From the enforcer: Competition and Markets Authority

United Kingdom: from the enforcer

Address: The Cabot, 25 Cabot Square, London, E14 4QZ
One Lochrin Square, 92 Fountainbridge, Edinburgh, EH3 9QA
Tel: +44 20 3738 6000
Email: [email protected]
Web:  www.gov.uk

Contacts

Andrea Coscelli
Chief Executive
Tel: +44 20 3738 6286
Email: [email protected]

Michael Grenfell
Executive Director, Enforcement
Tel: +44 20 3738 6134
Email: [email protected]

Andrea Gomes da Silva
Executive Director, Markets and Mergers
Tel: +44 20 3738 6686
Email: [email protected]

Erik Wilson
Executive Director, Corporate Services
Tel: +44 20 3738 6964
Email: [email protected]

Sarah Cardell
General Counsel
Tel: +44 20 3738 6971
Email: [email protected]

Mike Walker
Chief Economic Adviser
Tel: +44 20 3738 6201
Email: [email protected]

Questions and answers

How long is the head of agency’s term of office?

Andrea Coscelli was appointed as chief executive in July 2017 for a term of three years. Dr Coscelli was formally reappointed in July 2020 for a further two-year term.

When is he or she due for reappointment?

Dr Coscelli was appointed for a two-year term, due for renewal in July 2022.

Which posts within the organisation are political appointments?

The Secretary of State for Business, Energy and Industrial Strategy appoints through open competition the chair, the non-executive members of the Competition and Markets Authority (CMA) Board, the chief executive and the panel members of the CMA. The appointments process is governed by rules to ensure the overriding principle of selection is based on merit by the well-informed choice of individuals who, through their abilities, experience and qualities, match the needs of the public body in question. Although appointments are made by the Secretary of State, the CMA is independent and politically neutral.

What is the agency’s annual budget?

The CMA’s total budget for 2020-21is £75.6 million. This figure includes £2.8 million additional enforcement funding but doesn’t include any funding above our baseline for EU Exit and State aid (for which we were allocated up to £20 million to allow us to prepare for Exit).

How many staff are employed by the agency?

As at 31August 2020, we had 851 staff (excluding Agency workers) in established positions. The full time equivalent of staff (excluding Agency workers, as well as those on Career Break, Maternity, Shared Parental Leave andSecondee Loan Out) was 821.

To whom does the head of the agency report?

The chief executive reports to the CMA Board. As a non-ministerial government department, the CMA does not report directly to a government minister. The Enterprise and Regulatory Reform Act 2013 created the CMA as a statutory body governed by a corporate board. The Board is headed by the chairman and currently comprises seven non-executive directors, which includes the panel chair and a member of the CMA Panel, the chief executive and three executive directors. The Board is advised by the general counsel and the chief economic adviser. The CMA is accountable to the UK parliament.

Do any industry-specific regulators have competition powers?

Yes. The following regulators have competition law powers:

  • Financial Conduct Authority;
  • Payment Systems Regulator;
  • Office of Communications (Ofcom);
  • Gas and Electricity Markets Authority (Ofgem);
  • Water Services Regulation Authority (Ofwat);
  • Northern Ireland Authority for Utility Regulation;
  • Office of Rail and Road;
  • NHS improvement; and
  • Civil Aviation Authority.

If so, how do these relate to your agency’s role?

Under the UK’s concurrency arrangements, in a regulated sector both the CMA and the relevant sector regulator have powers to apply aspects of competition law, in particular the power to enforce the UK and EU prohibitions on anticompetitive agreements and abuse of dominance, and the power to refer a market for detailed investigation by members of the CMA Panel. The Enterprise and Regulatory Reform Act 2013 introduced new concurrency arrangements that, among other things, included:

  • a process for allocating cases between the CMA and regulators (with the CMA having the ultimate power to decide case allocation in the event of a dispute);
  • requirements to share information;
  • a requirement for the regulators, before taking certain specified direct regulatory enforcement, to consider whether Competition Act enforcement would be ‘more appropriate’; and
  • a statutory obligation to publish an annual report assessing the UK’s concurrency arrangements.

May politicians overrule or disregard authority’s decisions? If they have ever exercised this right, describe the most recent example.

Politicians may not overrule or veto the final, statutory decisions of the CMA in specific Competition Act 1998 (CA98), markets or merger investigations. However, the Secretary of State may, by order, exclude the application of Chapter I and Chapter II of the CA98 in certain circumstances (such as for the avoidance of conflict with international obligations and on the grounds of public policy).

The Secretary of State may also intervene in a market case or merger if he or she thinks it might raise one of a limited class of specified public interest considerations. Broadly stated, in those cases, the CMA is responsible for considering and deciding the competition issues (which the Secretary of State cannot overrule), but the ultimate outcome of the case depends on decisions of the Secretary of State based on the public interest considerations in the case. An example was the decision in 2018 of the Secretary of State for Digital, Culture, Media and Sport to accept the CMA’s recommendation that the anticipated acquisition of Sky Plc by 21st Century Fox Inc was not in the public interest due to media plurality concerns, and to accept the CMA’s recommendation that the most effective and proportionate remedy is for Sky News to be divested to a suitable third party.

The Enterprise Act 2002 (EA02) also gives the Secretary of State a reserve power to make a market investigation reference if he or she is not satisfied with a CMA decision not to make such a reference.

Does the law allow non-competition aims to be considered when your agency takes decisions?

As regards antitrust, the CA98 and articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU) prohibit anticompetitive agreements and abuses of a dominant position. These are intended to deal with competition considerations (including assessment of any countervailing economic efficiencies or benefits, which may make an agreement lawful where they outweigh the restrictions on competition). However, as noted above, the Secretary of State may, by order, exclude the application of Chapter I and Chapter II of the CA98 in exceptional circumstances related to non-competition aims (for example, for the avoidance of conflict with international obligations and on the grounds of public policy).

In merger and market cases, consideration may also be given to relevant customer benefits (such as lower prices, higher quality, greater choice of goods or services, innovation) as part of the assessment process. When deciding on certain remedies following a market investigation reference in a regulated sector, the CMA will, as appropriate, have regard to the relevant statutory functions of the sectoral regulator concerned. As noted above, under the EA02, public interest considerations may, in certain circumstances, play a role in an assessment of a merger or market investigation reference, where those considerations lead to an intervention by the Secretary of State.

Which body hears appeals against the agency’s decisions? Is there any form of judicial review beyond that mentioned above? If so, which body conducts this?Has any competition decision by the agency been overturned?

The Competition Appeal Tribunal (CAT) hears appeals in respect of certain CMA decisions under the CA98 and the EA02, including decisions:

  • on merger and market investigations under the EA02;
  • on whether any of the competition prohibitions of the CA98 or TFEU have been infringed;
  • in relation to the acceptance, variation or release of binding commitments under the CA98; and
  • on certain other appealable decisions under the CA98 and EA02, including the issue of or failure to issue interim measures directions and the imposition of administrative penalties for failure to comply with CMA investigatory powers.

Further appeals from decisions of the CAT may be possible in certain circumstances. The CAT can also (while the UK is still a member of the EU), in appropriate cases, request a preliminary ruling from the European Court of Justice under article 267 of the TFEU. In addition, as a public body, certain CMA decisions can be challenged under ordinary administrative law principles by way of judicial review in the UK High Court. From January 2019 to date, the CMA has not had any competition decisions overturned. In January 2020, the Tobii/Smartbox involved a challenge to a Phase II merger decision. In this case, the CMA lost on certain points before the CAT, but the decision as a whole was upheld.

Has the authority ever imposed conditions on a proposed merger? If yes, please provide the most recent instances.

Yes, since acquiring its powers on 1 April 2014, the CMA has allowed 58 mergers (26 anticipated mergers and 32 completed mergers), on the basis of the companies offering and the CMA accepting, acceptable undertakings that address the identified (actual or risk of) substantial lessening of competition that the CMA found in the course of its investigation.

Has the authority conducted a Phase II investigation in any of its merger filings? If yes, please provide the most recent instances.

Yes, since assuming its powers in 2014, the CMA has assessed65 in-depth merger inquiries. In the last 18 months, the CMA has conducted 21 in-depth investigations across a wide variety of sectors of the economy, often reviewing the casein parallel with authorities in other jurisdictions. Five of these cases remain live at the time of submission.Recentoutcomes include:

  • Prohibition decisions in anairline booking solutions merger (Sabre/Farelogix, This decision is currently under appeal at the UK’s Competition Appeal Tribunal), a retail merger(JD Sports Fashion plc/Footasylum plc, This decision is currently under appeal at the UK’s Competition Appeal Tribunal), a merger of two of the UK's largest supermarkets(Sainsbury’s/Asda) and merger of two leading suppliers of assistive communications solutions (Tobii/Smartbox). To date, there have been six Phase II prohibition decisions since the establishment of the CMA.
  • Remedies imposed in cases involving the acquisition of a number of radio businesses (the Bauer Media Group cases, the acquisitions entered into by Bauer Media Group gave rise to four separate mergers cases) anda cleaning chemicals merger (Ecolab/Holchem). To date, there have been 18 Phase II investigations that have concluded with remedies outcomes since the establishment of the CMA.
  • Clearance decisions in relation to Amazon’s 16 per cent investment in Deliveroo, PayPal's acquisition of payment services provider iZettle and Bottomline's acquisition of the Experian payment software business. To date, there have been 22 Phase II investigations which resulted in clearance since the establishment of the CMA; and
  • The abandonment of seven transactions following some competition concerns raised by the CMA, during Phase II Investigations (Illumina/Pacific Biosciences, Kingspan Holdings Limited/ Building Solutions, Taboola/Outbrain, McGraw-Hill Education/Cengage,Prosafe/Floatel, Thermo Fisher/Roper and TopCashback/Quidco). In total, there have been 19mergers abandoned during a Phase I or Phase II investigation since the establishment of the CMA. (This figure includes five cases that were abandoned at Phase I stage after the CMA had raised competition concerns about these mergers and 14 merger cases abandoned at Phase 2 stage.)

Has the authority ever pursued a company based outside your jurisdiction for a cartel offence? If yes, please provide the most recent instances.

Yes. The CMA has imposed civil fines under the Competition Act 1998 against overseas parent companies for infringements of competition law that involve a UK subsidiary. In 2016, the CMA fined both the Irish parent company and its UK subsidiary for the subsidiary’s involvement in the galvanised steel tanks carteland in 2019, the CMA fined both the French parent company and its UK subsidiary for the subsidiary's involvement in the pre-cast concrete drainage products cartel. In international cases, the CMA also liaises closely with the European Commission, the US Department of Justice and other overseas authorities. Recent examples include the CMA’s coordination with the French and Italian competition authorities in relation to the authorities’ investigations into price coordination by model agencies and with the US Department of Justice in connection with separate investigations into price coordination in the online sale of posters in the United Kingdom and the United States.

Do you operate an immunity and leniency programme? Whom should potential applicants contact? What discounts are available to companies that cooperate with cartel investigations?

The CMA operates a leniency programme under which businesses that admit their involvement in cartel activity may qualify for immunity from fines (or a fine reduction) and their current and former directors and employees may qualify for immunity from criminal prosecution in each case provided that certain conditions are met. Directors of companies that qualify for leniency may also qualify for immunity from director disqualification. (Extensive guidance on the operation of the CMA’s leniency programme can be found at www.gov.uk/guidance/cartels-confess-and-apply-for-leniency.) Potential leniency applicants should call the CMA on +44 20 3738 6833 for confidential guidance on the CMA’s leniency programme, to check whether leniency may be available or to make a formal application for leniency.

Is there a criminal enforcement track? If so, who is responsible for it? Does the authority conduct criminal investigations and prosecutions for cartel activity? If not, is there another authority in the country that does?

Yes. The criminal cartel offence applies to individuals who engage in hardcore cartel activity, namely agreeing to fix prices, share customers or markets, restrict output or rig bids. In England and Wales, and in Northern Ireland, prosecutions may only be brought by the CMA or the Serious Fraud Office, or with the consent of the CMA. Prosecutions will generally be undertaken by the CMA. In Scotland, prosecutions will be brought by the Crown Office and Procurator Fiscal Service, which is headed by the Lord Advocate.

Are there any plans to reform the competition law?

In August 2018, the Secretary of State for Business, Energy and Industrial Strategy (BEIS) requested that the then chairman of the CMA advise him on legislative and institutional reforms to safeguard the interests of consumers and to maintain and improve public confidence in markets. In February 2019, the chairman’s submission to the Secretary of State was published and is available at: https://www.gov.uk/government/news/reforms-proposed-to-put-consumers-at-the-heart-of-uk-competition-regime.

No legislative reform has yet been initiated by (BEIS). In March 2019,the Furman Review – a major independent review for the UK Government on competition in digital markets – made six strategic recommendations for changes to the UK’s competition framework. Work is underway to take forward Furman’s strategic recommendations and a Digital Markets Taskforce, based in the CMA, will provide detailed advice on the potential design and implementation of measures for unlocking competition in digital markets, reporting at the end of the 2020. In addition, a review of competition policy for the UK government by John Penrose MP was commissioned in September 2020. Its terms of reference are available at: https://www.gov.uk/government/publications/terms-of-reference-for-john-penrose-mp-report-on-competition-policy/terms-of-reference-john-penrose-mp-report-on-competition-policy

When did the last review of the law occur?

The last significant reform of the competition law regime was effected by the Enterprise and Regulatory Reform Act 2013, which took effect on 1 April 2014. In brief, the principal changes introduced included:

  • the creation of the CMA, taking on the competition and certain other functions previously exercised by the Office of Fair Trading and the Competition Commission;
  • in CA98 investigations, new powers for the CMA to interview individuals and a lower threshold for the CMA to impose interim measures;
  • in relation to markets work, new powers for the CMA to investigate practices across markets, to investigate public interest issues in the context of market investigations, and the introduction of shorter statutory timetables for market studies and investigations;
  • in merger investigations, statutory time limits for Phase I investigations, and strengthened or extended powers to prevent pre-emptive integration of merging enterprises and to remedy completed mergers that have led to a substantial lessening of competition;
  • strengthening of the application of competition law in relation to regulated sectors, including introduction of a requirement for sectoral regulators to consider whether enforcement action under the CA98 would be the most appropriate action to promote competition, before using their sectoral powers;
  • a new power for the CMA to impose civil financial penalties on persons for failure to comply with certain investigatory and interim measures powers under the EA02 and CA98; and
  • a new test for the EA02 criminal cartel offence, removing the previous requirement to prove dishonesty and introducing certain new exceptions and defences to the commission of the offence.

The CMA has published extensive guidance on its powers and procedures, which is available on its web pages at www.gov.uk/cma.

Do you have a separate economics team? If so, please give details.

The CMA has around 100 economists, econometricians and statisticians. The individuals work within the different business delivery groups across the CMA.

Has the authority conducted a dawn raid?

The CMA often carries out dawn raids. It has the power to seek a warrant to carry out unannounced searches of both business and domestic premises for the purpose of investigating suspected infringements of the Competition Act 1998 or cartel offences by individuals. Under the Competition Act 1998 the CMA also has the power to carry out inspections without a warrant at business premises with or without notice and require the production of documents. In 2019, the CMA carried out inspectionswith or without a warrant infive separate cases.

Has the authority imposed penalties on officers or directors of companies for offences committed by the company? If yes, please provide the most recent instances.

Individuals that have been directly involved in hardcore cartel activity (horizontal price fixing, market sharing, restricting output or bid rigging) may be investigated and prosecuted for the criminal cartel offence.

In addition, as a public protection measure, the CMA may secure the disqualification of company directors for competition law breaches by applying for a court order or accepting a binding undertaking from the director concerned. The directors of a company that has infringed competition law may be disqualified from being a director of any UK company for a specified period of up to 15 years. To date, the CMA has secured the disqualification of 20company directors and the CMA actively considers director disqualification in all cases involving a breach of competition law. The total number of directors disqualified following a CMA investigation includes one director who was disqualified on his conviction for the criminal cartel offence.

The CMA has produced guidance to help company directors, including non-executive directors, achieve compliance within their organisations (see www.gov.uk/government/publications/advice-for-company-directors-on-avoiding-cartel-infringements).

What are the pre-merger notification thresholds, if any, for the buyer and seller involved in a merger?

The UK has a voluntary, not a mandatory, notification system. However, the CMA has jurisdiction to investigate an anticipated or completed merger if:

  • the parties’ combined share of supply or purchase of particular goods or services exceeds 25 per cent and there is an increment to this share of supply arising from the merger; or
  • the UK turnover of the target business exceeds £70 million.

In June 2018, the UK government amended the tests in the Enterprise Act 2002 in relation to specific areas of the economy. It introduced different thresholds for mergers involving the takeover of a ‘relevant enterprise’. Relevant enterprises include enterprises active in the development or production of items for military or military and civilian use, quantum technology and computing hardware. This definitionwas expanded in June 2020 to include:artificial intelligence, cryptographic authentication and advance materials.  For mergers where the enterprise being taken over (or part of it) is a relevant enterprise, the revised thresholds are:

  • the turnover test is met if the relevant enterprise’s annual UK turnover exceeds £1 million; or
  • the share of supply test is met if before the merger, the relevant enterprise being acquired or merged has a share of supply or purchase of at least one-quarter in a substantial part of the UK. In other words, the test is met even if the share of supply does not increase as a result of the merger so long as the relevant enterprise has 25 per cent. The relevant goods or services for the purposes of deciding whether the share of supply test is met are those by virtue of which the target enterprise qualifies as a relevant enterprise.

In June 2020, the UK also introduced a new public health emergencies(PHE) ground for public interest intervention by the Secretary of State. The new PHE ground for government intervention is: ‘to maintain in the United Kingdom the capability to combat, and to mitigate the effects of, public health emergencies.’ (Explanatory Memorandum to the Enterprise Act 2002 (Specification of additional section 58 consideration) Order 2020, No. 627;  paragraph 2.1)It ensures ‘the Government has the powers to intervene in qualifying mergers to preserve critical UK public health and crisis mitigation capabilities, including those needed to fight, and to mitigate the effect of, the current COVID-19 pandemic’. (Explanatory Memorandum to the Enterprise Act 2002 (Specification of additional section 58 consideration) Order 2020, No. 627;  paragraph 2.2.) As with any other public interest interventions (national security, media plurality and financial stability), these powers can be used to: (i) impose remedies or prohibit a merger; and (ii) enable a merger to proceed where the CMA would otherwise find an SLC and prohibit the merger (should no remedies be available).

All thresholds apply to bothanticipated and completed mergers that fall under CMA jurisdiction.The CMA has jurisdiction to investigate completed mergers that meet either or both of these thresholds provided it decides within four months of the merger being made public or it being completed (whichever is the later), whether or not to launch a Phase II investigation.

Are there any restrictions on investments that involve less than a majority stake in the business?

The CMA has jurisdiction over acquisitions that fall short of outright voting control, where one enterprise acquires material influence over the policy of another – even if it does not hold the majority of the voting rights in that other enterprise. The CMA will consider a range of factors besides the acquirer’s ability to influence the target’s policy through exercising votes at shareholders’ meetings, such as board representation. Further detail is available in the CMA’s published mergers guidance.As noted above, of this type of cases, for example, the CMA has assessed (and cleared) Amazon’s 16 per cent investment in Deliveroo in 2020.


United Kingdom: from the enforcer's competition economists

Address: The Cabot, 25 Cabot Square, London, E14 4QZ, United Kingdom
One Lochrin Square, 92 Fountainbridge, Edinburgh, EH3 9QA, United Kingdom
Tel: +44 20 3738 6000
Email: [email protected]
Web: www.gov.uk

Contacts

Andrea Coscelli
Chief Executive
Tel: +44 20 3738 6286
Email: [email protected]

Michael Grenfell
Executive Director, Enforcement
Tel: +44 20 3738 6134
Email: [email protected]

Andrea Gomes da Silva
ExecutiveDirector, Markets and Mergers
Tel: +44 20 3738 6686
Email: [email protected]

Erik Wilson
Executive Director, Corporate Services
Tel: +44 20 3738 6964
Email: [email protected]

Sarah Cardell
General Counsel
Tel: +44 20 3738 6971
Email: [email protected]

Office of the Chief Economic Adviser

Mike Walker
Chief Economic Adviser
Tel: +44 20 3738 6201
Email: [email protected]

Julie Bon
Deputy Chief Economic Adviser
Tel: +442037386168
Email: [email protected]

Stefan Hunt
Chief Data and Technology Insights Officer
Tel: +442037386608
Email: [email protected]

Questions and answers

How many economists do you employ?

We employ about 100 economists, including econometricians and statisticians, and about 25 data scientists.

Do you have a separate economics unit?

Yes, but it contains relatively few of our economists. The Office of the Chief Economic Advisor contains our econometricians and statisticians, along with economists working on research projects and ex post evaluation projects. The vast majority of our economists work in the two front-line directorates (the Enforcement Directorate and the Markets and Merger Directorate). However, all Competition and Markets Authority (CMA) economists are staff managed by economists.

Do you have a chief economist?

Yes, Mike Walker.

To whom does the chief economist report?

To the chief executive.

Does the chief economist have the power to hire his or her own staff?

Yes.

How many of your economists have a PhD in industrial economics?

About 30.

Does the agency include a specialist economist on every case team? If not, why not?

Yes.

Is the economics unit a ‘second pair of eyes’ during cases – is it one of the agency’s checks and balances? If not, why not?

Yes, we carry out peer reviews of the economics on all our cases. This review is carried out by economists who are not already involved in the case.

How much economics work is outsourced? What type of work is outsourced?

We seldom outsource economics work in cases. We frequently use academics or consultants to quality assure our work, principally through our panel of academic associates or as expert witnesses. We may also employ consultants when caseload is high, but these consultants work on a secondment basis within the CMA and we do not commission reports from them. In addition, we commission one or two research reports per year from consultants or academics on economic topics of relevance to the CMA. We also commission one ex post evaluation each year of a past CMA intervention to learn from our past cases.

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