CIMA F3 Syllabus D. Business valuation - Role and scope of competition authorities - Notes ^{7 / 7}

Takeovers and mergers may be investigated by competition authorities to ensure that one company cannot dominate a market.

In the UK this is the responsibility of the Competition and Markets Authority (CMA)

Within the EU, the European Commission can review mergers that create turnover concentrations with a "Community Dimension"

The role of competition authorities

• is to ensure healthy levels of competition and safeguard public interest.

When the competition authorities feel that an acquisition is anti-competitive, they investigate the acquisition.

Based on the findings of the investigation, they may:

• Reject the proposal

• Add conditions for acceptance of the proposal

If an acquisition is investigated by the competition authority, the order of events will be as follows:

1. Acquisition / Merger Bid

2. Review

3. Possible investigation (if not in the public interest)

4. Acquisition on hold for several months while investigation takes place

5. Accept / Reject the bid proposal or accept the bid subject to conditions