form of investment commitments and short-term price caps – would in principle be effective to address its competition concerns in Vodafone/Three. It forms part of the CMA’s programme to implement the “4Ps” – pace, predictability, proportionality and process – across all its work. It also takes place in the context of increasing pressure from the UK government on regulators to do more to support economic growth.    

As set out in its formal call for evidence (CFE), the CMA is seeking feedback on three themes: (i) its approach to remedies; (ii) preserving pro-competitive merger efficiencies and merger benefits; and (iii) running an efficient process. 

The Review is broad-ranging and more ambitious in scope than might initially have been anticipated. Below, we pick out the most significant elements under each of the three themes, as well as the hints the CMA has included as to the possible outcomes of the Review.

1. The CMA’s approach to remedies

More complex remedies at Phase 1

The CMA currently requires remedies at Phase 1 (i.e. undertakings in lieu of reference, or UILs) to be both “clear-cut” and “capable of ready implementation”. In practice, these tend to come in the form of straightforward divestments of pre-existing businesses.

The aforementioned criteria are not expressly set out in the EA02 but, when accepting UILs, the CMA needs to be confident that the proposed remedies will sufficiently remedy all concerns raised at Phase 1 such that, as a result of the remedies, the transaction would no longer give rise to a realistic prospect of a substantial lessening of competition (SLC) that would engage the CMA’s duty to refer the merger to Phase 2.

The CFE suggests the CMA is willing to revisit these requirements – potentially opening the door to more complex UILs. However, the CMA also recognises that the constraints of the Phase 1 timetable¹  limit the scope for discussion of complex remedies, such that improvements in this area will likely also require some adjustments in the CMA’s Phase 1 procedure, to allow for earlier engagement on UILs.

Assessing effectiveness and proportionality of remedies

The CMA also indicates that it is open to revisiting its approach to assessing the effectiveness and proportionality of remedies at both Phase 1 and 2. Currently, the CMA first seeks to identify remedies that are effective in “addressing” the SLC to a “high degree of certainty”. It then selects the least costly and intrusive remedy, and considers whether that remedy is proportionate to the SLC.

In the CFE, the CMA recognises that, under the EA02, “mitigating” an SLC may be sufficient – such that it is not obliged to “remedy” or “prevent” an SLC in its entirety in all circumstances. Further, the CMA need only “have regard” to achieving as comprehensive a solution to the SLC and any adverse effects arising as is “reasonable and practicable”. The CFE then seeks views on how the CMA can “best reflect the need for proportionality in its consideration of remedies”.

There are, therefore, strong hints here that the CMA may in future be more willing to accept remedies that do not comprehensively address SLCs and instead assuage their effects, and also that the CMA may place a greater emphasis on ensuring its remedies are proportionate in the circumstances (which could, for example, include choosing a remedy short of prohibition where a market is small and/or not of great importance to consumers).

Behavioural remedies

Perhaps most notably, the CMA is inviting views on the circumstances in which behavioural remedies will be appropriate, and how the CMA can test their effectiveness. 

Behavioural remedies are permissible under the current guidance, but the CMA has generally been very reluctant to agree to them and expressly “prefers” structural remedies (Vodafone/Three is one of a very small number of Phase 2 cases in which the CMA has accepted behavioural remedies with no structural element).

Whilst this preference is likely to stay, the CFE hints that the CMA’s new ability under the Digital Markets, Competition and Consumers Act 2024 (DMCCA) to fine companies up to 5% of global turnover for breaches of remedies could make accepting behavioural remedies more palatable in future. 

The CMA also appears open to expanding the range of circumstances in which behavioural remedies may be appropriate. The current guidance states that, usually, for such remedies to be appropriate, divestiture must be impossible or disproportionate, the SLC must be of limited duration, and/or the relevant customer benefits of the merger must be substantial and preserved by the remedies. The presence of sectoral regulation and a dedicated regulator is also recognised as a relevant factor in this regard (both in the current guidance and CFE) – as it was in Vodafone/Three, and most other CMA cases involving behavioural remedies. Nevertheless, there is nothing in the CFE to suggest this will be a pre-requisite as part of any more expansive approach the CMA might adopt towards behavioural remedies as a result of the Review. 

Monitoring and enforcement

Consistent with the potential softening of its stance on behavioural remedies, the CMA is also reconsidering its approach to assessing, monitoring and enforcing remedies. Perhaps most notable in this regard are suggestions that the CMA may be willing to make greater use of Monitoring Trustees to oversee and enforce remedies. 

There is also a strong hint here that use of such expert monitors could address the resource implications of overseeing complex behavioural remedies (often cited as a reason to prefer structural remedies). As noted above, the CMA’s new fining powers under the DMCCA could give it further confidence to outsource some of its monitoring responsibilities to third parties such as Monitoring Trustees.

2. Preserving pro-competitive merger efficiencies and merger benefits 

Efficiencies

The CFE cites Vodafone/Three as an example of remedies being used to “lock in” rivalry-enhancing efficiencies (REEs) that may not otherwise have fully materialised, and thereby address the CMA’s concerns that such REEs were not “likely”. Such REEs can include economies of scale leading to greater efficiencies (and, consequently, lower prices), increased investment, and the creation of stronger competitors in the market, which may elicit a competitive response from other market players.

The outcome in Vodafone/Three, and the questions asked in the CFE, appear to signal that the CMA may in future be more willing to take REEs into account and to accept remedies aimed at preserving them. Indeed, the CMA explicitly states that it is keen to ensure that potential pro-competitive efficiencies from mergers are “maximised” and, in a nod to the current political context, notes that it is seeking to discharge its functions in a manner that is supportive to investment and economic growth.

Relevant customer benefits (RCBs)

RCBs are benefits that, unlike REEs, need not be achieved through increased competition. They can take the form of lower prices, greater innovation, greater choice, and higher quality. Notably, RCBs are not limited to the relevant market that the CMA is considering in any given merger decision. 

To date, arguments around RCBs have only very rarely been accepted, but the CFE suggests a willingness on the part of the CMA to do more to ensure RCBs are properly taken into account when designing remedies. For example, the CMA suggests that it may be open to revisiting the types of evidence it is willing to accept (within the current legislative framework) to substantiate any RCBs – hinting at a more permissive approach that could result in less onerous remedies being imposed. Notably, several of the RCB-related questions are not remedies-related at all – indicating that the CMA may be open to more general arguments about the existence of RCBs, at all stages of the merger review process.

3. Running an efficient process

This third theme builds on the CMA’s Phase 2 reforms, which were introduced to offer greater flexibility to parties, bring forward remedies discussions, and facilitate more constructive engagement between merger parties and the CMA. Through the Review the CMA intends roll out similar improvements to the Phase 1 remedies process (although it also open to feedback on the new Phase 2 remedies process). 

Perhaps most interestingly, the CMA is seeking views on how it can ensure that its remedies processes take account of parallel actions by other competition authorities, where relevant. This may stem from a desire to avoid a repeat of Microsoft/Activision, in which diverging outcomes were reached by the CMA and European Commission.

Next steps and conclusion

The CFE – alongside which the CMA is conducting a series of outreach and roundtable sessions with stakeholders – closes on 12 May 2025. The CMA aims to use the feedback it receives to develop “specific proposals” that will be consulted upon in the autumn, with a view to implementing any changes by the end of 2025 through amendments to its remedies guidance.

Overall, the Review appears very likely to be a positive development for dealmakers. However, it remains unclear exactly how far the CMA is prepared to go in broadening the range of remedies it is likely to accept. Additionally, even if the remedies guidance is amended to make it more permissive, a change of culture within the CMA will also be needed to overcome risk-aversion on the part of decision-makers and empower them to take a more proportionate approach to remedy selection and design. In particular, it should be remembered that, despite being seen by some as signalling a fundamental change in approach from the CMA towards behavioural remedies, the remedies in Vodafone/Three did not depart from the CMA’s existing remedies guidance.

¹ Whilst the CFE does not elaborate on this point, under the current Phase 1 process UILs are not typically discussed until late in the timetable, and between the parties proposing suitable UILs and the CMA considering whether they are acceptable, only 10 business days are formally allocated to the remedies process.