M&A regulation: Brexit empowers CMA to flex pro-markets muscle

M&A regulation: Brexit empowers CMA to flex pro-markets muscle

If there was a contest for the toughest merger regulator, the UK watchdog would be vying for the top prize. On Tuesday, the UK’s Competition and Markets Authority claimed another scalp. It barred a €4.5bn merger between Finnish engineering groups Konecranes and Cargotec, a month after Brussels gave the deal conditional approval. The duo subsequently tore up their merger plans.

Awesome displays of strength are a judgment-clouding temptation for regulators. Blocking this deal adds to the CMA’s growing reputation for naysaying. The watchdog cleared just under half its phase 2 cases in the four years to 2017-18. A fifth were prohibited or abandoned. In the four subsequent years the proportion cleared plummeted to 20 per cent. Just over half were nixed.

The CMA’s feistiness is controversial. It provided ammunition to its critics with last November’s decision to block Meta’s $315mn acquisition of online gif platform Giphy. That verdict raised eyebrows because the target, a US company, had no UK presence and no UK revenues. Meta accused the watchdog of “engaging in extraterritorial over-reach”. 

Giphy was a bad call by the CMA. Blocking the merger of Konecranes and Cargotec was a good decision. The companies’ cranes are widely used in British ports. There are few