On 3 June 2026, the UK’s Competition and Markets Authority (“CMA”) announced a consultation on revised guidance on how it assesses “rivalry-enhancing efficiencies”, i.e., efficiencies that induce the merging businesses to act as stronger competitors to their rivals (e.g., by reducing costs, creating an incentive to lower prices or by increasing the merged entity’s incentive to innovate) (the “Revised Guidance”). The revised draft will be inserted into the CMA’s 2021 Merger Assessment Guidelines (the “2021 MAGs”). The proposed Revised Guidance follows a call for evidence earlier this year (to which Paul, Weiss responded) and the European Commission’s (the “Commission”) recent consultation on revised guidelines for EU merger control (discussed in our client memo). The CMA’s consultation runs to 1 July 2026.
Key takeaways for dealmakers from the CMA’s proposed revised approach:
- Greater openness to efficiencies arguments. The policy scepticism in the current guidelines has been removed; the CMA says that well-evidenced claims will receive serious consideration and will be assessed to the same standard as harms.
- Still sequential to assessment of harms. Unlike the revised EU guidelines, the CMA will not integrate efficiencies into the core assessment of competitive effects but will consider them after reaching a conclusion on harms from the merger.
- The four-limb test and burden of proof are unchanged. Despite the softer tone, the high bar remains. Efficiencies must still (a) enhance rivalry, (b) be timely, likely and sufficient, (c) be merger-specific and (d) benefit UK customers.
- Dynamic and innovation efficiencies are now viable, even where specific outcomes are uncertain and realisation may take several years. This is significant for pharmaceuticals, telecoms, energy and other R&D-heavy sectors.
- New remedy-based pathways to clearance. Time-limited behavioural remedies can bridge short-term harm where efficiencies are credible but uncertain in timing. Consider remedy packages to secure efficiency commitments. This is a striking difference to the EU position where changes to remedy policy are not on the agenda.
- For parties running global deals, the current UK and EU consultation drafts indicate sufficient alignment that a coordinated efficiency strategy is possible, but differences in detail will necessitate tailoring for each regime.
- Build the case early (but also build in a need to assess post-integration synergies early and forensically). Board papers, synergies analyses, integration plans and deal track record will carry the most weight in proving efficiencies. However, in deals raising competition harms, more forensic analysis of post-integration synergies will need to be done by the deal team. Confidentiality issues and clean team requirements often hamper very detailed work, pre-signing and these limitations will need to be factored in. Development of well-substantiated efficiency arguments early (perhaps when the pool of those in the know about a deal is broader) to discuss from pre-notification onwards will be important.
What has changed?
- Evidence of efficiencies will be assessed to the same standard as evidence of harm. Evidentiary symmetry is now an explicit commitment in the Revised Guidance, which states that the CMA will apply a consistent approach (the Commission’s draft guidelines take a similar approach). In addition, the scepticism that pervades the CMA’s 2021 MAGs (which describe clearance on efficiencies as “uncommon” and warn that efficiency claims are difficult to verify and substantiate) has been stripped out of the Revised Guidance. However, the consideration of harm and benefit is still sequential in the CMA’s analysis. By contrast, the Commission’s draft guidelines have moved to a holistic approach, balancing theories of harm and theories of benefit in an integrated assessment.
- Greater granularity about required evidence. The Revised Guidance identifies four categories of evidence to which it will give greater weight: ordinary-course operational and financial data, board papers and strategy documents, synergies analyses and integration plans, and track record from prior deals (essentially, content created in the ordinary course of business rather than for the purposes of merger review). Bespoke economic modelling is also expressly flagged, provided it reflects commercial realities and is grounded in evidenced assumptions and parameters.
- Innovation efficiencies are expressly included. The 2021 MAGs discussed dynamic competition only in relation to harms; the Revised Guidance now addresses dynamic efficiencies. It flags that the CMA may recognise the strengthening of the process of dynamic competition even where specific outcomes are uncertain (in contrast to the approach of the Commission’s draft guidelines which require parties to explain as concretely as possible the nature of the investment or innovation in question). The CMA’s Revised Guidance also accepts that dynamic efficiencies may take several years to materialise, assessed by reference to industry-specific innovation cycles. This replaces the 2021 MAGs warning that doubt about efficiencies increases in proportion to the time required to realise them. This shift (seen also in the Commission’s draft guidelines) is helpful but the CMA’s framework still does not fully recalibrate for the inherent uncertainty of dynamic markets.
- New efficiency-driven pathways to clearance. The Revised Guidance includes new acknowledgement that short-term harm may be followed by longer-term efficiency gains. In such cases, the harm may be resolved by proportionate, time-limited remedies rather than prohibition. The CMA’s willingness to assess the “process of dynamic competition” is a step forward but the mere potential to unlock better R&D efforts should be recognised as an efficiency even where specific outcomes cannot be identified. There is no direct equivalent in the Commission’s draft guidelines. In addition, the CMA’s Revised Guidance recognises that where efficiencies are credible but uncertain in timing or likelihood, remedies may be used to secure them (as was done in the Vodafone / Three merger where efficiencies from a network investment programme were buttressed by behavioural remedies to ensure the investments were realised, plus short-term protections for retail and wholesale customers).
- Early engagement is essential. The Revised Guidance warns that late-stage evidence may receive limited weight. Efficiency submissions should be substantially ready at the time of notification. For the reasons discussed above, this can be logistically challenging. To encourage early engagement, the revised guidelines confirm that arguing for efficiencies is not an admission that the merger will generate harm.
The bar remains high
- The burden to prove efficiencies remains on the parties and the four-limb test is unchanged, although new clarity has been added in various areas:
- Efficiencies must enhance rivalry in the supply of those products where post-merger harm may otherwise arise: the Revised Guidance states that pro-competitive actions by the merged entity should stimulate competition from rivals, but clarifies that rivals’ reaction does not have to be on “the same parameter of competition”;
- Efficiencies must be timely, likely and sufficient to prevent post-merger harm: as noted, the Revised Guidance is more flexible on timeliness. As regards sufficiency, the guidelines retain the CMA’s approach that the greater the expected adverse effect of the merger, the greater the efficiencies must be to offset it;
- Efficiencies must be merger-specific: the CMA will assess the feasibility of alternatives (such as organic growth, licensing, buying groups or contractual arrangements) and whether it would be commercially rational for the merger firms to pursue them, considering barriers to implementation, dependencies on third parties and relative costs and risks. However, the Revised Guidance gives no weight to the structural certainty that mergers provide over contractual, partnership or other arrangements, aligning parties’ incentives in a way that most commercial agreements cannot. The CMA and Commission have cited lack of merger specificity in a number of previous cases because they considered that alternative commercial arrangements were feasible (even where they were not a feature of the market in question); and
- Efficiencies must benefit customers in the UK: the discussion of this limb of the test is largely unchanged. Because the UK regime permits consideration of relevant customer benefits, unlike the Commission’s approach, there is greater flexibility to take account of benefits which accrue to consumers beyond those harmed by a merger (whereas the Commission’s draft guidelines require that those harmed by the merger are also substantially compensated by efficiencies arising from the merger). This matters where deals involve two-sided digital markets or deals raising sustainability or resilience benefits.
The CMA’s consultation closes on 1 July 2026. The Paul, Weiss antitrust team would be delighted to assist in providing responses to the CMA’s consultation.
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