BusinessCorporate FinanceFears rise of EU taking over M&As

Fears rise of EU taking over M&As

Concerns are mounting among corporate financiers that an increasing number of UK companies will be referred to EU competition authorities, as part of the new mergers and acquisitions regime that will come into force on 20 June.

Link: M&A activity in IT sector in sharp decline

Under the new regime the competition commission alone will decide on the authorisation of mergers. Ministers will no longer be involved.

But corporate finance specialists say this also signifies M&A decisions will be left increasingly to the European Union, even if the size of a company does not justify it.

According to the experts, the referrals are already beginning, with companies with turnovers as small as £5m referred to EU competition authorities, adding delays to a process in which speed is essential.

BDO Stoy Hayward partner Jon Breach said there was a danger that the UK authorities would now wash their hands of the process completely. ‘The government will want to avoid being seen to clash with Europe,’ he said.

Competition minister Melanie Johnson told the ICAEW’s corporate finance faculty recently that the new regime was ‘underpinned by new principles and gives business confidence’.

Breach agreed that taking party politics out of M&As was ‘a good thing’, as in the past deals that should not have been blocked were stopped.

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