The UK’s competition and consumer law regimes – time for more change?

As the UK CMA prepares for new challenges as a leading international authority post-Brexit, Chair Lord Andrew Tyrie has proposed a set of reforms to the competition and consumer law regimes which would:

• significantly enhance its powers to intervene in certain markets, business conduct and deals; and
• strengthen individual and corporate accountability for non-compliance, whilst limiting the checks and balances on its activity under the appeal process.

At the centre of Lord Tyrie’s proposals is the consumer and how the legal framework should enable the CMA to act quickly and decisively to prevent consumer harm in rapidly changing digital markets. This is a challenge for competition authorities around the world (see Global antitrust in 2019 - 10 key themes), but the CMA’s proposals are amongst the most ambitious and far-reaching internationally.

They come in advance of findings expected shortly from two major reviews of the UK’s competition regime - the independent review of competition in the digital economy led by Professor Jason Furman and the statutory five-year review required under the most recent reforms which took place in 2014. Amongst the most notable of Lord Tyrie’s proposals are:

• consumers are paramount: an overriding ‘consumer interest’ duty on the CMA and courts, which would allow the CMA to intervene quickly to address a perceived consumer detriment even where there is no underlying competition concern. The CMA is not alone in focusing on the role of competition law in protecting the consumer, but an ability to use competition-based powers without proving a competition issue would be novel and potentially controversial when it comes to identifying which consumers are being harmed, the cause of any such harm and the extent to which an authority should impose changes to business practices to correct the harm;
• faster appeals under narrower grounds: streamlining appeals following a competition infringement finding by limiting the standard of review by the UK competition appeals tribunal (CAT) to a judicial review standard, or a new standard with specified grounds of appeal. This would replace the current ‘full merits’ standard where the CAT reviews all of the CMA’s findings of fact, its economic assessment and its application of the law. This proposal is also likely to prove controversial, not only because of its impact on parties’ rights of defence but because this change was widely criticised and not taken forward when it was last proposed in 2013;
• mandatory merger notification: preparing for post-Brexit, when the CMA will be reviewing a larger number of international deals, the introduction of mandatory and suspensory notification of certain mergers to the CMA. This is also not the first time such a change has been proposed, but the case for change may have been strengthened by the prospect of parties prioritising other major mandatory regimes - including the EU and the US – and the challenges the CMA will face in aligning review timetables and outcomes internationally. The proposals do not yet include an important quid pro quo for a mandatory regime – moving to review timetables more consistent with other authorities; and
• strengthened investigatory powers and tougher sanctions: further strengthening of the CMA’s powers to demand information and impose heavy penalties on companies and individuals who fail to comply. Individuals face the prospect of even greater accountability and sanction, despite the CMA’s powers to impose criminal and civil penalties having been strengthened in 2014 to a level where they are now amongst the most stringent internationally.

These proposals are mirrored by similar reforms to strengthen the UK’s consumer protection law regime – watch out for our blog to follow.

Next steps: such wide-ranging reforms will require public consultation and new legislation, so changes are not likely to be imminent. The speed and extent to which we may see such change could also depend on the nature of the UK’s exit from the European Union, in particular in the event of a ‘no deal’. Given the momentum for change and political pressure for a strong, effective regime post-Brexit, however, we expect there to be an appetite within the UK Government to take many of these proposals forward, with more developed reforms in the shape of a formal consultation to be published in the not too distant future.

Please get in touch if you would like to discuss the proposals, next steps or implications for antitrust risk management ahead.