Shaking Up the UK Antitrust Landscape: Government consults on major reforms to UK competition law and policy as well as digital markets

Two recent government consultations could have far-reaching implications for UK competition law and policy generally, as well as for digital markets in particular.

Major reform to competition law and policy

On 20 July 2021, the Department for Business, Energy and Industrial Strategy (BEIS) published a consultation on reforming competition and consumer policy. The key competition policy proposals are as follows:

1. Merger control: revise the UK merger control thresholds. The turnover threshold would be increased from £70m to £100m. There would be a safe harbour for mergers between small businesses (with worldwide turnover below £10m). A new threshold would enable the CMA to investigate mergers where any party has both a share of supply of at least 25% and has UK turnover of more than £100m.

2. Markets: to improve the market inquiry process, the government is considering whether to allow remedies to be accepted at the end of a market study, or whether to replace market studies and market investigations with a single stage market inquiry tool. It is also proposing to grant the CMA competition investigation-type powers to impose interim measures in market investigations, and to enable the CMA to accept commitments at any stage in the market inquiry process to close all, or any part of, an investigation. There are also proposals for a new process for remedy design, and improved monitoring and review of previous remedies.

3. Competition enforcement: strengthen competition enforcement by, in particular: expanding the territorial reach of the competition prohibitions; reducing the thresholds for immunity from fines; providing immunity from liability for damages for immunity recipients under the leniency policy; protecting whistle-blowers; strengthening the CMA’s interim measures powers; and providing the CMA with enhanced evidence gathering powers. The government is also proposing measures to streamline the settlement process and is seeking views on whether to adjust the standard of review for competition decisions.

4. Investigative and enforcement powers: arm the CMA with stronger investigative and enforcement powers, including: tougher financial penalties for failure to comply with an investigation; personal accountability for directors for the provision of evidence; and stronger penalties for failing to comply with remedies or commitments; as well as stronger powers and tools for international co-operation.

5. Other procedural reforms: revise certain merger procedures, including allowing commitments to be given earlier during Phase 2 and introducing an automatic fast-track referral procedure; revise the size, composition and role of the CMA’s Panel; require the CMA to produce regular reports on the state of competition in the UK economy; and introduce a new, more active approach by government when setting the CMA’s strategic steer going forward.

The government’s consultation runs until 1 October 2021.For further information on the consultation, see: Reforming competition and consumer law 

New regime for digital markets

Also on 20 July 2021, the Departments for Digital, Culture, Media and Sport (DCMS) and BEIS published a consultation on their proposals for a new ‘pro-competition regime’ for digital markets, along with the objectives and powers of the new Digital Markets Unit (DMU), which has already been established within the CMA in non-statutory ‘shadow’ form. The government’s consultation seeks views on the following proposals:

1. Strategic Market Status (SMS): firms with SMS will come within the scope of the regime. An evidence-based assessment will be used to identify firms with substantial and entrenched market power, in at least one digital activity, providing them with a strategic position. This includes where the effects of the firm's market power are likely to be widespread or significant. The DMU will designate these firms with SMS.
2. DMU: in terms of the DMU’s objectives, its statutory duty would be to promote competition (which includes promoting competitive outcomes) in digital markets for the benefit of consumers. Innovation is not explicitly included in the DMU's core duties, but it would support innovation when promoting competition and give appropriate regard to innovation and impacts on the economy and market. The consultation also considers how the DMU will work with other regulators (such as the ICO, Ofcom and the FCA).
3. Code of conduct: an enforceable, mandatory new code of conduct (to promote fair trading, open choices, trust and transparency) will set out how firms with SMS must behave.
4. DMU powers: the DMU will have powers to make ‘pro-competitive interventions’ to address the root causes of substantial and entrenched market power. This could include data-related remedies and measures to enhance consumer choice. It will also have powers to monitor and enforce the new regime, with the focus being on resolving concerns through constructive engagement with firms, but alongside robust powers to deter and tackle non-compliance.
5. SMS merger regime: the government is also considering a distinct new merger regime for firms with SMS, overseen by the CMA.

This consultation also closes on 1 October 2021.For further information on the government’s consultation, see: A new pro-competition regime for digital markets.

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Please contact our Competition expert Andrew Maxwell with queries on the article and the topics discussed.