The UK government has urged the Competition and Markets Authority (CMA) to adopt a more proactive and business-friendly approach.
British Business Secretary Jonathan Reynolds has emphasized the need for the regulator to be “more agile” and “less risk averse,” aligning its activities with the government’s growth agenda.
A Call for Change
Reynolds outlined new guidance for the CMA, advocating for greater responsiveness to business needs. “Our strategic steer asks the CMA to minimize uncertainty for businesses by being proactive, transparent, timely, predictable, and responsive in its engagement,” he stated in a recent speech in London.
Since the Labour government took power last year, pressure on regulators has intensified, with demands for their role to support economic expansion. This shift towards a lighter regulatory touch marks a change in approach for a country historically committed to stringent oversight of major corporations to protect smaller firms and consumers.
Structural Adjustments in the CMA
Recent government actions demonstrate a strong commitment to regulatory reform. In a notable move, the government replaced the CMA’s previous chair with a former Amazon executive, reflecting a desire for leadership more aligned with economic growth objectives.
The CMA has already begun adjusting its approach, particularly in merger evaluations. Its recent approval of the Vodafone UK-Three merger has been highlighted as an example of its evolving perspective. Furthermore, the regulator has pledged to reduce the time spent reviewing mergers before deciding on potential interventions.
Key Reforms and Efficiency Measures
Recognizing the importance of timely decision-making, the CMA has committed to a faster and more efficient process. By June 2025, the regulator aims to:
- Complete the pre-notification stage of merger inquiries within 40 working days, down from the current 65-day average.
- Reduce the review period for straightforward Phase 1 cases from 35 to 25 working days.
These changes require a “major streamlining” of procedures but are seen as feasible. The CMA stated, “We know speed of decision-making is vital to reduce uncertainty and costs for businesses.”
Enhancing Business Confidence Through Clarity
To improve predictability, the CMA plans to clarify its jurisdiction and guidelines regarding mergers. Two key aspects under review include:
- Material influence: The regulator’s ability to scrutinize acquisitions that fall short of full control.
- Share of supply: The definition of what constitutes a significant market share, which currently gives the CMA broad jurisdictional powers.
Updated guidelines on these tests will be open for consultation in June.
A Proportionate Approach to Market Regulation
The CMA also aims to ensure regulatory interventions remain proportionate, balancing consumer protection with business interests. The focus includes:
- Encouraging remedies over outright prohibitions for deals that raise competition concerns.
- Recognizing the potential for mergers to bring pro-competitive investment benefits, as demonstrated in the Vodafone/Three case.
- Assessing global mergers with a clear distinction between those with a direct UK impact and those where actions by foreign regulators may address UK concerns.
Strengthening Business Engagement
To foster transparency and collaboration, the CMA is set to introduce a Mergers Charter in March 2025. The Charter will formalize the regulator’s commitment to:
- Rapid and predictable decision-making.
- Proportionate interventions.
- Direct business engagement throughout regulatory processes.
Additional efforts will include early senior-level meetings with businesses, targeted outreach programs, and improved accessibility to guidance materials.
