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1 April 2014 Community, Guest Column

Guest column: Alex Chisholm

The Competition & Markets Authority takes up its powers in April. And when it comes to its dealings with businesses, the emphasis is on shared goals.

Competition and markets feature strongly in the current public debate. Politicians agree competition is a key part of lowering the cost of living for voters.

Consumers and consumer groups demand more of it. And business representatives, including the CBI, have been vocal proponents of competition as a driver of economic growth. 

But when different groups put forward their perspectives on the specific outcomes they want to see, the consensus breaks down.

This is where the Competition and Markets Authority (CMA) – the UK’s new unified competition body which took up its full powers this month – comes in. 

Our job is to make markets work well by taking an independent look at the facts, and intervening only where necessary to improve outcomes. 

Our ultimate focus is how consumers fare but, overall, businesses benefit from effective competition too. 

They need to operate with confidence that the playing field is level. The key economic infrastructure sectors, such as banking and energy, are examples of where businesses are not just the suppliers but also the customers.  

At first, those dealing with us in the business community shouldn’t notice a dramatic change. In bringing together two well understood and respected organisations – the Competition Commission and the Office of Fair Trading – we benefit from continuity and the best features of the previous regime, so this isn’t a Year Zero approach. 

However, we would be missing an opportunity if we didn’t have the ambition to make this new competition body better than what went before.

Together with a high-calibre board led by former Ofcom chair David Currie, and a senior team, I have been looking at the improvements we can make in how we do our work and conduct our investigations. One important aspect has been how we interact with business.

Know where you stand

Companies won’t always welcome the attention of the competition authorities. Although competition is widely accepted as a common good, and having effective authorities overseeing it is important, we also recognise that being the subject of a merger, market or cartel investigation can create uncertainty and impose a considerable burden on a business from, for example, the call on management time and resources.

The challenge is to minimise that burden while still carrying out the comprehensive and independent investigations that businesses rightly expect and that our surveys have always told us they value more than anything else.

I believe the changes we are making will go a long way towards meeting this challenge in providing greater certainty, speed and transparency for businesses and satisfying their frequently voiced wish to “know where we stand”. 

In combining the two authorities, we can reduce the duplication between the first phase and, where required, the more in-depth second phase of an investigation – a constant bugbear, we know – which until now has been carried out by a separate organisation. 

This benefit is underpinned by the addition of binding, and in some cases shorter, statutory timescales across all phases of the process.

In bringing together two well understood and respected organisations, we benefit from continuity and the best features of the previous regime

At the same time, we have also preserved the principle that this second phase looks at the case with fresh eyes. 

Crucial to this process is the retention of the system of independent members, so that such decisions are made by expert panellists with extensive experience of the business and commercial worlds, as well as of competition, law and economics. 

We plan to strengthen our decision-making on competition law investigations – previously the preserve of the OFT – by allowing for these panel members to be part of the decision groups that decide these cases. 

Other changes include businesses being able to see the substance of a merger decision at phase one before coming to the authority with a potential offer to resolve those concerns; greater access to decision-makers; and the appointment of a procedural officer to facilitate resolution of procedural disputes without recourse to the courts.

Speedier process

The CMA will also have new powers in areas such as information-gathering, requesting co-operation, and requiring merging companies to remain separate until the completion of an investigation – as well as a strengthened criminal cartel offence.

I would stress two things about these new powers: firstly, the quid pro quo of having them is that we will ensure they are used responsibly; and secondly, they are aimed at achieving an outcome that all parties want to see – a better, quicker process, alongside more effective competition in the economy. 

For many businesses, their contact with the competition authorities will be more limited. Only a small number of mergers will get the full treatment – only around 10 per cent of mergers examined by the OFT now lead to a full inquiry. 

Our market investigations and studies will be chosen carefully based on where they can make the most impact, and our enforcement cases on where there is clear evidence of an offence. 

The vast majority of businesses want to comply with the law. In our plan for this year, we are investing in clear and accessible information and guidance to help them do so. 

When we do have to take tough action, it will be in the interests of the efficient and innovative companies that benefit from competition as much as those of anyone else. 

While it won’t always be plain sailing, we believe that by operating firmly but fairly, we can work well with business towards achieving the common goals we all share.