UK government emphasises CMA’s independence while steering it to support UK growth and investment

The steer is the latest step in the government’s aggressive growth agenda. The government says it aims to create a level playing field for businesses by reforming the regulatory landscape to drive growth.

(Mostly) as we expected

The final version of the steer is largely unchanged from February’s draft.

It directs the CMA to prioritise pro-growth and pro-investment interventions, to focus on harms that impact UK-based consumers and businesses, and to support growth and competitiveness in the core sectors set out in the government’s industrial strategy. It requires the CMA to act quickly and proportionately, using its range of tools, including the new digital markets regime and direct consumer enforcement powers. And it instructs the CMA to minimise uncertainty by engaging with businesses affected by its work, as well as with other interested parties, and providing accessible and transparent guidance.  

One key change in the final steer is the addition of further references to the CMA’s independent status. This is in response to concerns that the CMA’s independence from the government may have been somewhat diluted, most notably following the government’s move to replace the authority’s chair earlier in the year. In a statement announcing the steer, Chancellor Rachel Reeves is clear that the government supports the independence of the CMA.

Another tweak seeks to counter concerns over the CMA’s international role. The draft steer directed the CMA to avoid duplication where antitrust or consumer protection authorities in other jurisdictions take parallel action that would effectively address issues in UK markets. Respondents noted that while the CMA should consider the actions of other agencies, this should not result in the CMA taking—or not taking—action just because other jurisdictions have done so.

The government thinks the steer is sufficiently clear that the CMA should not follow such actions unless doing so would address issues in the UK and has not amended the final steer on this point. But wording has been added to make clear that the government expects the CMA to continue to play an active role internationally, to “support issues of shared interest.”

So, what now?

The CMA has already set out how it plans to put the steer’s objectives into action in various of its activities through its “4Ps” framework. This focuses on greater pace, predictability, proportionality and improved process (the steer sets out the government’s expectation that the CMA’s actions should be “swift, predictable, independent and proportionate”).

In relation to its merger control activities, we know that the CMA plans to introduce new KPIs to shorten review periods for straightforward cases and has launched a review of its approach to merger remedies. It has also committed to clarifying its jurisdictional reach over M&A through updated guidance and has set out how it will better engage with businesses throughout the merger control process. Find out more in our previous alert.

Finally, the CMA has said that it is exploring where it might be appropriate to watch whether action by other antitrust authorities could address UK concerns—suggesting its willingness to take a more back-seat role in the review of global transactions.   

Each of these elements will result in an important shift in the CMA’s approach to merger control enforcement. Taken together, they may well pave the way for a more permissive outlook for review of M&A in the UK.

More reforms to come?

Significantly, the strategic steer might not be the final word by the government on UK competition policy. While the wide-ranging reforms in the Digital Markets, Competition and Consumers Act have only just taken effect, these address the priorities and concerns of the previous government.

The Labour government has so far taken an altogether different approach to regulation. It has said that it will consult soon on possible legislative revisions aimed at addressing uncertainty over two tests—share of supply and material influence—that determine whether the CMA should investigate a merger. Other amendments, for example to the process for remedy reviews in the markets regime, may also be on the cards. It remains to be seen what else might be thrown into the mix.

What is clear is that the coming months will be pivotal. We will update you on any further action by the government, how the CMA’s evolving approach to enforcement plays out in practice, and what this means for business and investment in the UK.