CMA launches consultation as it prepares for expanded role

The Competition and Markets Authority (CMA) has launched a public consultation on its strategy for the coming years, which would see its size and scope expand significantly.

According to its annual plan for 2022 and 2023, the CMA currently has 14 live competition enforcement cases, 13 consumer protection cases, 36 merger investigations, three market studies and a market investigation underway.

A proportion of this workload is attributable to Brexit, the plan explains, since the CMA is now handling certain cases that would previously have been reserved for the European Commission.

On top of its current caseload, the plan outlines how the new Digital Markets Unit (DMU) – which sits within the CMA - is expected to operate next year, although is not yet known when the unit will gain statutory powers.

The CMA pledged to continue its international collaboration with other competition authorities on regulating the digital sector. It will also continue to robustly enforce antitrust and merger control rules in digital markets. From a consumer law perspective, the CMA will build on its earlier work in the digital sector that involved cracking down on fake reviews, social media endorsements, online gambling, and secondary ticket platforms.

In September 2021, the CMA’s role further expanded with the launch of the Office for the Internal Market (OIM) - which is intended to assess whether the UK’s internal market is operating effectively. The CMA is now also preparing for creation of the Subsidy Advice Unit (SAU) in 2022.

Likely to be launched in autumn next year, the SAU will monitor the overall functioning of the UK’s new subsidy control regime, according to the plan, as well as providing “non-binding advice to public authorities on a small number of individual subsidies and schemes that are most likely to have distortive or harmful effects”.

Trade and subsidies expert Dr Totis Kotsonis of Pinsent Masons said: “While this role will be different and much more limited when compared with that of the European Commission under EU state aid law, it nonetheless means that the domestic competition regulator will, for the first time, not only be concerned with the conduct of businesses but also the potentially competition distortive conduct of public bodies when using taxpayers’ money to support certain businesses in domestic markets”.

“This role is likely to be much more politically sensitive than any of its other competition regulatory responsibilities, a fact of which no doubt the CMA is fully mindful as it takes on this new role,” he said.

The CMA said it will work to meet the UK government’s net zero targets by providing more guidance for businesses on how to engage in green initiatives that comply with competition law, and will continue consumer protection enforcement in line with the ‘Green Claims Code’ it published earlier this year.

The annual plan also announced the expansion of the CMA’s operations across the UK, with a new office in Manchester for the DMU, and a Microeconomics Unit at the Treasury’s Darlington campus.

Officials also hope to recruit more staff at the CMA’s existing headquarters in Cardiff, Belfast and Edinburgh.

Tadeusz Gielas, competition expert at Pinsent Masons, said: “The CMA is doubling-down on its current key areas of focus involving consumer protection, robust merger control and antitrust enforcement, digital markets, and sustainability and climate change.”

“Now outside the EU, the CMA’s ambition is to remain at the forefront of global competition and consumer authorities.”

“The new year is likely to see further ramping up in the CMA’s enforcement activity, including vigorous pursuit of antitrust breaches – the CMA has signalled that it will resume dawn raids, which have been put on hold during the pandemic, and will continue to routinely seek disqualification of directors found to have been implicated in a company’s antitrust violations,” he added.

“Businesses must remain alive to these risks, as the stakes for non-compliance continue to increase.”

Gielas said businesses can expect significant change in the new year, as various CMA and UK government consultations are likely to result in new legislative proposals or policy changes. 

“Key on the horizon are proposals for UK competition and consumer law reform, a new statutory regime for the DMU, and revised UK-specific vertical agreements block exemption rules and guidelines. We can also expect updates to the UK’s two retained horizontal block exemption regulations - covering R&D and specialisation agreements - and related guidance on horizontal cooperation,” he said.

“These developments may substantially impact UK businesses in the future, both from a legal and practical perspective. It is important that companies based or trading in the UK remain abreast of these changes and adapt their business practices and compliance policies accordingly.”

A public consultation on the CMA’s proposed plan closes at 5pm on 21 January 2022.