CMA’s heightened scrutiny of PE “roll-up” acquisitions: recent cases and lessons

The UK Competition and Markets Authority (CMA) has identified “roll-up” acquisitions (the acquisition of several targets in the same sector) by financial investors, such as private equity firms, as an enforcement priority.

In this post, we discuss the CMA’s enforcement focus, its recent decisional practice, and implications for merging parties.  The main takeaways are:

• The CMA is looking out for roll-up acquisitions, particularly those in consumer-facing sectors, such as healthcare, through its mergers intelligence function.
• The CMA has “called in” transactions that completed many months (and in a recent case, almost a year) earlier and identified competition concerns that have resulted in investors having to divest businesses they had already acquired.
• The CMA has applied its jurisdictional “share of supply” test creatively and expansively to capture transactions that, on first glance, fall below the UK thresholds.
• Financial investors should consider engaging advisors early to assess the risks involved in UK transactions, how those risks can be mitigated, and how to allocate risk in transaction documents.

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