Enforcer’s weedy roots

 New competition authority will have  to work hard to  restore the reputation of the UK regime

Gillian Sproul

The UK competition regime took a big step towards reform on 1 October when the Competition and Markets Authority (CMA) launched, attended by competition minister Jo Swinson and the CMA’s senior leadership team. The CMA will take over the competition powers of the Office of Fair Trading (OFT) and the Competition Commission (CC) next April, becoming the UK’s primary competition enforcer.

Its legacy is a difficult one. The OFT has been subject to criticism on a variety of fronts – successful appeals against its infringement and merger decisions, successful challenges to its penalty calculation methodology, the length of its decision-making processes, non-use of its powers to disqualify directors for competition breaches and, perhaps most of all, failure to bring successful cartel prosecutions. 

Neither has the CC been free from challenge over the robustness of its decision-making and remedies or for the information burden it places on parties and third parties in inquiries. 

A number of the Enterprise and Regulatory Reform Act 2013 reforms that accompany the establishment of the CMA are designed to help the CMA overcome some of these issues. Key are powers in infringement cases to compel individuals to answer questions about suspected infringements by employers or ex-employers during their employment and, in merger cases, to demand information from a range of individuals and businesses. There are also enhanced powers to intervene early to stop allegedly anti-competitive conduct and mergers, and the removal of the dishonesty requirement for cartel prosecutions, placing the burden on defendants to prove one of the new exemptions or defences – probably the most controversial reform.

There will also be more efficient and robust decision-making processes in infringement, merger and market investigations.

The CMA is consulting on five goals it proposes to set itself with a view to fulfilling its duty to promote competition and achieve high performance. But the real test will lie in its ability to select those cases that make a real difference, pursue them expeditiously and defend them successfully on appeal. It will be assisted in selection of cases by the Government’s strategic and non-binding steer, published on 1 October. This shows we can expect increased competition scrutiny in sectors where consumers find it difficult to compare products or face switching costs, in knowledge-intensive sectors and in the financial services and infrastructure sectors, including energy, where the CMA will work with the relevant sectoral regulators. 

And we can undoubtedly also expect a substantial number of cartel offence prosecutions.

The successful pursuit and defence of the cases that are selected, and therefore the strength and reputation of the UK competition regime, will be tied up with the CMA and its impressive and experienced senior team.