K.3 The formation of a JV entity may constitute a "relevant merger situation" under the UK's Enterprise Act, if two or more "enterprises" cease to be distinct. This may occur if two or more of the JV's founders allocate part of their assets, business, IP rights or personnel to the JV. There is no obligation to notify such a "merger" to the OFT. However, the OFT may investigate a JV entity agreement if it feels that it may have an anti-competitive effect. It will only however, investigate a JV which satisfies either of the following tests:
● where the JV will supply or acquire at least 25% of all particular goods or services in the UK, or part thereof, and at least two parties to the JV supply or acquire the particular goods or services (the share of supply test); or
● where the annual value of the UK turnover of two or more of the "enterprises ceasing to be distinct" exceeds £70m (the turnover test).
K.4 The EC Merger Regulation (ECMR) may apply if the JV is a "full-function JV" (i.e. if it performs on a lasting basis all the functions of an autonomous economic entity, which is likely to be the case for JV companies covered by this Guidance) and is sufficiently large-scale to merit investigation (the thresholds for investigation include a worldwide turnover of the JV partners having to exceed 5 billion euros).94 However, if each of the partners achieves more than two-thirds of their aggregate turnover within the UK, then the ECMR rules will not apply.
K.5 This means that most JVs entered into between public and private partners are likely to avoid EC scrutiny as mergers.
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94 There is a second, lower threshold of 2.5 billion euros, which applies if certain conditions are met.