By Bryan Koenig

Law360 (April 22, 2020, 8:25 PM EDT ) The United Kingdom's antitrust watchdog said in new guidance Wednesday that it would consider "substantiated claims" of COVID-19-related difficulties as sufficient to delay response deadlines for companies navigating merger reviews.

In broad guidance outlining how it is assessing mergers as the novel coronavirus pandemic ravages populations and economies worldwide, the Competition and Markets Authority said that its statutory timetables and overall assessment of transactions for their competitive implications remain unchanged.

But the agency also recognized that merging companies and third parties hit with information requests as part of its transaction assessments can face difficulties when trying to engage with those probes.

"In particular, the CMA understands that businesses may encounter difficulties in responding to statutory information requests during this period because of conflicting priorities or staff availability," the agency said. "Substantiated claims that a business is facing difficulties brought about by coronavirus will generally constitute a reasonable excuse for not providing certain information by a specified deadline in response to a statutory information request — i.e., under the CMA's information-gathering powers set out in section 109 of the Enterprise Act."

According to the guidance, the CMA is therefore unlikely to penalize companies in such circumstances that they cannot respond within the statutory time frame.

Like its international peers, the CMA has been scrambling to adapt to a pandemic that as of Wednesday had infected more than 2.47 million people globally and killed over 169,000, according to the World Health Organization. In the U.K., it was over 133,000 positive tests and over 18,000 deaths, according to the country's Department of Health and Social Care.

For the British government, adapting to the virus' competitive impacts has meant loosening antitrust rules for supermarkets and other businesses so they can coordinate to shore up the supply chain, while generally encouraging cooperation to address the pandemic even as it warns against any attempt to take advantage of the situation.

The virus has also leaked into CMA merger decisions. Last week, the agency provisionally cleared Amazon's planned minority investment in Deliveroo after the British food delivery company said it needs the infusion to help survive turmoil in the restaurant industry being caused by the pandemic.

On Wednesday, the agency argued that the pandemic has not spurred "any relaxation of the standards by which mergers are assessed or the CMA's investigational standards." The preservation of competitive markets via "rigorous merger investigations" remains vital to safeguard consumers "in the longer term," according to the guidance.

Coronavirus impacts will be considered as part of a merger assessment "where appropriate," the CMA said, asserting that the pandemic will have "a substantial impact" on the country.

"There remains considerable uncertainty about the extent and duration of this impact. A merger control investigation typically looks beyond the short-term and considers what lasting structural impacts a merger might have on the markets at issue," the agency said. "Even significant short-term industry-wide economic shocks may not be sufficient, in themselves, to override competition concerns that a permanent structural change in the market brought about by a merger could raise."

The CMA went on to say that its decisions must be based on evidence rather than "speculation."

The agency also noted that the pandemic may lead to more submissions asserting that a company is "failing" and cannot survive without a merger. Such deals must be assessed "in a fair and transparent way that appropriately protects the interests of consumers," according to the guidance, which maintained that such deals will be assessed case-by-case even as it noted it has issued a refresher on how it will consider failing firm assertions.

Other pandemic impacts addressed in the guidance include investigation timing. The CMA said that while it remains committed to wrapping up its merger probes quickly, the pandemic will likely cause problems, particularly in information-gathering.

"Within individual cases, it is possible that the pre-notification process will take longer than it otherwise would because of difficulties in obtaining information from the merging parties and third parties," the agency said.

Unlike its European Union peers, however, the CMA said it isn't currently asking parties to hold off on their merger filings, holding up the voluntary nature of the U.K. merger review system as incompatible with such requests. The agency said, however, that it would "encourage" merging companies to consider if some filings could be postponed.

"When submitting a case team allocation form to the CMA, merging parties are asked to provide as much information as possible, and to be realistic, about the likely timing of the case," the agency said.

Additionally, the CMA said that all meetings will be conducted over the phone or through teleconferencing, while in-depth investigation "site visits" are not currently taking place.

The agency also noted a high volume of merging party requests for changes to the "interim measures" that require companies to hold off on closing their transactions while the CMA investigates. Such requests, the agency said, can be granted, but they will still be reviewed case-by-case.

"If the CMA decides to investigate a merger, it is essential to the functioning of the U.K. merger regime that the pre-merger competitive structure of the market is preserved during its review," the agency said. "The CMA will therefore continue to impose interim measures in line with its policy pre-coronavirus, and is unlikely to lift interim measures that are already in place during the course of its review."

--Additional reporting by Matthew Perlman. Editing by Philip Shea.

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