The Threshold Is the Merger Policy

Competition policy is argued through cases. A regulator challenges a deal, a court rules, and the reasoning enters the law.

Those cases are a tiny fraction of the mergers that happen, and the fraction is determined before any of the reasoning applies.

The premerger notification requirement obliges parties to file and wait before closing, but only where the transaction exceeds a size threshold.

Below the threshold there is no filing, no waiting period, and in most cases no record that the transaction occurred at all.

A regulator retains authority to challenge such a deal afterwards, and challenging a completed merger is far harder than blocking a proposed one.

There is a second filter people forget, which is that notification is not approval.

Unwinding a business that has been integrated for two years is a remedy courts are reluctant to order and agencies are reluctant to seek.

A deal that files and waits out the period may close without anyone having examined it, because the agency simply did not open an inquiry.

The enforcement agency publishes the thresholds and the annual adjustments, and the figure is indexed, which is more than can be said for most statutory numbers.

So the threshold determines who files, and capacity determines who is actually looked at, and the second number is far smaller than the first.

Indexation removed the slow drift that afflicts unindexed thresholds, and it did not address the structural question of whether size is the right filter at all.

Publishing how many filings received substantive review each year would tell the public more about enforcement than any individual case does.

The serial acquisition problem is where that question bites. A firm buying twenty small competitors over a decade may never cross the threshold on any single deal.

Each transaction is individually trivial and the cumulative effect can be a consolidated market, achieved entirely below the level at which anyone looks.

The remedy question sits alongside all of this and is decided by the same capacity constraint. A challenge is only worth bringing if a court would order something useful at the end of it.

The implementing rules handle aggregation between the same parties, and they were not written with a decade-long acquisition programme in view.

Nothing aggregates a buyer's separate purchases of different targets, because there is no obvious principle by which they should be aggregated.

That is a genuine drafting difficulty rather than an oversight. A rule catching serial acquisition without catching ordinary growth is hard to write.

The value threshold also maps badly onto markets where the asset being bought is not expensive but is strategically decisive.

A small firm holding a key patent, a dataset or a distribution relationship can be worth far less than the filing threshold and matter far more than a large acquisition elsewhere.

The enacted history shows the framework built around a concern with large horizontal combinations, which was the shape of the problem when it was written.

The instrument has been adjusted many times since and the underlying filter, transaction value, has never been revisited as a concept.

The counterargument to lowering it is strong and should be stated. A lower threshold means thousands more filings, most of them harmless, reviewed by an agency with fixed capacity.

Capacity spent on routine filings is capacity not spent on the deals that matter, so a broader net can produce less enforcement rather than more.

Which suggests the answer is not a lower threshold but a different second filter: a reporting obligation, without a waiting period, for acquisitions in markets a firm already leads.

That would cost the parties almost nothing, would generate a record where none currently exists, and would let the question of serial consolidation be asked from evidence rather than from anecdote.