“Carrying on as we are is not a prudent option” says the Competition and Market Authority
The current uncertainty surrounding the terms of the UK’s Withdrawal from the EU, forces the Competition and Markets Authority (CMA) to admit that it had anticipated that “the path ahead would be clearer” when preparing to publish the Annual Plan for 2019-20. “Whilst clarity is no doubt approaching, important details around the timing and nature of the UK’s exit from the EU remain unresolved.”
See related publications: State Aid if there is a No Deal Brexit and Anti-Trust Enforcement is there is a No Deal Brexit.
Despite the uncertain times ahead the CMA has confirmed that it will be “ready to take on its additional responsibilities, whether at the end of March or later.” The additional responsibilities referred to are a result of the CMA (with concurrent regulators) having sole jurisdiction for competition policy once it is no longer under the jurisdiction of the European Commission and it will become the UK’s State Aid authority – a “major new function”.
The CMA acknowledges in the plan that it will be “taking on bigger and more complex global cases whilst remaining firmly committed to protecting UK consumers in purely national and local markets.” Such cases typically involve greater cost and complexity and require additional resources and capabilities. The CMA confirms that it has made “great strides” to ensure that it has the “people, skills and infrastructure” to take on major international cartel cases, merger investigations and State aid enforcement when the UK leaves the EU. Challenges which were identified in the National Audit Office report last year looked at the CMA’s progress in preparing for exit from the EU (see our related blog: #Brexit, the CMA and competition enforcement).
This change in remit will have a significant impact on resources and may shift the balance of priorities. Though the CMA continues to see “robust enforcement of the law as central to its purpose and it intends to maintain a significant volume of enforcement investigations”, it has stated that the type of new work which can be launched will be heavily influenced by the outcome of EU exit negotiations because a no deal scenario will require the CMA to “divert staff to casework returning to the UK from Brussels.”
The CMA therefore has produced an Annual Plan that is necessarily high level (which we are told will be refined and elaborated on in due course) but with a number of key themes with particular “strategic importance” for casework selection which include:
However, the plan goes on to state that the CMA’s future portfolio will reflect these themes but is necessarily also influenced by factors “beyond our control”. These can include fluctuations in work it is bound by law to undertake, such as merger control, regulatory appeals and in future, State aid. It can also include the need to devote resources to defend decisions in court.
The CMA’s current caseload - 23 competition enforcement cases, 6 consumer enforcement cases, 12 merger investigations, and 2 market studies under way - is set out alongside statistics as to the balance of staff time. What will be interesting to observe is whether the balance between enforcement and mergers (45% versus 21% in 2017) and (45% versus 23% in 2018) may then change significantly in the coming years in favour of State Aid.
As an alternative to specific anti-trust enforcement action, the Annual Plan confirms that the CMA believes that it can stamp out unfair practices and stop people being ripped off through wider reviews in markets, but that a ‘No deal’ outcome “will preclude this in the immediate term”.
With a future outside the EU, the Annual Plan confirms that it is a “globally active competition and consumer agency, with good relationships already in place with a range of international groups and agencies”. It sets out the clear intention to make full use of existing close relationships with international agencies to work together, to seek and share information to the extent permissible, and to develop new ways of working to protect UK consumers from harm. Though it recognised that there may be a future outside the European Competition Network (with its related information sharing capabilities), “it is neither in our, nor others’ interests for the CMA to recede as a contributor to the development of competition and consumer law internationally.”
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