What is a Killer Acquisition?
A killer acquisition occurs when a dominant company acquires a smaller, innovative rival-often in sectors like tech, pharma, or biotech-primarily to discontinue the target’s projects and eliminate future competition. Academic studies show these deals often avoid scrutiny by falling below traditional merger thresholds, allowing incumbents to maintain market power by neutralizing potential threats. The UK’s Digital Markets, Competition and Consumers Act 2024 (DMCC Act) introduces reforms to close this regulatory gap, effective 1 January 2025.
1. How does the DMCC Act redefine merger control for killer acquisitions?
The Act introduces a hybrid jurisdictional threshold allowing the Competition and Markets Authority (CMA) to review mergers where:
• One party holds a 33%+ UK market share and UK turnover ≥ £350 million, and
• The target has a UK nexus (e.g., operations, customers, or suppliers in the UK).
This captures vertical/conglomerate mergers and acquisitions of startups with minimal turnover, addressing gaps in previous regimes.
2. What are the updated CMA turnover thresholds under the DMCC Act?
• Target turnover threshold: Raised from £70 million to £100 million to account for inflation.
• Safe harbour exemption: Mergers where both parties have UK turnover ≤ £10 million are exempt.
3. Which firms face mandatory merger reporting under the DMCC Act?
Companies designated with Strategic Market Status (SMS)-large digital platforms like Google or Meta-must report acquisitions involving:
• Ownership changes ≥15%, 25%, or 50%, or
• Total consideration ≥ £25 million.
This applies even if deals fall below standard thresholds, ensuring closer CMA oversight.
4. Do the DMCC Act’s rules apply retroactively?
Yes. Transactions signed but not completed by 1 January 2025 are subject to the new thresholds. Deals in progress must reassess compliance.
5. How does the Phase 2 fast-track process work?
Parties can request accelerated Phase 2 investigations without admitting competition concerns. However, timelines may extend by 11 weeks for complex cases.
6. Which sectors are most affected?
Digital Markets
SMS-designated firms (e.g., Meta, Google) face mandatory reporting for acquisitions of UK-linked targets, including startups in AI, VR, and cloud services.
Pharmaceuticals & Biotech
Historical data shows 6.4% of drug acquisitions qualify as killer deals, often targeting overlapping therapies.
Media & Foreign Ownership
The DMCC Act introduces strict prohibitions on foreign state ownership/influence over UK newspapers through amendments to the Enterprise Act 2002:
• Foreign state intervention notices must be issued if a merger involves a foreign power (e.g., UAE, China) gaining control/influence over a UK newspaper enterprise.
• The CMA investigates and reports to the Secretary of State, who must block or unwind such mergers.
• Applies retroactively to deals completed after 13 March 2024.
7. How should compliance teams adapt?
• Conduct pre-emptive antitrust assessments focusing on market share overlaps and innovation pipelines.
• Submit mandatory reports before deal completion, not post-facto.
• Seek specialised legal advice and adopt a proactive and pre-emptive approach.
• Align general investment strategies to new regulatory constraints.
• Monitor SMS thresholds and submit mandatory reports within 5 working days of triggering criteria.
• Review deals signed in late 2024 for retroactive compliance.
8. How does the UK’s regime align with global trends?
The DMCC Act mirrors reforms like the EU’s Digital Markets Act (DMA) and U.S. FTC guidelines, emphasizing cross-border coordination to curb anticompetitive consolidation. For example, the EU’s revised merger control now scrutinizes acquisitions of "maverick" firms in digital markets.
9. What resources are available for compliance?
• DMCC Act 2024 (Full legislation)
• CMA Guidance on SMS Mergers (Reporting requirements)
• OECD Report on Killer Acquisitions (Global context)
10. What new civil penalties apply under the DMCC Act?
The DMCC Act introduces a three-tier penalty system, with distinct consequences for different breach types:
A. Merger Control Breaches
• Substantive violations (e.g., completing a prohibited merger):
o Fixed penalty: Up to 5% of global annual turnover.
o Daily penalty: Up to 5% of daily global turnover for ongoing non-compliance.
B. Consumer Law Breaches
• Substantive infringements (e.g., unfair commercial practices):
o 10% of global annual turnover or £300,000 (whichever is higher).
• Administrative breaches (e.g., failing to comply with CMA orders):
o 5% of global annual turnover or £150,000 (whichever is higher).
C. Procedural/Investigatory Failures
• Non-compliance with CMA inquiries or providing false information:
o 1% of global annual turnover or £30,000 (whichever is higher).
o Daily penalties: 5% of daily turnover or £15,000 for ongoing breaches.
Personal Liability
Individuals (e.g., directors) acting as "accessories" to breaches face:
• Up to £300,000 for substantive consumer law violations.
• Up to £150,000 for procedural failures.
Key Clarifications
• Turnover calculations include global revenue, not just UK operations.
• Daily penalties apply only to ongoing procedural breaches, not to false information provision.
• Consumer law fines (10%) now match competition law penalties, creating enforcement parity.
For detailed methodology, see the CMA’s "stepped approach" guidelines.
11. How does the UK’s regime align with global trends?
The DMCC Act mirrors the EU’s Digital Markets Act (DMA) and operates under the Multilateral Mutual Assistance and Cooperation Framework (MMAC) with the U.S., Australia, and Canada. For instance, the CMA collaborated with the FTC in 2025 to block a Meta acquisition of a VR fitness app, citing parallel concerns about data monopolization.
12. How can overseas regulators collaborate with the CMA?
Under the DBT-CMA Memorandum of Understanding, non-UK authorities can:
• Request evidence sharing or dawn raids for cross-border cases.
• Coordinate enforcement actions under the MMAC framework.
UAE Implications
While no UAE-specific agreements exist, firms with UK subsidiaries must comply with SMS reporting rules. For example, a Dubai-based AI startup acquired by an SMS firm for £30 million would trigger mandatory CMA disclosure.
The DMCC Act’s foreign state intervention regime has direct implications for Middle Eastern investors and mergers. For instance, firms with UK newspaper assets must:
• Disclose foreign state-linked ownership during merger reviews.
• Avoid indirect influence via subsidiaries or passive investments exceeding 5% shares/voting rights.
• Key exception: Passive investments ≤5% via state-owned funds (e.g., UAE sovereign wealth funds) are exempt if they meet "genuine diversity of ownership" criteria.
Clotilde Iaia Polak, a Dubai-based corporate lawyer with expertise in UAE-UK cross-border mergers, advises:
"The DMCC Act’s extraterritorial reach means UAE startups and investors must proactively align their merger strategies with global antitrust trends. Early legal reviews are critical to navigate the UK’s expanded CMA powers and avoid penalties."
Contact Clotilde Iaia Polak for assistance:
• Email: clotilde@yungo.ae
• Profile: Yungo Law
• Expertise: UAE-UK mergers, startup compliance, antitrust risk mitigation.
