United Kingdom: Competition and Markets Authority

Read economist perspective on United Kingdom

United Kingdom: from the enforcer

Addresses: The Cabot, 25 Cabot Square, London, E14 4QZ, United Kingdom
Queen Elizabeth House, Sibbald Walk, Edinburgh, EH8 8FT, United Kingdom
Erskine House, Chichester Street, Belfast BT1 4GF, United Kingdom 2 Caspian Point, Caspian Way, Cardiff, CF10 4DQ, United Kingdom
Tel: +44 203 738 6000
Email: [email protected]
Web: https://www.gov.uk/government/organisations/competition-and-markets-authority

Contacts

Sarah Cardell
Chief Executive
Tel: +44 203 738 6286
Email: [email protected]

Michael Grenfell
Executive Director, Enforcement
Tel: +44 203 738 6134
Email: [email protected]

Erik Wilson
Chief Operating Officer
Tel: +44 203 738 6964
Email: [email protected]

Chris Prevett
Interim General Counsel
Tel: +44 203 738 6282
Email: [email protected]

Mike Walker
Chief Economic Adviser
Tel: +44 203 738 6201
Email: [email protected]

Questions and answers

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

Sarah Cardell was appointed Chief Executive with effect from 19 December 2022, having been acting Chief Executive since July 2022.

When is he or she due for reappointment?

Sarah Cardell will serve as Chief Executive for a five-year term. The appointment of the CMA CEO is managed by the Department for Business and Trade.

Which posts within the organisation are political appointments?

The Business and Trade Secretary appoints through open competition the Chair, the members of the CMA Board, the Chief Executive, members of the Office for the Internal Market Panel 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 resource budget (excluding depreciation) for 2023– 2024 is £122.25 million. This figure includes additional funding to establish a dedicated Digital Markets Unit (DMU) under new powers expected to be given to us in the Digital Markets, Competition and Consumers Bill (DMCC).

How many staff are employed by the agency?

As of 30 June 2023, the CMA had 917 staff in established positions (excluding agency workers as well as those on career break, maternity, shared parental leave and secondee loan out). The full-time equivalent of staff was 887.8.

To whom does the head of the agency report?

The Chief Executive reports to the CMA Board. The Enterprise and Regulatory Reform Act 2013 (ERRA13) created the CMA as a statutory body governed by a corporate board, which is headed by the CMA Chair. As a non-ministerial government department, the CMA does not report directly to a government minister. 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; 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 prohibitions on anticompetitive agreements and abuse of

dominance, and the power to carry out market studies and refer a market for detailed investigation by members of the CMA Panel.

ERRA13 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 1998 (CA98) 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 CA98, markets or merger investigations.

However, the Secretary of State may, by order, exclude the application of Chapter I (the prohibition on anti-competitive agreements) and Chapter II (the prohibition on the abuse of a dominant position) of the CA98 in certain circumstances (such as for the avoidance of conflict with international obligations and for exceptional compelling reasons of public policy). For example, certain exclusion orders were adopted in response to issues arising in relation to coronavirus (covid-19).

The Secretary of State may also intervene under the Enterprise Act 2002 (EA02) in a merger, or where the CMA is carrying out a market study or proposing to make a market investigation reference, 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.

In addition, under the National Security and Investment Act (NSI) (National Security and Investment Act 2021: Guidance and information and the National Security and Investment Act), which came into force on 4 January 2022, the government can issue a direction to the CMA to do or not do anything under the EA02 where it reasonably considers that the direction is necessary and proportionate for the purpose of preventing, remedying or mitigating a risk to national security.

The 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 prohibits anticompetitive agreements (referred to as the ‘Chapter I prohibition’) and abuses of a dominant position (referred to as the ‘Chapter II prohibition’). 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 for exceptional compelling reasons 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, and innovation) as part of the assessment process. The CMA’s merger assessment guidelines explain that, for example, benefits in the form of environmental sustainability and supporting the transition to a low-carbon economy

may be considered to be relevant customer benefits in some circumstances. 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 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. 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. Since its formation in 2014, the CMA has had only a small number of its decisions overturned by the CAT. For example, in June 2018, the CAT set aside the CMA’s findings on abuse of dominance relating to excessive pricing in Flynn Pharma and Pfizer v CMA. The CMA appealed the

CAT’s judgment to the Court of Appeal, which in March 2020 upheld some aspects of the CMA’s appeal, finding that the CAT had made an error of law, but nevertheless remitted the case to the CMA. In the merger context, in November 2020 and June 2022 respectively, the CAT found against the CMA in relation to certain grounds of appeal in challenges of the CMA’s Phase II merger decisions in JD Sports/Footasylum and Facebook (now Meta)/Giphy. The CAT remitted these cases to the CMA for reconsideration in the light of the judgments.

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 (to 31 August 2023), of the mergers it has investigated, the CMA has allowed 105 mergers (46 anticipated mergers and 59 completed mergers), on the basis of the CMA either accepting undertakings offered by the companies or imposing remedies 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 (to 31 March 2023), the CMA has conducted 84 in-depth Phase II merger inquiries.

Since the establishment of the CMA, there have been the following Phase II outcomes:

12 Phase II prohibition decisions;
28 Phase II investigations that have concluded with remedies outcomes;
29 Phase II investigations which resulted in clearance;
29 mergers abandoned during a Phase I or Phase II investigation since the establishment of the CMA. (This figure includes nine cases that were abandoned at Phase I stage after the CMA had raised competition concerns about these mergers and 20 merger cases abandoned at Phase II stage).

In its 2022–2023 fiscal year, the CMA completed 13 in-depth investigations and it has completed a further five in the new fiscal year up to August 2023, across a wide variety of sectors of the economy, often reviewing the case in parallel with authorities in other jurisdictions. As at 31 August 2023, there are a further three live Phase II cases at the time of writing (Adobe/Figma, UnitedHealth/EMIS and Hitachi / Thales).

For the period from 1 April 2022 to 31 August 2023 (covering the 2022–2023 fiscal year and the current fiscal year to date), the following Phase II outcomes have occurred.

Prohibition decisions:
- social media sites and advertising (Facebook (now Meta)/Giphy, after remittal to the CMA by the CAT);
- Ready-to-bake products – including staples such as shortcrust and puff pastry, pizza and patisserie dough (Cerelia/Jus-Rol);
- supply of property search services in England and Wales (Dye & Durham/TM Group);
- and the cloud gaming sector (Microsoft/Activision).
Remedies imposed:
- essential software providers used by blue light emergency services (including police forces, fire and rescue services and ambulance trusts) as well as transport service providers (such as TfL and rail operators) (NEC/Capita);
- supply of engineered foam products used to make household goods such as mattresses, upholstery and kitchen sponges (Carpenter/Recticel);
- supply of chemical admixtures (Sika/MBCC);
- providers of offshore transport in the oil and gas sector (CHC/Babcock);
- suppliers of waste management services (Veolia/Suez); and
- hearing implant sector (Cochlear/Oticon).
Clearance decisions:
- UK financial services (LSEG/Quantile);
- cybersecurity software (NortonLifeLock/Avast);
- satellite connectivity that enables services such as the internet, email, and video calling – including for use on aircraft (Viasat/Inmarsat);
- vehicle salvage services (Copart/Hills); and
- supply of server hardware components (Broadcom/VMWare).
Abandonment following competition concerns raised by the CMA during Phase II investigations:
- manufacture and supply chicken and other types of poultry feed (ForFarmers/Boparan);
- auction service providers for used heavy equipment (Ritchie Bros/Euro Auctions); and
- Shanghai Kington Technology and others/Perpetuus, which was referred to the CMA for a Phase II review by the Secretary of State under the UK’s public interest intervention notice regime on the grounds of national security concerns. The UK introduced a new National Security Investment regime in January 2022; under this new regime, transactions will no longer be referred to the CMA on national security grounds.

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

The CMA has imposed civil fines under the Competition Act 1998 (CA98) against overseas parent companies for infringements of competition law that involve a UK subsidiary. For example, in 2021, the CMA fined both a Canadian parent company, and a US/Ireland based previous parent company, for their respective subsidiaries’ involvements in anticompetitive market-sharing agreements relating to the sale of 10mg hydrocortisone tablets.

Following the UK’s exit from the EU, the CMA is now responsible for a larger and more international caseload and continues its close engagement and cooperation with a range of international

counterparts. In international cases, the CMA liaises closely with the European Commission, the US Department of Justice and other overseas authorities. Some recent examples of the CMA’s international cooperation in relation to cartel investigations include:

the CMA’s investigation into anti-competitive conduct in relation to fragrances, which was launched in March 2023, at the same time as and in consultation with the Antitrust Division of the US Department of Justice, the European Commission and the Swiss Competition Commission. See CMA launches investigation into fragrances and fragrance ingredients – GOV.UK (www.gov.uk); and Suspected anti- competitive conduct in relation to fragrances and fragrance ingredients (51257) – GOV.UK (www.gov.uk);
the CMA’s investigation into suspected anti-competitive conduct in relation to the use of recycled materials in cars, their recyclability, and the arrangements for recycling of end-of-life vehicles, in which the CMA worked closely with the European Commission and launched its investigation on the same day in March 2022. See CMA launches investigation into recycling of cars and vans – GOV.UK (www.gov.uk) and Suspected anti- competitive conduct in relation to the recycling of end-of-life vehicles – GOV.UK (www.gov.uk).

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

Yes. The CMA operates a leniency programme under which businesses and individuals that provide evidence of cartel activity and cooperate with the CMA’s investigation can benefit from a reduction in or, in some circumstances, complete immunity from penalties. Directors of companies that qualify for leniency are also protected from director disqualification proceedings, provided they cooperate fully with the CMA’s investigation. (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 6888 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?

The Digital Markets, Competition and Consumers (DMCC) Bill was introduced to the UK Parliament in April 2023.

The Bill reinforces the key principles that underpin the CMA’s work, which are about helping people, businesses and the economy. The Bill has three areas of focus:

Consumer protection: new rules in this Bill will empower the CMA to decide when consumer law has been broken, rather than having to take each case to court. This will help ensure people are protected more quickly, and fair-dealing firms are not disadvantaged. The Bill will also allow the CMA to fine businesses which do break the law up to 10 per cent of their global turnover.
Digital markets: the Bill establishes a new, targeted regime built for the digital age, overseen by the CMA – that will use a proportionate approach to hold digital firms accountable for their actions – enabling all innovating businesses to compete fairly. It will set rules that will prevent firms with Strategic Market Status (SMS) from using their size and power to limit digital innovation or competition – ensuring the UK remains a highly attractive place to invest and do business for all.
Competition: the Bill will bolster the CMA’s investigative and enforcement powers – such as introducing turnover-based penalties for breaches of CMA investigative and enforcement requirements – meaning the CMA can conduct faster and more flexible competition investigations, which identify and stop unlawful anticompetitive conduct more quickly. Changes to the competition framework – including updated merger and fine thresholds – will also make it easier for the CMA to take action against mergers that harm UK consumers and businesses.

When did the last review of the law occur?

As noted above, the Digital Markets, Competition and Consumers (DMCC) Bill was introduced to the UK Parliament in April 2023. This Bill was preceded by two UK government consultations that started in July 2021:

one was on a range of proposals to reform the UK competition and consumer law regime, with the government publishing its response in April 2022: https://www.gov.uk/government/consultations/reforming- competition-and-consumer-policy, and
the other was one on legislative proposals for the new pro- competitive regime for digital markets, with the government publishing its response in May 2022: https://www.gov.uk/government/consultations/a-new-pro- competition-regime-for-digital-markets.

This is the first major review of the law in this area since that leading up to the Enterprise and Regulatory Reform Act 2013, which significantly reformed the UK competition regime, including by establishing the Competition and Markets Authority in 2014.

The CMA has also 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 130 economists, econometricians and statisticians. The individuals work within the different business delivery groups across the CMA. In addition, we have a dData team of about 50 people that is also part of the Chief Economist’s Office.

Has the authority conducted a dawn raid?

Yes, 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 CA98 or cartel offences by individuals. Under the CA98 the CMA also has the power to carry out site visits without a warrant at business premises, with or without notice, and require the production of documents. Since January 2022, the CMA has conducted 18 dawn raids.

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?

Yes. 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. A director 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 29 director disqualifications (including two disqualifications for the same director) and the CMA actively considers director disqualification in all cases involving a breach of competition law.

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. 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.

All thresholds apply to both anticipated 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.

Looking forward, the UK government recently set out its intention to adjust the current jurisdictional thresholds. These adjustments, as summarised below, are yet to come into force at the time of submission.

In April 2022, the UK government indicated it intends to make three adjustments to the current jurisdictional thresholds (Reforming Competition and Consumer Policy: Government Response to Consultation; page 33). The government intends to:

raise the target turnover test threshold from £70 million to £100 million to adjust for inflation and preserve the original effect of this test;
introduce a new jurisdictional threshold, targeted towards acquisitions by larger businesses, including vertical acquisitions. The new threshold will apply where an acquirer has both an existing share of supply of goods and services of 33 per cent or more in the UK or a substantial part of the UK and a UK turnover of £350 million or more; and
introduce a small merger safe harbour, exempting mergers from review where each party’s UK turnover is less than £10 million. This aims to reduce the burden on small and micro enterprises.

In addition, in the context of digital mergers, the Digital Markets, Competition and Consumers Bill currently in Parliament sets out new mandatory reporting requirements for firms designated with SMS. The CMA will assess whether a firm has SMS. Only firms found to have substantial and entrenched market power in at least one digital activity, and a strategic position in that activity, will be designated as SMS firms. Prior to completion of transactions which exceed certain thresholds, SMS firms will be required to report them to the CMA. The CMA will then consider whether to open an 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. One example of this type of case is the CMA’s assessment (and clearance) of 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
Queen Elizabeth House, Sibbald Walk, Edinburgh, EH8 8FT, United Kingdom
Erskine House, Chichester Street, Belfast BT1 4GF, United Kingdom 2 Caspian Point, Caspian Way, Cardiff, CF10 4DQ, United Kingdom
Tel: +44 203 738 6000
Email: [email protected]
Web: www.gov.uk
https://www.gov.uk/government/organisations /competition-and-markets-authority

Contacts

Sarah Cardell
Chief Executive
Tel: +44 203 738 6286
Email: [email protected]

Michael Grenfell
Executive Director, Enforcement
Tel: +44 203 738 6134
Email: [email protected]

Erik Wilson
Chief Operating Officer
Tel: +44 203 738 6964
Email: [email protected]

Chris Prevett
Interim General Counsel
Tel: +44 203 738 6282
Email: [email protected]

Office of the Chief Economic Adviser

Mike Walker
Chief Economic Adviser
Tel: +44 203 738 6201
Email: [email protected]

Julie Bon
Deputy Chief Economic Adviser
Tel: +44 203 7386168
Email: [email protected]

Jenny Haydock
Deputy Chief Economic Adviser
Tel: +44 203 7386318
Email: [email protected]

Stefan Hunt
Chief Data and Technology Insights Officer
Tel: +44 203 7386608
Email: [email protected]

Questions and answers

How many economists do you employ?

We employ about 120 economists, including econometricians and statisticians, and about 40 people in the data team.

Do you have a separate economics unit?

The CMA has an Office of the Chief Economic Adviser consisting of around 120 economists, econometricians and statisticians, and around 40 people in the data and technology analysis

team. However, these individuals are assigned to cases and embedded within the different business delivery groups across the CMA (ie, competition enforcement, consumer protection, markets, mergers and advocacy groups). All 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 25.

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 a senior economist in the chief economist’s team (typically, the chief economist, one of his deputies or a Director of Economics).

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

We seldom outsource economics work in cases. We occasionally use academics or consultants to quality assure our work 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 may commission one or two research reports per year from consultants or academics on economic topics of relevance to the CMA. We also regularly commission ex post evaluations of past CMA interventions to learn from our past cases.