UK Merger Control Developments March On in the First Half of 2026

While the first half of 2026 has not seen the same flurry of activity as in 2025, the direction of travel remains clear. The UK Government continues to progress its reform agenda, focused on a more pro-growth and predictable merger control regime, and the CMA remains focused on putting its 4Ps framework – pace, predictability, proportionality and process – into practice.

It remains to be seen what impact the incoming Prime Minister, Andy Burnham, will have on UK merger control and UK National Security and Investment Act (“NSIA”) enforcement. Indeed, Tuesday’s letter from the Secretary of State for Culture, Media & Sport, Lisa Nandy, to Paramount and Warner Bros. Discovery, notifying them that she is minded to intervene in their merger on public interest (media plurality) grounds suggests that the left-leaning incoming Prime Minister (with whom Ms Nandy is closely aligned) may be taking a more interventionist approach in sectors that he cares about, including streaming and the risk of fake news within the broader media sector.

Continued Focus on Reforms to the UK Competition Regime

In May 2026, the King’s Speech – which sets out the Government’s political agenda for the forthcoming parliamentary session – confirmed the UK Government’s firm intention to reform the UK’s competition regime.¹ As detailed more fully in our Q2 2026 Update, one of the most significant (and contested) reforms is the replacement of the panel model for decision-making during Phase II merger investigations with sub-committees comprised of non-executive members of the CMA Board, non-CMA staff experts and CMA senior staff (including executive or senior directors).

It will be interesting to see how this reform impacts the outcome of the CMA’s reviews of more challenging deals in practice (if at all), but the ‘fresh pair of eyes’ currently offered at Phase II by the independent panels has had a meaningful impact in a number of complex cases, and many practitioners continue to oppose abolishing the panels.

One recent example of the fresh scrutiny offered by the panel in action is the Phase II outcome in Getty Images/Shutterstock, which was conditionally cleared by the CMA in May 2026.² In this case, the Phase II panel oversaw a volte-face on the current and future constraint posed by generative artificial intelligence (“GenAI”) on the parties’ stock content offerings, recognising that the competitive strength of GenAI will continue to grow substantially over the next few years.³ Based on detailed market feedback, the panel did, however, require a broader remedy package than the parties were initially willing to offer at Phase II (to resolve concerns in the UK editorial market).⁴ This is not to say that the new Phase II sub-committees will never step back from provisional Phase I findings. Indeed, the very purpose of a Phase II review process is to provide the CMA with the additional time necessary to stress-test the Phase I provisional findings via a more in-depth, evidence-heavy investigation (along with a higher standard of evidence required to conclude a substantial lessening of competition (“SLC”), compared with the standard for initiating a Phase 2). This will not change following the reforms, with the UK Government having been keen to emphasise the continued independence of the CMA.

The CMA’s Pragmatic Approach to the Failing Firm Defence

The CMA also showed its continued and growing pragmatism during its recent investigation of ABF/Hovis.⁵ While the CMA initially identified a potential SLC in certain Northern Irish markets – namely, the supply of bread, pancakes, soda farls and potato farls – it ultimately relented, accepting a rare acquirer-side ‘failing firm’ defence on behalf of Allied Bakeries, and unconditionally cleared the deal. As discussed in our Q1 2026 Update, the CMA’s recent practice had suggested a potential willingness on the CMA’s part to soften its approach to this defence. Nevertheless, it is encouraging to see another practical example of the CMA engaging with the commercial realities including, as in this case, when the acquirer (rather than the target) was the candidate for the defence.⁶

The CMA’s Draft Revised Merger Efficiencies Guidance

On 3 June 2026, the CMA published its draft revised merger efficiencies guidance (the “Draft Guidance”).⁷ Against the backdrop of the CMA’s efforts to continue to drive its 4Ps framework forward, it is not surprising to see the Draft Guidance suggest a greater openness to efficiencies arguments. Importantly, the Draft Guidance signals a move toward a more integrated assessment of competitive harm and rivalry-enhancing efficiencies, with the CMA also emphasising that it will adopt a consistent approach to assessing evidence that supports the finding of an SLC and evidence that supports efficiencies.⁸

In light of the CMA’s emphasis on early engagement on efficiencies, the Draft Guidelines imply that going forward parties should be more able to frontload important arguments around the benefits of the deal, rather than treating efficiencies merely as a rebuttal. Indeed, the scope of potentially relevant efficiencies is perhaps wider, with the CMA recognising the benefits of innovation-related efficiencies and long-term competitive benefits, similar to the draft EC Merger Guidelines. That said, we expect that getting a potentially problematic deal across the line based entirely on efficiency-based arguments will remain a challenge.     

What Does ‘National Security’ Mean Under the UK National Security and Investment Act?

Although the UK Government continues to progress important reforms to the NSIA (see our related Client Alert), it has maintained a steady pace of enforcement under the NSIA. Of the five Final Orders published in 2026 so far (all within the last quarter), one deal – the acquisition of TTG Global Solutions by Shenzhen HYT – was ultimately vetoed. Given that TTG Global Solutions provides emergency communications systems, the UK Government identified national security risks related to TTG Global Solutions’ role as a critical supplier to UK critical national infrastructure, government and emergency services, along with the sensitive data held by or accessible to TTG Global Solutions that would cause harm to UK national security if accessed. The decision is not entirely unexpected. Shenzhen HYT is a partially state-owned Chinese acquirer, and Chinese acquirers have been disproportionately represented among the 8 total vetoes (7/8 involving Chinese or China-adjacent acquirers). While the rate of call-ins involving Chinese investments has arguably declined,⁹ the Final Order demonstrates the UK Government’s continued willingness to intervene in transactions involving Chinese investment in sensitive sectors.

Although no other Final Orders published this quarter amounted to a veto, they are still informative of the UK Government’s current approach to assessing and remedying national security risks.

• Acquisition of Manx Telecom: The transaction involved the acquisition of Isle of Man’s leading broadband and telecommunications provider by a strategic partnership established between JT Group and CVC DIF (both European acquirers). With Manx Telecom being a critical supplier to government departments, to address the identified national security concerns, the Final Order required, inter alia, continuity of supply commitments and the establishment of a Cyber Security Group within the target.
• Acquisition of Balmoral Comtec: The transaction involved the acquisition of an engineering and manufacturing company, specialised in subsea protection and buoyancy systems used in critical infrastructure projects, by Freudenberg Flow Technologies, a German-based acquirer. The Final Order identified risks relating to the security and protection of UK know-how and IP, and imposed remedies requiring, inter alia, advance notification to the UK Government in the event of certain business activities and specific collaborative or commercial arrangements relating to dual-use or military grade capabilities.
• Acquisition of SFL Mobile Radio: The transaction involved the acquisition of SFL Mobile Radio, which is active in the hire and sale of two-way radio equipment relied on by local government, healthcare, security and utility sectors, by an Irish acquirer. The Final Order required compliance with a package of security, governance and data-protection requirements, which were deemed necessary in light of the target’s role as a supplier of services to important parts of the UK Government.
• Acquisition of Plessey Semiconductors: The transaction involved the acquisition of a UK-based photonics company, developing innovative Micro LED displays and optical computing technologies, by a UK-based acquirer. Considering the importance of MicroLED technology related IP, to address potential national security concerns the Final Order imposed, inter alia, notification requirements related to certain commercial and business decisions.

With all of the acquirers in the abovementioned conditional approvals being from ‘friendly’ or allied nations (and even the UK itself), these Final Orders demonstrate the importance of correctly assessing the extent of the national security risk presented by the target’s activities in the UK when considering the level of scrutiny that a transaction is likely to be subject to under the NSIA. In addition, the UK Government’s approach is increasingly reflecting a broader whole-of-economy concept of national security, extending beyond traditional defence concerns to encompass more Industrial Strategy and economic theories of harm relating to supply chain resilience, technological leadership and preservation of sovereign capabilities. As a result, dealmakers should remain vigilant, because even targets that initially may be perceived as having only a peripheral impact on national security could still be of interest to the UK Government under the NSIA.

As the UK prepares to usher in a new Prime Minister within the coming weeks, it remains to be seen how the UK Government’s approach to national security will evolve. The recent resignation of Defence Secretary John Healey MP, amid concerns over inadequate investment into defence and security at a time of mounting geopolitical challenges, has brought these issues into sharper focus. Regardless of the political complexion of the next government, strengthening resilience and security is likely to remain a priority, with the NSIA being one tool in the armoury to support that objective.

¹ See here, pp 27-28.

² See the Getty Images/Shutterstock case page here.  

³ One of the key features of the panel model at Phase II is that the CMA can draw on a broad pool of panel members with diverse experience and expertise when constituting an inquiry group. This enables the CMA, where possible, to tailor each inquiry group to the issues raised by the particular transaction. For example, Colleen Keck – who was appointed to the Getty Images/Shutterstock inquiry group – also serves as a Deputy Chair of the Copyright Tribunal, bringing significant experience in matters that may be particularly relevant to a transaction involving content creation and increasing use of GenAI.

⁴ On 30 June 2026, almost 7 weeks after the CMA conditionally cleared the deal, Getty Images decided not to proceed with the divestiture of Shutterstock’s editorial business and terminated the deal. While the CMA ultimately accepted a remedy package focused on editorial content (and related on potential concerns in the global stock content activities), its insistence on the sale of Shutterstock’s global editorial business to remedy concerns in the UK editorial content market ultimately led to the deal being abandoned. Getty Images’ decision underscores the CMA’s continued ability to shape – and in some cases, effectively determine – the outcome of global deals, even where other major jurisdictions are prepared to clear unconditionally. This case reinforces the importance of assessing competition concerns in relatively narrow UK markets, which remain of particular interest to the CMA.

⁵ See the ABF/Hovis case page here.

⁶ ABF is active in the UK bakery business through Allied Bakeries. The CMA accepted that Allied Bakeries was likely to exit the market absent the transaction given that it is a loss-making business in a structurally declining market, with limited strategic importance to ABF. The CMA ultimately accepted, following close interrogation of a live sale process, that there was no realistic purchaser for the Northern Irish business. The CMA, therefore, treated the relevant counterfactual as one where Allied Bakeries would have exited the market and, consequently, concluded that the transaction would ultimately have no impact on the competition faced by Hovis.

⁷ The Draft Guidance follows the European Commission’s recent draft Merger Guidelines (“Draft EC Guidelines”), which also seeks to evolve the approach towards efficiencies in merger investigations (albeit with important differences between the Draft Guidance and Draft EC Guidelines). See our recent client alert on the Draft EC Guidelines here.

⁸ At Phase I, the CMA must be satisfied that the rivalry-enhancing efficiencies would prevent a realistic prospect of an SLC. At Phase II, the CMA must assess whether, on the balance of probabilities, an SLC arises considering any rivalry-enhancing efficiencies.

⁹ For example, 32% of the call-ins issued in 2024/2025 targeted Chinese acquirers while 41% of call-ins related to UK acquirers (see the NSIA Annual Report 2024-2025). By contrast, Chinese acquirers made up 41% of call-ins in 2023/2024 (see the NSIA Annual Report 2023-2024).