Competition

Much of the UK's new Digital Markets, Competition and Consumers Act 2024 (DMCCA) came into force on 1 January 2025. These included the reformed competition law provisions (including new merger control thresholds for the UK Competition & Markets Authority (CMA) to be able to take jurisdiction over transactions) and the new regulatory regime for digital markets. The new consumer law provisions (see Section 6: Consumer law) came into force slightly later, on 6 April 2025.

The new merger control, competition law and consumer law provisions are applicable to all types of business, not just Big Tech. 

Merger control

In the merger control space, the DMCCA updates the UK's jurisdictional thresholds, as well as introducing the UK's first 'no-increment' share of supply test (to capture so-called 'killer acquisitions as well as vertical and conglomerate mergers), a new safe harbour for 'small mergers' and a specific reporting regime for designated tech firms. Read our key takeaways for more.

However, developments are fast-moving in the UK merger control space, with the UK Government and CMA already working towards new (and, in some areas, legislative) reforms only a matter of months after the DMCCA came into force.

Competition investigations

The DMCCA also introduces substantive reform to investigations across the UK competition law sphere, strengthening the CMA's cross border reach and significantly increasing the penalties that it may impose for failures to comply with its investigatory measures. Read on for more.

New regulatory regime for Big Tech 

The most talked-about reform is the new regulatory regime for Big Tech. Read our key take-aways here. The DMCCA empowers the UK's Digital Markets Unit (DMU) (a unit within the CMA) to designate the biggest digital players with 'Strategic Market Status' (SMS). Having designated a firm as having SMS, the DMU will:

• set ex ante Conduct Requirement's on designated firms i.e. rules on what those firms must and must not do;
  
  
• be able to make 'Pro-Competition Interventions' to remedy competition problems; and
  
  
• require designated firms to report M&A activity before deals are completed.

The CMA said, back in January, that it expected to launch SMS investigations in three areas of digital activity over first six months of the new regime. To date, the CMA has opened investigations into whether to designate: (1) Google as having SMS in respect of general search and search advertising; and (2) Apple and Google as having SMS in the provision of their respective mobile ecosystems, including their respective mobile operating systems, native app distribution and mobile browser/browser engine.

The CMA, alongside other UK regulators, has been under pressure to align with, and advance, the UK Government's 'pro-growth agenda'. Merger control has come under fire, with the Government pushing for what, in their view, should be a more certain, proportionate, transparent and thus more business-friendly approach. The 'pro-growth agenda' has manifested in several ways in the competition law space.

• First, the Government's draft strategic steer to the CMA (published in February of this year) makes clear that the CMA is expected to "support and contribute to the overriding national priority of this government – economic growth".
  
  
• Shortly afterwards came the CMA's 'Mergers Charter' (published in March) – designed to enhance business and investor confidence, enhance perceptions of the UK as a great place to do business and, of course, to support growth. The Charter focuses on four areas: pace (streamlining the CMA's approach and minimising in-depth reviews), predictability (clarifying the CMA's remit), proportionality (getting to the right outcomes while minimising burden on business) and process (more direct engagement with businesses).

At the same time, the CMA launched a 'call for evidence', seeking views on how the CMA can balance different types of remedies in its merger control investigations. The CMA is looking at:

1. whether the standard for remedies to be accepted during a Phase 1 investigation can be lowered to enable more complex remedies to be accepted at an earlier stage;
   
   
2. whether the legal standard for the CMA to accept remedies, at any stage of an investigation, can be made more flexible;
   
   
3. whether there are better ways in which efficiency gains can be recognised; and
   
   
4. most notably, when and how behavioural remedies should be used - signalling a greater openness to behavioural remedies and a willingness to shift away from traditional divestment and structural remedies going forward.

The call for evidence closes on 12 May.

• Also, in March, came the Government's policy paper "New approach to ensure regulators and regulation support growth". As a next step, the Government commits to bring forward a consultation "in the coming months" on proposed reforms "where the Government can take action to improve the pace, predictability and proportionality of the UK’s competition regimes". Notably, these proposed reforms are described as being "legislative" in nature, rather than further changes to CMA guidance, and will include measures to provide more certainty on when mergers will be subject to investigation in the UK by addressing uncertainty with the existing 'Share of Supply' and 'material influence' tests.

Read our briefing and watch out for our updates in this area – a fast-moving debate given, only a matter of months ago, the DMCCA retained the (uncertain and generous to the CMA) merger control 'Share of Supply' jurisdictional test in its current form.

With the first UK Labour Government since 2010 now firmly with their feet under the table, now is a good time to take stock of how the Government is approaching national security reviews under the UK's National Security and Investment Act 2021 (NSIA) regime.

In our briefing, we consider the Labour Government's approach to the NSIA, and delve into three areas where trends may potentially be emerging, namely:

• call-ins covering transactions in a wider cross-section of the UK economy;
  
  
• a move towards economic commitments to maximise investment into the UK; and
  
  
• a more relaxed stance on Chinese investments in specific sectors.

Whilst on the topic of national security, the UK Government won the first-ever challenge to a divestment order under the NSIA in November 2024 – in the LetterOne appeal. In fact, this was the first ever judgment on the UK Government's application of the National Security and Investment Act 2021 to be handed down.

With a focus on the procedural aspects of the review, the High Court upheld the Government's decision to require LetterOne (ultimately owned by Russian nationals, including individuals subject to UK sanctions) to divest the entirety of its shareholding in Upp, a fibre broadband start-up. 

The judgment sets out a high degree of deference that the courts will afford the UK Government in its NSIA reviews and describes a high bar for parties subject to remedies orders seeking to overturn them. The judgment makes some interesting comments on the consideration of current versus future national security risks (i.e. whether the Government can act now to prevent risks from materialising). It also comments on how significant financial losses for parties subject to divestment orders will be viewed (spoiler: they are likely to be simply part of the economic landscape for those operating in the alt-net sector or other parts of national infrastructure).

This high bar was also seen in the later (February 2025) High Court judgment on the first ever request for interim relief in a judicial review challenge under the NSIA. The request was made as part of FTDI Holding Limited's challenge against an NSIA final order requiring the divestment of an 80.2% shareholding in a Scottish semiconductor company due to national security concerns. In refusing the request (and in line with the earlier LetterOne judgment), the High Court re-confirmed the high degree of deference to be granted to the UK Government in national security cases - in short, “public interest weighs heavily against the grant of interim relief.” Again, potential influence by malign actors was found to be enough for the refusal. The judgment also confirmed the arguably low standard that the Government needs to reach in terms of disclosure.

In this briefing we discuss the key elements of the High Court's LetterOne judgment and our views on the future for procedural challenges across the NSIA/FDI landscape.