The Competition & Markets Authority ("CMA") becomes the single UK competition regulator, taking over from the UK's Office of Fair Trading and Competition Commission, both of which will no longer exist. The CMA will:

  • Investigate mergers at both phase 1 and phase 2 and impose remedies where it finds a substantial lessening of competition.
  • Investigate breaches of the EU and UK prohibitions on anti-competitive agreements and abuse of market dominance and impose fines and other remedies.
  • Prosecute individuals suspected of committing the cartel offence.
  • Conduct market studies and market inquiries and impose remedies where it finds market features that have an adverse effect on competition.
  • Apply to disqualify directors who ought to have known their company was in breach of competition law or who participated more actively in the breach.
  • Exercise some consumer powers. 

Sectoral regulators will continue to apply competition law in their sectors of competence, acting concurrently with the CMA. However, the CMA may be expected to take a more assertive role where sectoral regulators conclude that the CMA’s now expanded investigative and enforcement powers enable it better to address market competitiveness concerns identified by the sector regulator.

Changes to the UK merger regime are likely to affect the way UK M&A are assessed.

  • Hold separates: The system remains voluntary, so no filing or clearance is required before a transaction is completed, but the CMA can still investigate a deal whether or not it has been filed and it can order the parties to suspend integration pending its clearance decision and unwind any integration that has already occurred. It can impose penalties of up to 5% of global revenues for failure to comply with a hold-separate order. It is likely to be more difficult now for a seller to persuade a buyer not to make a deal conditional on UK clearance.
  • New statutory deadlines: The CMA must reach a phase 1 decision within 40 days, and there will be a statutory deadline for negotiating remedies at phase 1 and 2.
  • More comprehensive investigatory powers: The CMA can now require the parties to a deal and third parties to provide information and documents in phase 1 as well as phase 2 and impose penalties for non-compliance.
  • Access to decision makers: There will be a new opportunity to gain access to the decision maker during Phase 1 investigations, before any decisions as to remedies are made.  Board members will now have the chance to put across their case, but must be careful not to say anything that may have a more detrimental than beneficial effect.

The CMA will have stronger powers in competition investigations.

  • New fines for failure to comply with investigations.
  • Interim measures: These temporary suspensory requirements during an on-going investigation will be easier for the CMA to impose.
  • Compulsory interviewing powersduring dawn raids – but questions remain over the presence of legal representatives and the scope to resist questions on grounds of self-incrimination.
  • Focus on small as well as large cases: The CMA proposes to focus on small cases as well as large ones, since smaller cases can serve as a useful precedent. This means that all businesses need to continue to pay close attention, whether in relation to a merger, market enquiry or anti-competitive conduct.

Removal of the dishonesty requirement from the criminal cartel offence puts a greater burden on defendants.

  • Burden on defendant: When prosecuting an individual suspected of the cartel offence, the CMA does not need to prove that the individual acted dishonestly. It is up to the individual to defend him or herself by arguing one or more of the new exceptions and defences; these have attracted their fair share of questions as well.
  • Greater use of these powers: The CMA has indicated that criminal aspects are to gain greater priority in future, so we expect an increased number of prosecutions of this offence.

Changes to the market inquiry regime provide greater flexibility but tighter deadlines.

  • Market features: The CMA may refer specific features of several markets in combination for a detailed market inquiry, without having to refer entire markets or examine the features of each in independent inquiries. 
  • Greater investigation powers: The CMA has enhanced powers of investigation.
  • Shorter deadline for decision: The deadline for the CMA's decision in a market inquiry is 18 months. There is a further statutory deadline for negotiation and implementation of any remedies the CMA considers necessary.
  • Greater use of these powers: Expect to see more of these in the near future as the CMA retains, if not exceeds, the previous regime’s enthusiasm for them.

Director disqualification principles continue as before. Less has been said about the CMA's proposed use of powers to disqualify directors in the context of a competition law breach by their companies. These powers will be exercised in accordance with principles already established by the OFT, although, as far as public sources disclose, rarely considered by it.