[co-author: Jen Qosja]*
The UK Competition and Markets Authority ("CMA") recently issued its Annual Plan for 2020/2021, which aims to give clarity to the CMA's objectives for the next year.
The report acknowledges that its publication comes out at a time of massive social and economic turmoil caused by the COVID-19 outbreak and that it is working hard to keep pace with the rapidly unfolding situation.
Activity in the past year
In highlighting its active enforcement of the competition rules in the previous year, the CMA points out that it imposed fines on businesses for infringing the rules which totalled over £48 million and that it secured the disqualification of nine company directors in connection with corporate breaches of the competition regime. It also notes some of its higher profile decisions, including its controversial decision to block the Sainsbury's/Asda merger, and its review of the audit market.
Objectives for the coming year
In keeping with previous years, the CMA has centred its Annual Plan around a number of key principles, as set out below.
The CMA's strategic aims for the coming year are set against a backdrop of high volumes of ongoing casework, and in particular, an unprecedented number of phase 2 (in-depth) investigations. The pressure of a heavy workload will be increased by the UK's departure from the EU, following which the CMA anticipates that it will face a 50% increase in the number of merger cases that it takes on, amongst other responsibilities. However, the CMA reiterates that it is well prepared to take on its new responsibilities whilst also remaining firmly committed to UK-only matters.
1. Protecting consumers, including in particular those in vulnerable circumstances
In aiming to protect consumers, the CMA will focus on both its enforcement capabilities and behavioural insight skills. The CMA explains that where the 'competition broom cannot sweep or cannot sweep cleanly or quickly enough' it will promote consumer interests in a holistic way, although no specific details are provided as to the types of tools that the CMA is envisaging to use.
The CMA also refers to specific industries that it will continue to place a strong focus on. These include funeral markets, care home providers, fertility clinics, the pharmaceutical sector and other healthcare related markets.
2. Improving trust in markets
The CMA's main focus in improving trust in markets is on legislative changes. In particular, the CMA advocates for reforms to its duties in relation to its authority to promote consumer interests and conduct work as swiftly as possible. To this end, the CMA cites the proposals it made to the government in February 2019 for reforms designed to help stop anti-competitive conduct sooner.
The CMA also intends to play a more visible role by building a greater evidence base and doing more to signal expectations of good business behaviour. The beginnings of such work can be seen in the CMA's 'Cheating or Competing' campaign that was launched in February 2020.
3. Tackling concerns in digital markets
The CMA acknowledges that the 'digital market' is not a sector in itself, but rather that most businesses are increasingly shifting their trading online. Despite this, the CMA contends that 'the UK has an analogue system of competition and consumer law in a digital age'. As such, the CMA supports recommendations for the development of a new pro-competitive regulatory regime for digital platforms. The CMA will provide advice to the government on what such a regime should look like through its newly formed Digital Markets Taskforce.
Notably, the CMA will also update its Merger Assessment Guidelines to reflect better how digital markets function and the CMA's recent practice in its assessment of mergers. Similarly, the CMA aims to develop its technological understanding and capabilities to improve its investigations.
4. Enhancing productivity and economic growth
The CMA's actions in furtherance of this objective mostly relate to government engagement, including promoting practical guidance on how to design and implement policies that harness the benefits of competition. Similarly, the CMA intends to expand its outreach and training on competition matters for civil servants.
5. Climate change – supporting the transition to a low carbon economy
As part of this newly introduced objective, the CMA explains that it will aim to support businesses in adapting to climate change while ensuring that markets remain competitive and open to disruptive innovation.
The CMA sends a positive message to businesses engaging in 'sustainability initiatives', underlining that it will communicate with them to ensure they do not shy away from initiatives due to unfounded fears of being in breach of competition law as a result of cooperation with competitors. However, the CMA will also deepen its understanding of 'green' claims made by sellers to customers to ensure that consumers are not affected by false or misleading statements on this topic.
6. Taking on new responsibilities as a result of the UK leaving the EU
In anticipation of taking on new responsibilities conferred on it as a result of Brexit, the CMA reassures companies that it remains open to talking to businesses and other interested parties about specific concerns they may have relating to Brexit.
The CMA also aims to accelerate its engagement with 'international partners' to share information and expertise, in addition to participating in forums such as the Organisation for Economic Cooperation and Development and the International Competition Network.
CMA reports to be published this year
The CMA's Plan highlights various reports and studies it intends to publish this year in relation to the following:
- Online platforms and digital advertising: an ongoing market study into online platforms and digital advertising, including the market power of digital platforms in consumer-facing markets and the lack of consumer control over data.
- Funeral markets: an ongoing market investigation into funeral markets.
- Fertility clinics: a public consultation on guidance on consumer protection law for fertility clinics.
- General state of competition: a report to assess the state of competition in markets across the UK and consumers' experience of those markets.
- Review of 2016 study: a review of the CMA's legal services market study conducted in 2016 to assess the extent to which the recommendations in that market study have been taken forward and the impact of the changes.
Watch this space
It was clear from the outset that the coming year was going to be an important period of transition for the CMA, in preparation for its expanded responsibilities in a post-Brexit world, as a competition authority outside of the EU system coordinated by the European Commission. In part reflecting this, the CMA appears recently to have adopted a more proactive enforcement stance, particularly in reviewing mergers, where it has taken a tougher line with its investigatory procedures. It has also been an active participant in debate about the need to update its statutory remit and procedures.
Given the circumstances with the COVID-19 pandemic, however, it is quite possible that the priorities of the CMA (and other regulators) will need to be recalibrated, depending on the length and ultimate economic impact of the crisis. For example, one might expect a more detailed early steer on the UK’s approach to state aid in a post-Brexit world, when it is no longer subject to the EU rules in this area, given the huge demands for state assistance coming from many parts of the economy. Furthermore, the CMA’s well publicised ambitions on other fronts, such as more effective competition enforcement in digital markets, may need to be more modest in the immediate term – whether because of resourcing issues, the re-ordering of its priorities or, in the case of digital markets, the pivotal role that the big online and tech businesses may be required to play in getting the economy back on its feet.
*Trainee solicitor
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