The UK government has announced the launch of a consultation in relation to the five year statutory review of the competition regime and the UK Competition and Markets Authority (CMA) as required by the Enterprise and Regulatory Reform Act 2013 (ERRA). The government also published a consultation on its Strategic Steer for the CMA. The announcements came with the publication of a Green Paper entitled Modernising Consumer Markets. The Green Paper invites views on four broad areas of the consumer markets: (i) improving deals and services in the utilities markets; (ii) protecting consumers when they buy and sell online and helping them to take advantage of their data; (iii) improving alternative dispute resolution; and (iv) supporting local and national enforcers to collaborate to protect consumers. The consultation will close in July 2018, and the government will publish its review of the current regime by the statutory deadline in April 2019.
The consultation on the current competition regime and the Green Paper
The Business Secretary, Greg Clark, revealed that the government will consider whether the current regime gives the CMA, and other sector-specific regulators, adequate tools to deal with anti-competitive behaviour. It will also look at the regime’s ability to handle novel challenges; there is a particular focus on the digital economy (a chapter of the Green Paper is dedicated to looking at issues in respect of the digital markets).
The ERRA overhauled the UK competition regime in 2014. The CMA was established pursuant to the ERRA by merging the functions of the Office of Fair Trading and the Competition Commission. The review will consider whether the administrative and policy tools of the current regime enable consumers and the wider economy to benefit from competition, including the competition regime’s ability to respond to the rapid development of the digital economy.
The Green Paper states that the challenges posed by the digital economy span the breadth of competition law. Rules and practice on mergers, cartels and other anti-competitive agreements, market investigations and enforcement of consumer protection laws are all relevant. The Green Paper uses the example of merger control, suggesting that the nature of the digital economy means that there might be difficulties in assessing how a market may develop when reviewing a large market player’s acquisition of a smaller competitor. Further, it suggests the traditional theory that consumers will be harmed by rising prices if competition is ineffective is not straightforward to apply when services are essentially paid for by consumers’ data. Algorithms also potentially enable competitors to collude on prices, and problems can even arise without the algorithm users’ knowledge. The consultation invites views on the challenges digital markets pose for effective competition enforcement, and what can be done to address them.1
notes that post-Brexit there will be fewer constraints on the UK’s ability to modify the regime, which suggests that a wider range of amendments could be considered. Other areas of focus in the Green Paper are better outcomes for consumers participating in regulated markets and proposals to improve the enforcement of consumer rights, including in particular a new power enabling all consumer law enforcers, such as the CMA and Trading Standards, to ask courts to fine companies that breach consumer law up to 10 per cent of global turnover. It is proposed that the fines can be standalone remedies or be used in conjunction with other civil remedies. These areas tie in with the CMA’s work and that of other industry regulators some of which have concurrent competition powers. Again, the consultation requests views in relation to these areas.
The Strategic Steer
The government is also consulting on the new ‘Strategic Steer’ for the CMA. The government issues a Steer for the CMA for each Parliament. The Steer is non-binding and its purpose is to “support the CMA in achieving its objectives and delivering real benefits for UK consumers and the UK economy”.2 It also shows how the government views competition in the context of its wider economic objectives. The current Steer was adopted in December 2015 and broadly provides that the CMA should focus on markets where competition may enable better consumer choice and facilitate innovation and productivity, be fair and effective when enforcing antitrust rules and take the lead on using its tools to provide alternatives to regulation to help meet the objective of removing regulatory burdens for businesses.
The government has set out a draft new Steer as an annex to the Green Paper, and it invites views on the draft.
The draft Steer highlights three key areas:
(i) The government’s Industrial Strategy – the CMA should take timely action to improve competition throughout the UK in sectors that considerably impact productivity, act to minimise entry barriers for new market participants and publicly report on competition matters impacting productivity, bringing to light issues requiring government intervention, and steps the CMA is taking towards improvement.
(ii) The championship of consumers – the CMA should centre its activities on areas where there is a clear risk of harm, deal with market failures and use a cross-discipline approach, lead sector regulators to maintain a coordinated competition regime and protect consumers from illegal and anti-competitive practices and make markets work well for vulnerable consumers.
(iii) Embracing the challenges and opportunities arising from the digital economy – the CMA should foresee and embrace competition challenges arising from new and emerging markets, and seek high-impact outcomes, assist consumers in exploiting the digital economy by building trust and providing law enforcement and engage in international discussion on consumer policy and competition in the digital economy.
The draft Steer suggests that the CMA should have regard to all of these areas when it carries out its activities, and that it should be active in dealing with anti-competitive conduct and unfair trading both pre and post-Brexit. In particular, the CMA should:
(i) be ambitious in terms of the volume, type and pace of its cases;
(ii) provide a voice for consumers and work to grow public knowledge of competition law;
(iii) be robust, fair and effective when applying competition rules; and
(iv) publicly report on its impact on competition in the UK, and on developing and preserving well-functioning markets for all. It should make public the actions it is taking to tackle issues and be vocal when a matter requires government intervention.
The broad theme underlying the government announcement and the Green Paper is consumer protection. The government also shows that it has a particular interest in the CMA’s ability to adapt to deal with the new challenges posed by the digital economy. Many challenges and opportunities that will emerge from Brexit remain to be seen, but it is important to note it is part of the backdrop to this review. It will be interesting to see how this shapes the CMA of the future, and the impact it may have on competition law.