Special public interest cases
190.These sections provide for an exceptional category of mergers that may be referred for investigation on public interest grounds, even though they do not meet the normal qualifying thresholds (the turnover test or the share of supply test). These include mergers involving certain government contractors (or subcontractors) who may hold or receive confidential information or material relating to defence.
191.They will not be scrutinised on competition grounds, but against public interest considerations only.
Section 59: Intervention by Secretary of State in special public interest cases
192.Subsection (1) provides that the Secretary of State may intervene on special public interest grounds if she has reasonable grounds for suspecting that: a special merger situation has been created or is in contemplation. Subsection (2) provides that the Secretary of State may issue a special intervention notice if she believes that the case raises public interest considerations as specified in section 58.
193.Subsection (3) provides that a special merger situation is one where the usual thresholds of share of supply or turnover have not been met and the conditions in subsection (4) are satisfied. Those conditions are that one of the enterprises is carried on in the UK, or by or under control of a body corporate incorporated in the UK and a person carrying on one of the enterprises is a relevant government contractor. Subsections (5) and (6) provide that for the purposes or determining whether a relevant merger situation has been created, sections 22-31 shall apply, subject to certain changes listed in subsection (6). These changes clarify that certain references to the OFT shall, for the purposes of the Chapter, be read as the Secretary of State.
194.Subsection (8) defines a relevant government contractor as a contractor whose contract includes handling confidential information or documents. They are notified of this by the Secretary of State, or on behalf of the Secretary of State in cases where this notification is passed on from a prime to a subcontractor. This subsection also establishes that a relevant government contractor includes a former contractor whose notification has not been revoked.
195.Subsection (9) defines defence as having the same meaning as in section 2 of the Official Secrets Act 1989, and further defines government contractor as having the meaning given in the 1989 Act and including subcontractors.
Section 60: Special intervention notices under section 59
196.This section provides that a special intervention notice shall contain details of the case concerned, and the public interest considerations specified in section 58 which are thought to be relevant. It also provides for the circumstances in which a special intervention notice would finally be determined and the time at which it would be determined.
Section 61: Initial investigation and report by OFT
197.This section establishes the OFT’s role in investigating and reporting on these cases. Subsections (1) and (2) establish that if the Secretary of State issues a special intervention notice to OFT, they shall produce a report within such time-limit as the Secretary of State may require. There is nothing to prevent the Secretary of State from altering the time-limit if circumstances so require. Subsection (3) provides that, in its report, the OFT will consider matters relevant to references under sections 22 and 33 which are also relevant to the criteria specified in section 62. This means that OFT do not need to consider whether the merger may result in a substantial lessening of competition as this is not relevant to the Secretary of State’s decision in a special public interest case. This subsection also provides that the OFT’s report will include a summary of representations received that are relevant to the Secretary of State’s decision.
198.Subsection (4) provides that the OFT shall decide whether a special merger situation has been created or is contemplated. This will be a relevant merger situation without the need to meet the qualifying thresholds (share of supply or turnover test). Subsection (5) provides that OFT may, at its discretion, provide other advice that may be relevant to the Secretary of State’s decision about whether to refer, and subsection (6) allows the OFT to carry out their investigations for the report as it considers appropriate.
Section 62: Power of Secretary of State to refer the matter
199.This section provides for the Secretary of State to refer the case to the CC if she believes that a special merger situation has been created, or is contemplated; a consideration specified in section 58 is relevant, and it may operate against the public interest. Subsection (5) provides that the Secretary of State will accept the OFT’s decision as to whether a special merger situation has been created.
Sections 63 and 64: Questions to be decided on references under section 62 & Cancellation or variation of references under section 62
200.Section 63 provides that the CC will consider whether a special merger situation has been created, or is contemplated; whether – on the basis of the considerations set out in the reference – the merger may be expected to operate against the public interest; and make recommendations as to what action, if any, the Secretary of State or others should take to remedy any adverse effects.
201.Section 64 provides for the circumstances in which the CC or the Secretary of State may cancel or vary a reference.
Section 65: Investigations and reports on references under section 62
202.This section provides that the CC’s report and investigation should contain its conclusions on whether a special merger situation has been created; whether it may be expected to operate against the public interest; and what actions should be taken by the Secretary of State or others to remedy these adverse effects.
Section 66: Decision and enforcement action by Secretary of State
203.This section provides that the Secretary of State must decide whether the merger may operate against the public interest within 30 days of receiving the report from the CC and may take whatever remedial steps she considers necessary (from paragraph 9 or 11 of Schedule 7). The Secretary of State must accept the view of the CC as to whether a special merger situation has been created or is contemplated.
