Part 1: Digital Markets Chapter 5: Mergers Section 57: Duty to report possible mergers
This section sets out the circumstances in which designated undertakings, or where a designated undertaking is part of a larger corporate group (see section 117), group members, will have a duty to report a possible merger involving them (a "reportable event") to the CMA before it takes place.
	There are two categories of reportable event. The first category is concerned with designated undertakings (or larger corporate groups collectively) reaching (whether through the acquisition of shares or voting rights or otherwise) certain percentage thresholds of the shares or voting rights held in certain bodies corporate with links to the UK. The second category is concerned with designated undertakings (or one or more members of a larger corporate group) forming certain joint venture vehicles (bodies corporate formed with an unconnected party or parties for the purpose of working together) that are intended or expected to have certain links to the UK. A minimum value requirement also applies in relation to the consideration provided by the designated undertaking (or larger corporate group collectively) for the relevant shares or voting rights, or in relation to the formation of the joint venture vehicle. The purpose of the reporting criteria is to target the "relevant merger situations" within the investigative jurisdiction of the CMA under the merger control regime that are most likely to raise competition concerns in the UK.
	Subsection (2) sets out the first category of reportable event: those that result in a designated undertaking or (by virtue of section 61(2)) larger corporate group collectively having qualifying status (as defined in section 58(1)) in respect of shares or voting rights in relation to a UK-connected body corporate (as defined in subsections (5) and (6)), where the value of all consideration (as defined in section 59) provided by the undertaking or group for its shares or voting rights (whichever gives the undertaking or group qualifying status) is at least £25m.
	Subsection (3) defines the second category of reportable event: those that involve a designated undertaking, or one or more members of a larger corporate group, forming a body corporate (a "joint venture vehicle") with at least one other person (such as a company) that (as stipulated by subsection (7)) is not part of the undertaking or group, in circumstances where: the undertaking or (by virtue of section 61(2)) larger corporate group collectively acquires qualifying status (as defined in section 58(2)) in respect of shares or voting rights in relation to the joint venture vehicle; the undertaking or group members involved intend or expect the joint venture vehicle to become a UK-connected body corporate (as defined in subsections (5) and (6)); and, the total value of all capital and assets contributed to the joint venture vehicle by the undertaking or group, and of all other consideration provided by the undertaking or group in relation to the formation of the joint venture vehicle, is at least £25m.
	Example 1: Reportable Event (categories 1&2)
Category 1:
If Designated Undertaking A already holds 20% of the shares in Company B, which carries on a digital advertising business in the UK , for which it has provided £20 million consideration, and then seeks to acquire an additional 10% for consideration of £10m, the proposed acquisition must be reported to the CMA prior to completion, as: B carries on activities in the UK and is therefore a UK-connected body corporate; the acquisition will take A from a shareholding in B of 25% or less (20%) to one of more than 25% (30%), giving it qualifying status; and the total consideration for the resulting shareholding will be above the £25 million value threshold (£30m), thus satisfying both limbs of the test in section 55(2).
Had A proposed to acquire the additional shareholding for consideration of only £4 million (rather than £10 million), it would not have had a duty to report the event, because the value threshold would not have been met.
Category 2:
Designated Undertaking A, which is not part of a larger corporate group, and Company B, which is not part of A, propose to establish Company C together, with A holding 51% of the shares and B the remainder. A and B intend for C to supply digital services to customers in the UK. A agrees to transfer a pre-existing business with a value of £20 million to C and also to pay £10 million to B in relation to it agreeing to establish C with A. A must report the proposal to establish C to the CMA before C is formed because: C will be a body corporate formed with an unconnected person B and therefore a joint venture vehicle; A will have qualifying status in respect of shares in relation to C, as it will own a percentage of the shares above the 15% threshold for qualifying status in relation to joint venture vehicles; A intends that C will supply services to persons in the UK and therefore that C will be a UK-connected body corporate; and the value of the consideration to be provided by A in relation to the formation of C will be above the £25 million threshold, including the capital and assets that will be contributed to C.
The creation of C would not need to have been reported had the consideration been less than £25 million or if A did not intend or expect C to carry on any activities in the UK or to supply goods or services to anyone in the UK.
	Subsections (5) and (6) define "UK-connected body corporate" for the purposes of the first and second categories of reportable event. A body corporate is UK-connected if it, or any of its subsidiaries (which section 118(1) defines as having the same meaning as in section 1159 of the Companies Act 2006), carries on activities in the UK or supplies goods or services to a person or persons in the UK.
	Subsection (7) clarifies that, in relation to the second category of reportable event, the formation of a joint venture vehicle solely by persons (such as companies) that make up a designated undertaking or larger corporate group is not in scope of the reporting duty.
	Subsection (9) signposts two sections of the Enterprise Act 2002 that establish some of the more significant steps that the CMA may be in a position to take under the merger control regime (where the relevant statutory requirements are met) in relation to a possible merger that has not yet taken place, including one that has been reported under this section.