The UK government is consulting on a series of proposed changes to the competition regime, including changes to decision making structures, market investigations looking at consumer issues, and clearer jurisdictional tests for merger control.

The main proposed changes, which are open to consultation until 31 March 2026, are as follows.

Abolition of Phase 1 "market studies", so that there is a single 12-24 month market investigation process. Such market investigations would extend to consumer issues even where there is no competition concern, i.e.  they would no longer be limited to addressing competition issues, as they are at present. The Competition and Markets Authority (CMA) would have the option to decline to investigate markets that are referred to it by a sector regulator, which it cannot do at present. These changes are primarily to make the system quicker and more efficient.

Phase 2 merger and market investigation decisions would no longer be made by independent members of the CMA's panel (made up of senior executives drawn from business, legal and accounting sectors). Instead, they will be made by CMA Board sub-committees, comprising senior CMA officials (who were not involved in any previous Phase 1 merger decision), executive and non-executive members of the CMA's board, and independent external experts.  This is intended to enable the CMA leadership, which is accountable for Phase 2 decisions, to be involved in those decisions, while safeguarding the CMA’s continued independence.

Remedies imposed under the market investigation regime are to have default "sunset clauses" (so that they fall away after a certain period), unless the CMA can justify why that is not appropriate and would be subject to review every 10 years, absent exceptional circumstances. Sector regulators would also be able to monitor compliance with market investigation remedies that are imposed by the CMA. These changes are aimed at improving business certainty and efficiency of enforcing remedies.

The merger control jurisdictional "share of supply" and "material influence tests" would be clarified by introducing closed lists of factors that are to be taken into account by the CMA when assessing those tests.  The CMA would be permitted to assess merging parties' shares of supply based on the value, cost, price, quantity, capacity and/or number of workers employed in relation to the relevant products or services.  Material influence would be assessed by reference to shareholding/voting rights, board representation, special/veto rights over strategic decisions, access to confidential strategic information and commercial, financial or consultancy arrangements.

Stronger information gathering powers in competition and consumer protection investigations, allowing the CMA to require businesses to generate information on algorithms and conduct A/B testing. This will align the CMA’s investigative powers under the competition and consumer regimes with those that already exist under the digital markets regime.

Comment

While some of the proposals – such as sunset clauses for market remedies - are positive for businesses, some have potential to increase substantially the intrusiveness of competition investigations. For instance, the market investigation regime is already highly intrusive, as it allows the CMA to impose costly remedies to address competition issues upon businesses that are not alleged to have broken any laws. The proposals would mean that such remedies could be imposed even if the CMA cannot prove that competition in the market is adversely affected by a business practice or market feature; it would suffice to identify some form of harm to consumers. Changes to information gathering powers are also potentially intrusive, as businesses could be forced to implement tests that adversely affect the experience of their consumers.

Other proposals do not go as far as many had hoped they would. In particular, the proposed clarification of the merger control jurisdictional tests appears largely to codify, rather than rein in, the CMA's existing practice. For example, past cases of regulatory over-reach where the CMA asserted that the share of supply test was met by businesses that had never supplied any products in the UK, but had some UK-based employees, could still occur under the proposed changes.