On 11 March 2020, the Budget 2020 was published by the UK government, followed by the final version of the Competition and Markets Authority's ("CMA") Annual Plan for 2020/21 on 19 March. The Budget states that the government is committed to making the UK the best place to start and grow a business, and so is investing in the priorities of the business community by improving transport networks and digital connectivity and ensuring that the regulatory regime supports competition and innovation. Whilst the CMA Annual Plan set outs its priorities for 2020/21, its current workload and its assumption of new responsibilities after the end of the Brexit transitional period.
| what you need to know - key takeaways |
- Under government plans, digital companies that have been designated with a ‘Strategic Market Status’ may have to make the CMA aware of all intended acquisitions.
- Businesses will need to follow digital focused developments in both EU and UK markets in parallel now that the UK has left the EU. Assessing the extent to which the UK's approach will diverge from that of the EU will be a key focus of many digital companies.
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Budget 2020
As part the 2020 Budget, the UK government announced its plans for the potential shape of UK competition policy in the digital sector, in particular in relation to platforms (see paragraphs 1.201-202, and 2.266 of the Budget). The government's competition policy plans include:
Accepting Furman Review recommendations
The government will accept all six of the Furman Review’s strategic recommendations from March 2019 (see here for our summary of the Furman Review), subject to consultation. These recommendations include:
- Introducing a new digital markets unit focused on digital platforms.
- Reviewing how digital mergers are assessed, including: requiring digital companies that have been designated with a ‘Strategic Market Status’ to make the CMA aware of all intended acquisitions and updating the CMA's Merger Assessment Guidelines and potentially allowing the CMA to use a 'balance of harms' approach.
- Updating the CMA's enforcement tools, including: greater and quicker use of interim measures, reviewing the appeal standards applied by the Competition Appeal Tribunal, and strengthening information gathering powers.
- Continuing to monitor how the use of machine learning algorithms and AI evolves to ensure it does not lead to anti-competitive activity or consumer detriment, in particular to vulnerable consumers.
Digital markets taskforce
A digital markets taskforce has been established, which will provide the UK government with advice on the design and implementation of pro-competitive measures for digital platform markets. See here for further details. It's key areas of focus include:
- Advice on a potential methodology to designate digital platforms with "Strategic Market Status" (SMS).
- Whether intervention is justified in relation to platforms or platforms’ activities which do not fall within the scope of SMS.
- Considering the form, content and enforcement of a code of conduct for platforms to promote competition, including being mindful of the EU Platform to Business Regulations and other relevant regulations.
- Whether there is a case for remedies relating to data access and interoperability outside of search and social media markets.
- Considering the interaction with existing regulatory regimes and wider regulatory objectives, including economic growth, innovation, privacy, data protection, and intellectual property rights.
- Advice on international cooperation and how this cooperation can be achieved in practice.
Divergence from EU policy?
The government's announcement follows recent announcements from the European Commission that it is also considering reforms in similar areas (see our summary here), which means that business will need to follow developments in both markets in parallel now that the UK has left the EU. Assessing the extent to which the UK's approach will diverge from that of the EU will be a key focus of many digital companies.
CMA Annual Plan 2020/21
On 19 March 2020, the CMA published the final version of its Annual Plan for 2020/21. It was launched prior to the height of the Covid-19 pandemic, and much of its resources and priorities since then have shifted to adjusting to the outbreak and related competition law issues (see our UK competition law Covid-19 guide here).
Foreword
The CMA expects to face a number of challenges in the coming year, most notably those associated with the UK's exit from the EU on 31 January 2020 and the responsibilities that the CMA will take on from the end of the transition period, including trans-national mergers and cartel cases over which the European Commission has previously had exclusive jurisdiction and enforcement of a new UK national subsidy control regime. The CMA will have to strike a balance between its new responsibilities and its commitment to promoting competition for the benefit of UK consumers in those cases that affect only the UK.
The increasing digitalisation of the economy has exposed consumers to detriment. This poses challenges for the CMA in protecting consumers and they will need to address these challenges effectively.
The CMA also intends to shift its culture to sharpen the focus on what matters to consumers, assess the state of competition in markets across the UK, and consumers’ experiences of those markets, become an increasingly viable and robust champion for competition and consumers, improve how they choose which problems to take on and make this selection process more transparent and intervene more actively, decidedly and speedily than in the past.
Priorities
In 2020/21 the CMA will particularly focus on:
- Protecting consumers, including in particular those in vulnerable circumstances. Their competition law enforcement caseload is at a record level as they seek to send a clear message that anticompetitive practices are not to be tolerated. In terms of merger control, 2019/20 saw the CMA carry out a high number of major merger investigations that would otherwise result in consumers facing higher prices or lower quality products and services, including carrying into 2020/21 an unprecedented number of Phase 2 merger investigations.
- Improving trust in markets.
- Tackling concerns in digital markets. In this regard, their market study into online platforms and digital advertising and their investigation into the funerals market are ongoing.
- Enhancing productivity and economic growth.
- Climate change, supporting the transition to a low carbon economy.
- Taking on new responsibilities as a result of the UK leaving the EU. Following the end of the transition period, from January 2021 they expect to incur a 50% increase in the number of merger cases, UK elements of international competition enforcement cases and a role in subsidy control. To be ready, the CMA will need to work on these cases well before January 2021. As a result of this they will have limited opportunities to launch major new projects in the coming year, but are committed to maximising the use of available resources to deliver significant outcomes for consumers, businesses and the economy.
With thanks to Victoria Beswick of Ashurst for her contribution.
