Government consults on reforming UK competition regime

On 20 January 2026, the Department for Business and Trade (DBT) published a consultation on 'Refining Our Competition Regime' (the Consultation), which proposes a number of legislative reforms to the UK competition regime in line with the Government's pro growth agenda, focused on the mergers and markets regimes. This follows the Competition and Markets Authority's (CMA) recent work revising its internal processes and guidance in line with the growth agenda.

What you need to know

• The Consultation proposes to remove the existing independent CMA panel members from the decision-making processes for Phase 2 merger reviews and market investigations with key decisions being made instead by the CMA Board or new sub-committees of the Board, at least half of which will be non-executive Board members or non-CMA staff experts.
• The markets regime will be streamlined into a single-phase market review tool with stricter timelines which would aim to reduce the end-to-end review process to 18 to 24 months. The assessment will focus on whether there is an adverse effect on consumers, in line with the current test for market studies. Proposals are also made in relation to the approach to remedies, including the introduction of sunset clauses.
• There are also proposals to amend the share of supply and material influence tests in merger control, with the proposals aimed at providing greater certainty on when mergers will fall within the CMA's jurisdiction.

Why now?

The CMA has continued to emphasise its commitment to the Government's pro-growth agenda since the introduction in late 2024 of the '4Ps' framework (focusing on 'Pace', 'Predictability', 'Proportionality' and 'Process'). As part of embedding the 4Ps framework, the CMA's Chief Executive Officer, Sarah Cardell, committed to reviewing the CMA's approach to its internal processes.

The Government's updated strategic steer to the CMA on 15 May 2025 set out the Government's overarching aim for economic growth and the CMA's role in delivering that aim. This built on the 4Ps framework and emphasised the importance of the CMA to the Government's growth agenda, including requiring the CMA to review its procedural guidance to increase accessibility, transparency and provide "proactive, transparent, timely, predictable and responsive engagement with businesses".

Over the last year, the CMA has conducted wide-ranging updates to guidance across its functions (including reviewing several key pieces of merger guidance (see our November 2025 and January 2026 updates)), markets guidance and leniency guidance for cartel investigations (see our November 2025 update). However, the CMA's ability to enact more significant changes to the competition regime is curtailed by its statutory remit. The Government had therefore indicated that it would consult on areas which would require legislative change and the Consultation builds on the March 2025 Regulatory Action Plan and Modern Industrial Strategy by refining the competition regime and introducing legislative proposals to support the CMA's "operational transformation".

A new decision-making process for markets and mergers

Presently, Phase 2 market or merger investigations are conducted by members of an independent panel. This decision-making structure is a historic feature of the UK competition regime, which was developed to ensure the involvement of experienced independent decision-makers given the importance of the issues involved. However, this process has been questioned by the CMA's Chief Executive Officer, who in November 2025 commented that it excludes senior CMA leaders from two of the CMA's most significant decision-making processes, despite the fact that it is senior CMA members who are accountable to Parliament for the CMA's performance.

The Consultation proposes replacing these independent panels with the CMA Board or new sub-committees of the CMA Board. The committees are expected to be formed of senior CMA staff, non-executive directors of the Board and external experts appointed by the Secretary of State for Business and Trade, with at least half the members being non-executive Board members or non-CMA staff experts. The proposed structure would bring the merger and markets decision-making processes in line with the process for the digital markets regime which requires certain strategic decisions to be taken by the CMA Board.

Key decisions (such as whether a merger may result in a significant lessening of competition, whether features of a market are having an adverse effect on competition, and on remedies) would be reserved to the CMA Board, new committees of the Board or decision-making groups appointed by the Board committees. Other decisions could be delegated to the case team and Phase 1 decisions would continue to typically be made by senior members of CMA staff, not by the Board.

Whilst the proposed change may have the potential to deliver greater certainty, the removal of an independent decision-making panel and the internalisation of the decision-making structure removes the checks and balances currently in place to avoid actual or perceived unconscious bias. This concern is exacerbated by the fact that these decisions in relation to Phase 2 mergers and market investigations will remain reviewable only on judicial review grounds. This is likely to be an area which is fiercely debated by stakeholders, with arguments being raised about the resulting need to change the appeal standard (to allow for the possibility of appeals on the merits) to ensure that sufficient checks and balances remain in place.

Streamlining the markets regime

Creation of a single-phase market review tool

Currently, the CMA has the ability to launch a Phase 1 market study or a general review to educate itself on a market, following which it can refer the market for an in-depth (Phase 2) market investigation if it identifies concerns. This two step process can take up to 36 months. The Consultation proposes replacing this process with a single-phase market review tool, which would see the CMA conduct its full review in a six to 12 month period. It would then either publish a final report with recommendations or consult on a provisional adverse effects decision, and set out areas to consider for remedies. If it decides to consult, the CMA would be expected to publish its final report within six months for less intrusive remedies and 12 months for more intrusive remedies (for example, price controls).

The expectation is that the end-to-end process would take between 18-24 months, with a statutory time limit of 24 months providing greater certainty as regards the overall duration. This builds on the Government's commitment in its strategic steer to respond to CMA recommendations within 90 days, with a presumption that the recommendations will be accepted.

This aims to increase the pace, certainty and transparency of investigations, including through the identification of remedies at an earlier stage in the process. However, as the Consultation itself recognises, expediting the review of markets should not be at the expense of a robust analysis, protection of procedural safeguards and rights of defence, which will need to be ensured if any changes to the regime proceed.

The legal threshold for the market review tool

The Consultation proposes that the legal threshold for making an adverse finding for the single-phase review would be based on whether there is an adverse effect on consumers. The Consultation states that the effectiveness of the markets regime could be restricted if the CMA is required to demonstrate an adverse effect on competition (which is the current focus in market investigations). The Consultation indicates that this is because there may be instances where the causal link between the consumer harm and harm to competition is disputed but there is material consumer harm which may damage trust in, or the fairness of, a market if not addressed.

Moving to a single-phase market review tool using a test focused on whether there is an adverse effect on consumers has the potential to broaden the scope for intervention and, when combined with the shortened timeframe, could prejudice rights of defence for a wider range of harms. This is significant given the potential remedies which can be imposed at the end of a market investigation which can include structural divestments and significant cost for market participants, as well as the risk of fines for failing to comply with the remedies imposed.

The Consultation also considers providing the CMA with the ability to determine whether to take forward market reviews under the new model following market studies completed by concurrent sector regulators and for sector regulators to oversee remedies resulting from any CMA market review.

Time limits for markets remedies

The burden that certain market remedies place on businesses was partially addressed by recent changes to the markets regime in the Digital Markets, Competition and Consumers Act 2024 (see our June 2024 update). This included introducing powers for the CMA to vary, revoke, release or replace market remedies where the original remedy has become ineffective, as well as introducing the power to trial certain remedies and accept binding undertakings at any stage in the process.

The Consultation proposes further changes to the regime, responding to concerns about market remedies remaining in place for extended periods without regular review. Those changes include the introduction of sunset clauses by default, meaning that remedies will fall away after a set period unless the CMA determines that there is a good reason for them to remain in place. The Consultation also proposes requiring the CMA to review all market remedies at least once every 10 years.

The CMA's commitment to monitoring remedies and removing those that are no longer appropriate, for example, due to market developments, their age or changes to the affected businesses, is clear from the recent strategic review of 33 market remedies launched on 19 January 2026. The Consultation's proposals are a welcome addition to the regime, provided that stakeholders are afforded an opportunity to make appropriate submissions based on their understanding and experience of the market.

Changes to jurisdictional merger control thresholds

As anticipated, the Consultation proposes clarifying the factors that will be considered in relation to the share of supply and material influence jurisdictional tests:

• Share of supply test: the current test permits the CMA to have regard to the criteria specified in the Enterprise Act 2002 (EA 2002) (including value, cost, price, quantity, capacity and the number of workers employed) and any other criteria that it considers appropriate. The Consultation proposes removing the CMA's ability to consider other criteria it considers appropriate, meaning it would be limited to the specified criteria set out in the EA 2002.
• Material influence test: material influence is the lowest level of control that gives the CMA jurisdiction to review a transaction. It applies where an entity has the ability to materially influence the commercial policy of the target. The factors the CMA will consider when assessing material influence are currently set out in CMA guidance: the Consultation proposes changing that to set out the relevant factors in the EA 2002. The factors proposed to be included are: shareholding and voting rights (both thresholds and where assessed in combination with other factors); board representation or appointment rights; special voting rights or veto rights over strategic decisions; access to confidential strategic information; and commercial, financial or consultancy arrangements.

These changes supplement the CMA's updated merger guidance on jurisdiction and procedure, which clarified the CMA's approach to the share of supply and material influence tests (see our November 2025 update). The Consultation proposes to apply these changes to the standard merger control regime in Part 3 of the Enterprise Act 2002, with the Government also considering whether to apply the changes to mergers between energy network enterprises and water enterprises. The Consultation also proposes retaining the existing jurisdictional tests for the Secretary of State in public interest intervention cases.

The Consultation also proposes extending the statutory timeline for the CMA to consider Phase 1 remedies from up to 10 working days to up to 20 working days from the date of its decision, which would be a welcome extension.

New investigative powers for algorithms

The Consultation proposes increasing the CMA's powers to investigate algorithms within its competition and consumer protection functions in response to companies' increased use of algorithms. This would see an extension of the CMA's powers under its digital markets function (where algorithms fall within the definition of information) to its competition and consumer functions.

The Consultation suggests that the new powers would expediate the CMA's information gathering, by enhancing its ability to: (i) obtain or generate information on algorithms, (ii) alter the conduct of algorithms to understand their behaviour, and (iii) perform a specified demonstration or test to observe how the algorithm operates.

If the CMA's information gathering powers are extended in relation to algorithms, there should be appropriate safeguards in place to ensure that entities have the right to meaningfully comment on the scope and appropriateness of requests for information, particularly in relation to: proportionality, technical feasibility, protection for confidential and privileged material, timescales, and independent oversight of the process.

Comment

The reforms proposed by the Consultation, if implemented, would have a significant impact on the UK competition regime, particularly in relation to the markets and merger control functions. The changes build on the CMA's previous work to revise its internal practices and procedures in line with the Government's pro-growth agenda by making changes to its legislative framework. While improvements to processes which offer greater predictability and faster timelines are welcome, it is important that this is not achieved at the expense of merging parties' and market participants' procedural rights to due process, legal certainty, effective participation and rights of defence, including transparency.

The Consultation is open until 31 March 2026. DBT has also stated that it will consult separately on proposals to refine the opt-out collective actions regime in the coming months.

Want to know more?

• Mergers 2026 – One year on from the CMA's pivot to the Government's growth agenda, 15 January 2026
• CMA publishes revised guidance on merger remedies, 8 January 2026
• CMA publishes updated guidance on UK merger procedure, 11 November 2025
• CMA consults on further reform to UK merger procedure guidelines, 4 July 2025
• CMA reconsiders approach to merger remedies and publishes Mergers Charter, 17 March 2025