Speech

Competition and Markets Authority launch

Competition Minister Jo Swinson launches shadow Competition and Markets Authority (CMA).

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

Jo Swinson

Thank you very much indeed for the opportunity to speak at the launch of the new Competition and Markets Authority. Lord Currie’s remarks show just how fortunate we are to have such a capable and qualified group at the head of the CMA. We can all be very excited and optimistic about the future.

Today’s launch is the culmination of years of thought and effort. It marks a major milestone, bringing us closer to the CMA taking on its full operational role.

So I would like to start by expressing my thanks and admiration for the Competition Commission and Office of Fair Trading (OFT) for their sterling work, both on the transition and for continuing to deliver a heavy caseload.

Staff should be proud, for example, of what they have delivered for the millions of people who bought Payment Protection Insurance, and for the vulnerable consumers who benefited from the OFT’s work on mobility aids.

The CMA will build on this important work, and I look forward to seeing it play a major role in benefitting consumers, improving the effectiveness of markets, and contributing to the growth our economy needs.

Given the high regard in which the OFT and Competition Commission are held, I think it is important to remind ourselves of the rationale for reform.

As I’m sure everyone here will agree, competition is a key driver of growth and one of the pillars of a vibrant economy. Competition ensures the most efficient and innovative businesses will thrive, allowing the best to grow and enter new markets.

Competition also drives investment in new and better products and pushes prices down and quality up.

The competition regime itself delivers over £800 million of direct benefits to consumers. This is impressive, but the regime can do better:

  • difficulties in successfully prosecuting sufficient anti-trust cases in reasonable time
  • market studies and the end-to-end markets process can be long, over 5 years in one case - this creates uncertainty for business and prolonging consumer detriment
  • the voluntary notification merger regime means a large proportion of mergers referred to the Competition Commission had already been completed and that makes the remedies more difficult
  • sector regulators have made only 2 anti-trust infringement decisions and two market investigation references

To address these concerns we have established the CMA and given it stronger powers.

The new CMA will have wide powers to enforce the antitrust prohibitions, operate the mergers regime and conduct market studies and market investigations.

It will protect consumers by: using consumer enforcement powers where those are appropriate; fast tracking responses to super-complaints; and coordinating action with other consumer bodies.

The CMA will also have an important role in regulatory appeals and references.

By combining these roles in a single body, the regime will be more coherent and predictable, competition processes more efficient, and there will be a more flexible allocation of resources.

Some of the main improvements are to antitrust and criminal cartel enforcement. The OFT has previously tackled serious harm in markets as diverse as football kit and the sale of pharmaceuticals to the NHS. In future:

  • Speed and efficiency of antitrust investigations will be improved by giving the CMA stronger investigatory powers, such as a power to require individuals to respond to oral questioning. The threshold for interim measures is also being lowered, so the CMA can halt abusive conduct quickly.
  • To ensure greater speed does not come at the expense of fairness, the CMA’s procedural rules will provide safeguards, such as collective decision-making and the introduction of new decision makers after the investigation. This will improve the quality of decision-making and thereby mitigate against appeals.

The cartel offence should deter the most serious forms of anti-competitive behaviour but there have been only 2 cases prosecuted, only 1 successfully.

The ‘dishonesty’ element of the offence, which makes it really difficult to prosecute, will be removed while those who engage in certain co-operative arrangements but do so openly and in prescribed ways will be taken outside the offence.

Our changes ensure that only conscious and clandestine participation in hardcore cartels will be caught by the offence.

The mergers and markets regimes are also being reformed:

  • There are statutory time limits for all stages of the processes, to ensure greater certainty and reduce burdens on business. Stronger information gathering powers go together with these time limits.
  • The CMA will have wider powers to suspend merger integration steps and will have clearer authority to reverse integration steps that have taken place.
  • The CMA will be able to investigate practices across markets, taking a more targeted approach to recurring consumer complaints, such as on extended warranties.
  • The government can request the CMA to investigate public interest issues as part of a market investigation.

The new concurrency regime will encourage the CMA and sector regulators to work more closely together to promote competition:

  • Sector regulators will be explicitly required to consider their antitrust powers before taking enforcement action.
  • Competition authorities will share more information about possible antitrust cases and case management decisions. The CMA will also have powers to allocate cases, and in certain circumstances, take cases from the sector regulators.
  • The CMA will report on the use of concurrent competition powers across the landscape, increasing transparency.

And I welcome the establishment of UK Competition Network to drive these reforms forward in partnership with the sector regulators.

Finally, I’d like to touch on the ministerial statement of strategic priorities for the CMA.

We are determined to ensure that the CMA has the powers and resources it needs to create a competition regime that is both strong and streamlined, protecting consumers and businesses alike from unfair practices from day one. That is why we have been implementing wide-reaching reforms and have published our aspirations for the CMA today.

Government recognises the need for a stable and predictable regime, and that a key component of that is the CMA’s operational and decision-making independence.

So, the Steer focuses on high level priorities, and importantly, provides a transparent statement of the government‘s aspirations for the development of the competition regime. It publicly sets out the long term goals of the government in relation to competition and growth.

The CMA will be accountable to government, Parliament and the Courts for its decisions taken in light of the Steer. Importantly, it does not affect the legal tests that the CMA will apply.

The Government does, however, ask the CMA to identify markets where competition is not working well and stay at the forefront of competition analysis.

Of course the CMA also needs to complete investigations underway – such as the payday lending market investigation – when it takes over from the OFT and Competition Commission.

The CMA should also assess whether there are particular sectors where enhanced competition could contribute to faster growth, for example, knowledge intensive sectors, financial services and infrastructure sectors including energy.

The Steer highlights the importance of robust antitrust enforcement, but also of acting fairly.

And of course the CMA’s role should go beyond pure enforcement. It should:

  • advocate competition and encourage businesses to comply with their obligations
  • challenge government where it creates barriers to competition
  • work with sector regulators to promote competition
  • play an active role in the Consumer Protection Partnership, alongside Trading Standards and the Citizens Advice Service

Once fully implemented next April, the creation of the CMA and wider reforms will lead to an even more effective competition regime.

That’s good for business and our economy. We should all be very excited about these reforms – and it gives me great pleasure to support the CMA’s launch today.

Published 1 October 2013