House of Commons Library

The UK competition regime

Published Monday, October 7, 2019

This note introduces competition law and outlines the institutional arrangements for enforcing it. It also looks at past and proposed reforms, at the implications of Brexit and at competition in digital markets.

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Competition law seeks to curb practices that undermine or restrict competition to the detriment of consumers: the abuse of a dominant market position by a firm, anti-competitive agreements between firms, and mergers or takeovers which, if allowed, would result in a substantial lessening of competition.

In the UK, the responsibility for enforcing competition law lies with the independent competition authority, the Competition & Markets Authority (CMA). The legislative framework for the UK regime is established by the Competition Act 1998 and the Enterprise Act 2002, as amended by the Enterprise and Regulatory Reform Act 2013 which created the CMA. The Government has very limited powers to intervene in either the assessment of mergers or the investigation of markets.

As a consequence, in most cases, concerns about instances of anti-competitive behaviour or the implications of a merger should be referred directly to the CMA. Individuals can report issues relating to a market not working well, unfair terms in a contract, or any issues related to anti-competitive practices. The CMA has detailed guidance on its work regarding mergers, markets, and cartels & other anti-competitive behaviour. The individual sectoral regulators – Ofcom, Ofgem, FCA, etc – have concurrent powers to start inquiries in their respective fields – communications, gas & electricity, financial services, etc.

The prohibitions in UK law of the abuse of a dominant position and anti-competitive agreements are underpinned by equivalent provisions in EU law (specifically, Articles 101 & 102 of the Treaty). Where markets or mergers have an EU-wide dimension, the lead competition authority is the European Commission. Guidance on the scope of the Commission’s responsibilities, and its ongoing work, is on its site.

In August 2018, the Secretary of State for Business, Energy and Industrial Strategy asked the CMA to come forward with proposals to better protect consumers in the digital economy and improve public trust in markets. In February 2019, CMA Chairman Lord Tyrie outlined his proposals to the Secretary of State in a letter. In a nutshell, the CMA wants to act faster and more decisively on competition issues, and it wants its powers to protect consumers upgraded to the same level as its competition powers.

Brexit raises a range of questions for the future of the UK competition regime, including whether to diverge from EU law and practice and what future co-operation with the European Commission and other European authorities would look like. There are also opportunities with respect to the UK recuperating the authority to investigate and decide the largest cases.

A global debate is taking place about the dominance of tech giants in digital markets and their ability to stifle competition. There are different views about what the right solution is, or if any is needed. Of those who favour action, some advocate new regulations while others call for ‘breaking up’ the tech giants. Whichever route is taken, these digital markets involve global companies often headquartered outside the UK. The solution is likely to require a high degree of engagement and co-operation with competition authorities around the world, and in particular the two major players, the US agencies and the European Commission.

Commons Briefing papers SN04814

Author: Federico Mor

Topics: Competition, Regulation

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