On 1 April 2014, the Competition and Markets Authority (“CMA”) comes into force as the central UK competition regulator. Born under the Enterprise and Regulatory Reform Act 2013, the CMA replaces the competition regulator functions of the Office of Fair Trading (“OFT”) and the Competition Commission (“CC”). Like those institutions, the CMA will be responsible for UK merger control, market investigations, cartel prosecutions and co-ordination with concurrent sectoral regulators such as the CAA and Ofgem.
The reasoning behind this shake-up was the expected efficiency gains of moving from two regulators to one. Significantly, the CMA has a remit wider than that of the OFT which was to police markets to the benefit of consumers. This has been replaced by a more holistic approach where the remit of the CMA will be to make markets work for the benefit of businesses and the economy as a whole, as well as consumers. There were also criticism levelled at the OFT and CC at the small number of successful prosecutions they obtained and the drawn out nature of many of their enquiries. Whilst efficiency and speed are certainly two of the new goals, the CMA is to retain much of the two stage checks and balances procedures provided by the OFT and CC through internal divisions. Two stage merger review is to be maintained amongst other measures to ensure operational integrity.
Alongside the move to a single regulator, the criminal cartel offence under the Enterprise Act 2002 has been reformed with the intention of obtaining more successful prosecutions against individuals. The CMA also enjoys new powers under merger control including the ability to order merging parties to hold separate their businesses until a merger decision is made by the regulator. However, and crucially, merger control remains a voluntary regime.
Whilst the first year will inevitably be consumed by left-over enquiries and work from the OFT and CC, the medium too long term will show whether the UK has been endowed with a more aggressive and effective regulator. The UK already has a well-regarded competition regime and the expectation is that this will continue to improve with the birth of this new super-regulator.