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Legal Perspectives of M&A

Law and regulations substantially affect mergers and acquisitions (M&A) by stipulating the process, probable outcomes, and robustness of deals, impacting everything from timelines of delas and value to the feasibility of proceeding with a transaction at all. Regulations, namely securities rules, antitrust laws, foreign investment restrictions and industry or sector-specific regulations all constitute key legal frameworks that ensure competition, protection of shareholders, including safeguarding national interests.

In European Union, M&A are fundamentally regulated by Council Regulation (EC) No 139/2004 (the EUMR), which set out rules for the control of “concentrations” regarding M&A and some joint ventures.

In the UK, M&A is regulated by the Enterprise Act 2002 for competition, the Companies Act 2006 and common for the sales companies, the National Security and Investment Act 2021 (NSIA). Non-compliance can setback to deals, repudiation, or considerable liabilities. Specifically, regulations may be applied to deals related to sensitive industries, and all transactions must sail through tax implications (e.g., stamp duty).

Updated 20 May, 2025.

The EU Merger Regulation and Turnover Thresholds

The EUMR, in accordance with council Regulation (EC) No 139/2004, the EU law that governs mergers and acquisitions with an “EU dimension” to avoid substantially lessened competition in the single market. It mandates companies to notify such concentrations to the European Commission for review.

Concentration and Community Dimension

A concentration comprises two or more independent companies merging or a particular company acquiring control over another, or formation of a joint venture where distinct companies gain joint control over another; while the “Community dimension” is ascertained by specific turnover thresholds that show an important presence across EU Member States. Should the concentration meet these thresholds, the EU Commission must be notified, and implementation is not possible until it is declared compatible with the common market.

The concentration constitutes “Community dimension” if it meets standardized turnover thresholds, confirming the European Commission’s jurisdiction.

Turnover Thresholds:

  • First Option: 

The merged worldwide turnover of all the merging companies exceeds €5 billion, and the EU-wide turnover for each of at least two companies exceeds €250 million.

  • Second Option: 

The merged worldwide turnover of all the merging companies exceeds €2.5 billion, and the merged turnover of all companies within the EU exceeds €100 million in each of at least three Member States.

The target’s UK turnover exceeding £100 million, raised from £70, after changes implemented by the Digital Markets, Competition and Consumers Act 2024 (DMCCA) on January 1, 2025. There are also rules that include the combined parties’ share supply, a new hybrid threshold exceeding £350 million and a 33% share of supply in any UK market and is a UK entity and serves UK (UK nexus).

Under the “De Minimis Exception”, transactions are factored out from the Competition and Markets Authority (CMA) jurisdiction if both parties earned a UK turnover of £10 million or less in their last financial year.