HomeInsightsCMA responds to Government’s ‘Strategic Steer’

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The Department for Business and Trade has published a draft ‘Strategic Steer to the Competition and Markets Authority (“CMA”)”, setting out the Government’s priorities for the regulator.

The document reiterates the Government’s primary mission of economic growth, adding that “free and fair competition and effective consumer protection support growth by driving forward innovation, increasing productivity, and encouraging investment – including international direct investment – into the UK“.

The Steer sets out how the Government expects the CMA to support this mission as it discharges its statutory functions, adding that its approach should “clearly, and unambiguously, reflect the need to enhance the attractiveness of the UK as a destination for international investment”.

First, the Government expects the CMA to use its tools “proportionately, with growth and investment in mind”. Whenever the CMA is deciding whether to commence a review or investigation, or to consider a remedy, it is expected to “give appropriate consideration” to the following:

  • prioritising pro-growth and pro-investment interventions;
  • focusing on markets and harms that particularly impact UK-based consumers and businesses; and
  • supporting growth and international competitiveness in the Government’s industrial strategy’s 8 key sectors.

The CMA is also expected to consider actions taken by equivalent competition or consumer protection agencies in other jurisdictions, working with them where necessary to ensure that regulatory action is coherent and avoids duplication.

Action should also be timely, and the Steer states that the CMA should tackle anti-competitive conduct which harms businesses and consumers as swiftly as possible, in line with the new duty of expedition.

Turning to the new Digital Market Competition regime, the Steer states that the CMA should use it “flexibly, proportionately and collaboratively…recognising that the development of markets driven by new and emerging technologies is not always predictable”. Furthermore, the CMA is encouraged to “take particular care to ensure growth and innovation benefits are prioritised, including through supporting the government in delivery of the AI opportunities action plan” (which we discussed here).

The Steer also urges the CMA to “minimise uncertainty” for those businesses affected by its work. For example, it is encouraged to review procedural guidance to ensure that it is “accessible and meaningful”, and to explore collaborative approaches to resolving issues, including proactive and timely engagement with businesses, and listening to any relevant feedback.

Engagement is also encouraged with the Government: the CMA is urged to identify areas where it can support the Government’s agenda. For its part, the Government commits to issuing an official response to CMA recommendations under its markets tools within 90 days, with a presumption that recommendations will be accepted unless there are “compelling policy reasons” not to do so.

Finally, the Government will amend the CMA framework agreement to require regular feedback from businesses, consumers, and other stakeholders. According to the Steer, this will result in “published results regarding CMA decision-making, commercial awareness, transparency and stakeholder engagement”.

CMA Response

Reacting to the Strategic Steer, the Chair of the CMA, Sarah Cardell, announced a number of proposals to help achieve the Government’s ambitions, focussed on four areas (the so-called ‘4P framework’):

1. Pace

By June 2025, the CMA commits to (a) establishing a new KPI to complete the pre-notification phase within 40 working days (the current average is 60); and (b) reducing the current target for straightforward Phase 1 cases from 35 working days to 25.

2. Predictability

To provide greater clarity and predictability for businesses, the CMA will update its guidance on how it interprets the tests of ‘Material Influence’ and ‘Share of Supply’ which are applied when determining whether to review a particular deal. A consultation on new guidance will be released in June.

3. Proportionality

The CMA will launch a review of its approach to remedies with the aim of ensuring that as many deals as possible which raise competition concerns are cleared with effective remedies, rather than prohibited altogether. It will also explore how it might adapt its approach to global deals, considering whether there might be circumstances where it is more appropriate to wait and see if other national authorities are able to resolve UK concerns, rather than intervening itself.

4. Process

Finally, the CMA will publish a ‘Mergers Charter’ which will reassert the 4P Framework and include measures to “break down barriers to more direct engagement, both outside of and during investigation” including “a targeted outreach programme for businesses and investors; more senior meetings early in the review process; a suite of accessible, engaging, business-friendly materials and so on”.

To read the Strategic Steer in full, click here.