The end of free movement: what SMEs need to know
At the end of last year a Memorandum of Understanding (MoU) between the Competition and Markets Authority (CMA) and the Financial Conduct Authority (FCA) on concurrent competition powers was published. The MoU represents a further stage in the interests of establishing a more effective competition law enforcement system in the UK with its stated purpose being to establish an understanding between the CMA and the FCA. It underlines the CMA’s strategic goal to “extend the frontiers of competition into new areas, including by working with sectoral regulators” and to build a strong dialogue with them. Overall the spirit of co-operation underpins the new concurrency regime as well as the importance of effective communication and sharing resources between the authorities. Eve Giles and Maya Silva examine what the MoU seeks to achieve and what changes it might lead to in practice.
The MoU reiterates that the CMA has competition law powers which apply across the whole economy, whilst the sectoral regulators (such as the FCA) may exercise its powers for which they have responsibility (see our related blog on FCA competition powers here). The MoU intends to act as a practical framework, setting out arrangements relating to the allocation of cases, the sharing of information and confidentiality constraints, as well as the pooling of resources.
The MoU sets out the basis of co-operation in three parts:
Cooperation in competition
Part A of the MoU encourages communication between the CMA and FCA specifically allocating ownership of cases when their competition powers are concurrent. Such processes should be conducted with reference to the concurrency guidance and the MoU but keeping in mind practical experience.
Under the MoU both bodies are encouraged to share information with one another if either body has reasonable suspicion that a competition prohibition has been infringed in relation to financial services. Where an application for leniency is made to the CMA by a firm active in the financial services sector in the UK, the CMA will remind the applicant that it may have obligations to notify the FCA of its conduct.
Further co-operation is encouraged in respect of concurrency reporting; voluntary redress schemes, where both the CMA and the FCA have the power to approve voluntary redress schemes in cases relating to investigations under the competition prohibitions in the financial services sector; and, short form opinions where the CMA shall inform the FCA following an initial enquiry for a short form opinion relating to the provision of financial services. The FCA will be given the opportunity to provide comments on a draft opinion.
Co-operation in market provisions
The CMA and the FCA will, in respect of financial services, agree to consult each other before exercising concurrent competition law powers and before launching a market study. Interestingly the MoU suggests an awareness that there might be such a thing as too much co-operation between the CMA and FCA. The co-operation between the CMA and the FCA “shall not extend to conduct that could reasonably be expected to impair the impartiality or the fairness of the CMA panel in conducting market investigations.”
Co-operation in competition scrutiny
Part C of the MoU relates to making of section 140B advice where the CMA gives advice about the effect of regulating provision or practice. Once again, the MoU stresses the need for communication between the CMA and FCA.
The MoU may be limited in impact given its lack of legal effect; it is not intended to be rigidly prescriptive but rather interpreted by the FCA and the CMA in the light of their experience, alongside other authorities and a range of other material and statutes governing the CMA and FCA. Nevertheless, the existence of a MoU signifies more cooperation, communication and concurrent power between the FCA and the CMA potentially bolstering the CMA’s effectiveness in competition law.
Skip to content Home About Us Insights Services Contact Accessibility