CMA proposes lowering burden of proof to block big tech acquisitions

The Competition & Markets Authority (CMA) has proposed lowering the burden of proof required to block dominant tech companies acquiring smaller rivals.

The new regulations would apply only to tech companies deemed as having “strategic market status”, which refers to companies with powerful positions in digital markets.

This will include Google’s search and advertising businesses and Facebook for its role as a leading social media platform.

Amazon, Apple and even Uber are likely to be included at a later date if they are deemed to possess a strategic market status.

READ MORE: Digital Markets Unit launches to fight tech giants’ market dominance

Currently a proposed acquisition will likely be blocked by CMA regulators if it is likely to weaken market competition by preventing original innovation or increasing prices.

However, experts are concerned that current regulation misses out deals where a larger company acquires a smaller one which has potential to be a future threat to the market.

Many believe that this was the reason that Facebook acquired Instagram after Mark Zuckerberg was seen to claim that “Instagram can hurt us” in a previously leaked email.

The new proposals would lower the burden of proof to stand in the way of an acquisition from a company with a strategic market status that has a fair chance of reducing competition in its market to a “greater than fanciful, but below 50 per cent” chance, as reported by the Financial Times.

According to the new proposed laws, a deal with a 90 per cent chance of actually improving competition should be blocked because a 10 per cent chance that it could reduce market competition.

There are also concerns that the new regulations proposed by the CMA will have a negative affect on start-up’s in the UK.

Click here to sign up to Charged’s free daily email newsletter



Leave a Reply

Your email address will not be published. Required fields are marked *

Fill out this field
Fill out this field
Please enter a valid email address.