GovWire

Driving growth: how the CMA is rising to the challenge

Introduction

Much has changed since July, when I was invited to speak at this conference. In the UK, our new government has set out an ambitious programme of reform, underpinned by a national growth mission and supported by a modern industrial strategy. In the EU, weve seen the Draghi report on EU competitiveness and the nomination of a new Competition Commissioner-designate. And in the US, the election of a new President.

Much change, and undoubtedly more to come. But also, some valuable clarity. Growth is the new governments top priority. Competition is core to growth. Thats why we made driving productive and sustainable growth a key pillar of our strategy in 2023.

But without business, there is no competition. Thats why it is important for the CMA to work with, listen to, and act on feedback from a wide range of businesses.

As we focus on the critical part the CMA can play in the success of the growth mission, we must evolve but stay true to our mandate from Parliament: to promote competition, within and outside of the UK, for the benefit of consumers. We know the benefits from promoting competition are profound and far-reaching not just lower prices, but more innovation, choice, quality, security of supply, productivity, investment and growth.

Since Marcus and I became Chair and Chief Executive, we have pushed hard to make rapid and meaningful progress, delivering change whilst maintaining stability.

An almost entirely new executive team, with competition, consumer and corporate expertise. New non-executive directors with deep backgrounds in business, innovation and investment. Overhauling our strategy and prioritisation processes to maximise the impact of our work. Greater stakeholder engagement and transparency than ever before. A surge in digital and technology capability. And a new strategic, business and financial analysis team to ground our work in commercial realities.

Some of our actions over the last 18 months which promise to have the greatest impact for stakeholders, like the phase 2 merger reforms, are just now coming into effect. And some of our most significant opportunities to unlock competition as a force for growth especially in the vital UK tech sector will begin next year with the new Digital Markets, Competition and Consumers Act (DMCCA).

We have made a strong start. We can and will do more. At a critical moment for the UKs economic growth and prosperity, we must deliver a regime that is swift yet rigorous. Robust but pragmatic. Agile yet predictable. Collaborative yet independent.

We must unashamedly focus on the best outcomes for UK consumers, UK businesses and the UK economy; and always be open and transparent. We must deliver a regime that leaves no one in any doubt that the UK is open to business whilst remaining true to our statutory duty and Parliaments intent: to help realise for the UK all the benefits that flow from effective competition. Can the CMA rise to this challenge? Absolutely.

I will cover three main points today:

1. First, that competition is an engine for growth and an essential lever in industrial strategy. But that, in pursuing growth, competition can be balanced alongside other policy objectives.

2. Next, how competition supports investment, and our response to concerns about the impact of the competition regime on investment.

3. Finally, how the CMA continues to progress and evolve, whilst remaining true to our mandate.

1. Competition is an engine for growth and an essential lever in industrial strategy

It should be uncontroversial to say that the spirit of competitive rivalry can be harnessed to drive the innovation, productivity, investment and ultimately the growth on which a more secure and prosperous future depends. And consumer protection gives people confidence to spend, spurring growth across the economy.

Evidence and history show that where competition is stronger, innovation, productivity and wage growth will be higher too.

This also benefits investors. They must be confident that the start-ups and scale-ups they back here in the UK have a fair chance of success on a level playing field. And that they can get a return on their investment, whether through growth or exit.

Equally, in an increasingly uncertain and volatile world, competition is ever more important to shore up resilience and self-reliance in our economy.

Logically then, just as skills, trade, tax or energy policy are key levers for sectoral growth, so too is competition policy.

We welcome the governments commitment in its Industrial Strategy Green Paper to robust and independent enforcement of competition and consumer protection law.

As we set out in our response to the Green Paper, which we are publishing today, an industrial strategy which creates and captures maximum long-term value for the UK must be one in which competition is a core component.

This is important to emphasise because there is sometimes a perception wrong in my view that competition policy and industrial strategy are in tension. Perhaps thats because industrial strategy is sometimes used as shorthand for national champions. The Green Paper itself lays out a far richer vision for a modern industrial strategy than that. And a strategy of building UK champions strong enough to compete in global markets is not, in any case, anti-competitive, provided this strength does not result in harms to UK consumers from weak competition at home.

Putting competition at the core of industrial strategy can support the governments objectives in two ways:

1. First, effective competition drives growth directly in key sectors, removing barriers which stifle the flow of capital, innovation and the scaling of businesses.
2. Second, when government itself acts to drive growth in particular sectors, pro-competitive principles can maximise the long-term impact of those interventions across the economy, whilst minimising the risk of unintended consequences.

Fundamental to growth is public sector productivity. Public procurement represents around a third of public expenditure. Evidence from around the world suggests its highly vulnerable to anti-competitive behaviour. We provide advice to government and public authorities across the UK on the design of competitive procurement processes. And we take direct enforcement action last year alone, the CMA issued fines totalling almost 60m to firms involved in rigging both public and private sector bids.

Alongside this, we are using our extensive AI and data science capability to assist public sector organisations (both nationally and regionally) to identify anomalies in bidding data and indicators of potential illegal conduct. This has the potential to deliver substantial taxpayer savings, and greater public sector productivity.

In pursuing growth, competition can be balanced with other policy objectives

Competition should be a core component of the governments industrial strategy, but in pursuing growth, competition can be balanced with other policy objectives.

Thats true for industrial strategy, as it is for all government policy.

The CMA has a statutory function to advise government on the competition impact of its policy design, but it is for government to weigh this alongside other objectives.

And even within the competition regime, the statutory framework gives the CMA several levers to take account of wider factors.

The Competition Act prohibits anti-competitive agreements, but it still allows cooperation to drive innovation or other economic benefits, in certain circumstances.

For example, our Green Agreements Guidance helps businesses understand how they can lawfully collaborate to achieve environmental sustainability goals.

Flexibility also exists in the merger regime. There, the statutory question is whether a merger is likely to substantially lessen competition. As part of our assessment, we can evaluate whether the merger is likely to result in competition-enhancing efficiencies that might offset immediate concerns (for example, efficiencies flowing from long-term infrastructure or technology investments).

And we can consider whether remedies are available that lock in efficiencies or preserve relevant customer benefits (including from innovation) which offset the impact of lost competition.

A case in point is the proposed Vodafone/Three merger specifically the provisional remedies decision of the independent Inquiry Group.

I must issue a health warning here highlighting the breadth of possible considerations within the legal

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