The UK competition regime
This note describes how competition law works in the UK. It considers past and proposed reforms, the implications of Brexit and competition in digital markets.
Competition law seeks to curb practices that undermine or restrict competition to the detriment of consumers. This includes 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, primary 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 limited powers to intervene in either the assessment of mergers or the investigation of markets.
Individual sector regulators – such as Ofcom (communications), Ofgem (gas and electricity) and the Financial Conduct Authority (financial services) – have similar powers to investigate competition in their own fields.
The prohibitions in UK law on abusing dominant market positions and anti-competitive agreements were based on and underpinned by equivalent provisions in EU law. Since Brexit, under the terms of the UK-EU trade agreements, EU competition law is no longer enforced in the UK, and the UK and EU now operate completely separate competition regimes. See section 2 of our briefing The UK-EU Trade and Cooperation Agreement: Level Playing Field for information on the competition provisions of the UK-EU trade agreement.
The CMA is now responsible for all anti-competitive practices that affect UK markets and consumers.
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 summary, the CMA wanted to be able to act more quickly and decisively on competition issues, and it wanted its powers to protect consumers upgraded to the same level as its competition powers.
In February 2021, Conservative MP and UK Anti-Corruption Champion John Penrose published a report on reform of UK competition law. The Penrose report’s recommendations include strengthening CMA powers and streamlining current processes. Most of the proposals suggested by Lord Tyrie in his 2019 letter were not carried over.
A global debate is taking place about the dominance of tech giants in digital markets and their ability to stifle competition. Following the recommendations of an expert panel and a Digital Markets Task Force, a Digital Markets Unit (DMU) was set up within the CMA in April 2021. This monitors and regulates the behaviour of platforms with significant market power. The Government intends to consult on the design of the DMU and legislate to put it on a statutory footing in due course.