Proposed competition and consumer policy reforms

In July 2021, the Department for Business, Energy and Industrial Strategy (“BEIS”) launched a consultation on reforming competition and consumer policy. The consultation follows a series of previous competition and consumer reform proposals including the Penrose report, published in February 2021, which made various recommendations on strengthening the UK’s competition and consumer protection regimes in light of the challenges presented by the post-Brexit and COVID-19 economy. It is clear that the Government considers the improvement of competition and consumer protection as key elements of a healthy economy.

What are the key competition policy proposals? 

Some of the key competition policy proposals made in BEIS’ latest consultation include:

• A new pro-competition strategy for the UK – introducing a requirement for the CMA to publish regular ‘state of competition’ reports to assess the strength of competition in the UK economy.
• More effective market inquiries - introducing a new single market inquiry tool (which would replace market studies and market investigations) which would have a statutory timeframe of two years or alternatively, retaining the existing market study and market investigation procedures but allowing the CMA to impose certain remedies at the end of a market study. The Government is also proposing giving the CMA powers to accept binding commitments from businesses at any stage during the market inquiry process (rather than at the end of the process).
• Rebalanced merger control - revising the merger control thresholds such that the CMA would have jurisdiction where:
  • The target’s UK turnover exceeds £100 million (rather than £70 million) or the merger would result in the creation or enhancement of at least a 25% share of the supply of particular goods or services in the UK, or a substantial part it; or
  • The target’s UK turnover exceeds £100 million and one of the merging parties has a share of supply of at least 25% of a particular category of goods or services supplied or acquired in the UK or a substantial part of it (regardless of whether the parties’ activities overlap).
• The Government has also proposed to create a safe harbour for mergers between small businesses where the worldwide turnover of each of the merging parties is less than £10 million (even if the merger satisfies the share of supply test).
• Stronger and faster enforcement against illegal anticompetitive conduct - providing holders of full immunity in the public enforcement process with additional immunity from liability for damages caused by the cartel (in order to incentivise leniency applications). The Government has also proposed to extend the territorial scope of the Chapter I and II Prohibitions under the Competition Act 1998 so that they capture agreements which have, or are likely to have, direct, substantial and foreseeable effects within the UK.
• Stronger investigative and enforcement powers across competition tools – allowing the CMA to impose fixed penalties of up to 1% of a business’ annual turnover for failing to comply with an order or investigation, as well as the power to impose an additional daily penalty of up to 5% of daily turnover while non-compliance continues. The Government has also proposed giving the CMA the power to impose civil penalties on companies that fail to comply with the CMA’s directions, orders, or undertakings or commitments the company has given to the CMA.

What next? 

The consultation is due to close on 1 October 2021 and advice from the CMA is due by early 2022.

 Written by Sandra Mapara