GovWire

Development of the CMA

I was recently reminded by the chair of the CMA that I am now the longest serving CMA non-executive director having joined the Board in 2017 after a career in private practice. When I compare the organisation as it is now to the body that I joined there have been significant changes. New needs and challenges have arisen: the impact of Brexit, the consequences for UK businesses and consumers of the pandemic, the war in Ukraine and the exponential development of digital platforms, to name a few. And the CMA has evolved and adapted to these:

• we now consider how the largest global mergers will impact competition in the UK. In antitrust enforcement, we are investigating conduct which crosses borders, working alongside other authorities

• we have established a Digital Markets Unit reflecting a much better understanding of the role that digital platforms play in the economy; the significance of such platforms for businesses and consumers and the important role of competition policy in supporting the digital economy

• since Brexit, we have additional responsibilities and new powers to carry them out. We now advise on public subsidies, and report on the UKs internal market

• we have expanded and opened offices across the country, demonstrating a more concerted and explicit focus on engaging with our stakeholders the people, businesses and governments in the nations and regions of the UK

With any new responsibility comes increased accountability and often increased scrutiny. In parallel with the developments I have described, further changes in the broader economic environment - such as the cost of living crisis and the need to encourage growth and productivity - have indeed led to increased interest and debate around what we do and why we do it. We are highly aware that it is more important than ever for us to be clear about how we choose to exercise our powers and what we seek to achieve when we do so.

Choices

There are many more things that we might like to do, or others may wish us to do, than we have the resources to achieve. We are deeply thoughtful and analytical in our decisions about how to use limited resources in the most effective way. We have a public responsibility to be open about the choices we make, and we have published prioritisation principles to make this as transparent as possible. We have also reformed our pipeline co-ordination process, helping us plan and manage our resources as strategically as possible. As Bill Kovacic has put it: No function is more central to the operation of a competition agency than making decisions about what to do with its powers and resources (see William E. Kovacic, Deciding What to Do and How to Do It: Prioritization, Project Selection, and Competition Agency Effectiveness, 13 Competition Law Review 9 (June 2018)).

In this talk I propose to address 2 issues fundamental to how we make such choices. First, the evolution of the powers, or tools, we have available to address competition concerns. Second, how we apply those tools focusing on the outcomes we are tasked to deliver.

Tools

As someone whose professional career was spent advising clients about the competition regime, I have a natural tendency to think first about different tools - the powers to: review mergers, investigate potential infringements of the prohibitions against anti-competitive agreements and abuse of dominance, enforce consumer law and initiate inquiries into markets that might be failing. This is after all what businesses and consumer organisations are interested in when they consult their professional advisers: Might the competition authorities prohibit a proposed merger? Will the authorities or courts find that an agreement infringes Chapter 1 of the Competition Act? What consequences might a market investigation have for a specific business?

And tools are of course important to us as a competition authority. Without the right tools we would be unable to do our job. But we are increasingly aware, as we strive for ever greater impact from our work, that the tools do not define what we do. A toolbox is a means to achieve an end in our case helping people, businesses and the UK economy by promoting competitive markets and tackling unfair behaviour.

Outcomes

It is therefore necessary that we pay attention to the outcomes we need to deliver; set our priorities to achieve the desired outcomes and evaluate problems to be solved against those priorities. We then choose the tools best suited to deliver the right solution to the problems.

The CMA is required to produce an Impact Assessment of the direct financial benefits we return to taxpayers from our work each year. The average ratio of direct benefits to cost over the last 3 years was 25.8 for every 1 spent.

Concentrating on outcomes is not just a means of holding ourselves accountable for this value and constantly striving to improve on it. Neither is it solely a means of demonstrating the benefits of our work - although it has that very significant advantage. Nor is it just to provide a strategy for selecting areas for discretionary work - although again, it has that advantage.

Concentrating on outcomes is a discipline which helps us to use our tools as effectively as possible:

• first, focusing on outcomes can help us use our existing tools flexibly in response to developing concerns, as we are doing in labour markets and climate change

• second, attention to outcomes can help us think outside of our formal tools, and undertake more informal work that is going to deliver most effectively

  • in our recent work in groceries markets we looked at the issues outside the structure of a formal market study. And, while it is important for the CMA to take on its new statutory powers to monitor fuel prices, we in the meantime set up a temporary fuel monitoring system, relying on information provided voluntarily

• finally, a regard to outcomes can encourage us to use several tools in a complementary way to tackle different aspects of a single issue

  • for example, housing costs and availability are areas of widespread concern. The CMA has worked across its tools to help deliver for consumers. That includes (i) competition law enforcement in the construction sector, to help keep the costs of constructing new houses low (ii) consumer protection work in the rented housing sector to help us identify where enforcement action may be necessary and (iii) a market study into housebuilding published yesterday which indicates the need for a substantial intervention in the housebuilding market and includes recommendations to government on estate management charges and options to reform the planning system. We are also opening a new investigation into suspected anti-competitive behaviour by housebuilders

Annual Plan

And that focus on outcomes has been the impetus for how we have adapted our strategy over the last year set out in our annual plan. Our 2023 Annual Plan marked the start of a new chapter for us, with a new overarching strategy framework for the mid to long term. One of the benefits of being an independent arms length body, of course, is that we can provide this longer-term certainty and stability for our stakeholders, which is often challenging in the world of politics.

We produced a draft of our plan for the year from April 2024 in December and we shall be publishing the final version shortly. Our strategy has 3 ambitions, based on who we serve: (i) people (ii) businesses and (iii) the economy.

• first, we want people to be confident they are getting great choices and fair deals. That includes taking action in the areas that matter most to people such as having somewhere to live, feeding our families, looking after ourselves and others, and buying the goods and services we need online

• for businesses, we want competitive, fair-dealing businesses to innovate and thrive. Our role includes tackling the behaviour of a small minority of businesses that try to harm consumers, restrict competition or prevent markets from functioning properly

• for the economy, we want to help it grow productively and sustainably. We will prioritise our work in sectors which may have a particularly positive impact. For example, we want to take a forward-looking approach in nascent markets, to help them develop in a positive direction for competition and consumer protection. Over the long run, this will help drive innovation, investment, and economic growth

And we use our tools appropriately and proportionately, to deliver those outcomes.

Digital markets reforms under DMCC

One area which cuts across all of these ambitions is digital. Ubiquitous and entrenched, as it is, in all our lives today. I therefore want to turn to the Digital Markets Competition and Consumers Bill.

The Bill currently before Parliament is designed to unlock a new era of digital innovation and investment in the United Kingdom. And it aims to do this not by broad brush, one-size-fits-all regulation that creates barriers to innovation, or unnecessary burden for businesses. Instead, the regime has been consciously designed to be highly flexible, bespoke, and targeted, helping to address the market power of a small number of technology firms.

The CMA is charged with responsibility for the new regime and we believe it will be a significant c

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