Competition & Markets Authority
Printable version

Market investigations: 75 years of UK experience

A keynote speech gvien yesterday by Martin Coleman, Non-Executive Director and Panel Chair of the Competition and Markets Authority (CMA), to the Swedish Competition Authority’s Pros and Cons Conference.

Those of you into do-it-yourself home improvements will know that having the right tools is essential to do a good job. A tool is a means of delivering an end result – a new set of shelves, a repaired garden fence. It is the desired outcome that influences the choice of tool. And so it should be for competition authorities. If the aim is to ensure that markets are working effectively for the benefit of consumers, and if there are markets where this is not happening, it is the responsibility of policy makers to consider what can be done. This is where tools come in – a means to an end. One may conclude that existing tools can fix the problem. But it may be that the old tools are inadequate and new ones are required. It is in this light that market investigation powers should be assessed – what do they add to existing tools in achieving desired outcomes?

While Sweden is considering whether market investigation tools are a helpful adjunct to existing competition powers, the UK came at the issue from the other direction. As long ago as 1948 the UK gave an independent body the power to investigate industries with monopolistic or oligopolistic structures where anti-competitive practices might damage the public interest, with the decision on remedies taken by elected ministers.

Fifty years later the UK introduced prohibitions on restrictive agreements and abuse of dominance. At that point the 1948 sector investigatory model might have been considered obsolete, after all the prohibitions were specifically designed to address and punish anti-competitive behaviour. In fact the old system was retained in parallel with the new prohibitions and was modernised in 2002 with the competition authorities given power to select markets for investigation and impose remedies independently of ministers.

The reason for this was explained in Parliament during the passage of the legislation: “Most UK markets are broadly competitive and where competition problems exist they can more often than not be addressed by means of the Competition Act 1998 [the UK equivalents of what are now Articles 101 and 102 of the EU Treaty]. But from time to time the competition authorities become aware of markets in which competition does not appear to be working properly, even though there appears to be no breach of the Competition Act prohibitions…markets characterised not so much by a virtually anti-competitive behaviour as by general anti-competitiveness” [Footnote 1].

Since 2002, about 20 investigations have been conducted including strategically important markets such as groceriesenergyretail banking and audit services and highly sensitive markets such as private healthcare and funerals and we are currently considering an investigation into veterinary services.

What we have learned is that Articles 101 and 102 are not sufficient to address all significant competition issues. This is true regardless of market structure but particularly in oligopolistic markets where the concepts of tacit collusion and collective dominance are too complex and uncertain to be of practical value in many cases.

This matters because if a system does not have the tools to address competition concerns causing serious consumer harm it calls into question the overall credibility of the regime. The statement that: ‘we know there’s a competition problem, we recognise that it is causing harm to consumers and businesses, but there’s nothing we can do about it’, is unlikely to engender public or political confidence in the system.

Market investigations fill gaps that other competition tools cannot address in 2 ways. First, addressing market failures that are not the result of anti-competitive agreements or an abuse of dominance, and second, allowing the CMA to impose by order market-wide forward-looking structural or behavioural remedies including divestitures, price controls, IP licensing and information transparency requirements.

Let me give 2 examples. 

Funeral services

First a market where there were no anti-competitive agreements or dominant players but where, on any measure, UK consumers were getting a bad deal – funeral services which we investigated in 2020. The sector had seen annual price increases well in excess of inflation for over 13 years. The large funeral director firms were earning average returns significantly and persistently above what one would expect in a well-functioning market [Footnote 2]. Persistent excess profits indicated that cost drivers or quality differentials did not explain the pricing issues. We estimated conservatively that the consumer detriment averaged at least £400 per funeral across a significant proportion of the market [Footnote 3]. Some funeral directors were not providing acceptable levels of quality.

The market features which caused these detrimental outcomes were:

  • low level of customer engagement caused by the challenging circumstances surrounding the purchase of a funeral
  • lack of easily accessible and clearly comparable information on the services provided
  • lack of visibility to customers of the quality of care given to the deceased

We introduced ‘sunlight’ remedies – shining a light on the pricing and back of house practices of the sector. The objectives were to support customers when making choices about funerals and to ensure that the pricing, business and commercial activities of funeral directors were exposed to greater public and regulatory scrutiny. We were initially minded to consider price controls but decided not to because the later stage of the inquiry was during the COVID-19 pandemic when the sector was under particular pressures.

So, we had a market which was clearly not working well – highly vulnerable consumers paying more than they should and sometimes receiving poor quality services. Was this a gap that Competition Act powers were unable to address? Yes, there were no anti-competitive agreements or dominant players. Did our market investigation help address the problem? We think so – by imposing transparency remedies that could not have been introduced under Competition Act powers. In a later review we found that that the remedies were having a constraining effect on funeral prices with a real terms reduction after many years of price rises.


Now a market where there was probably a dominant market position but no abuse and where remedies would have been extremely difficult under the prohibitions even if there had been an infringement.

4 airports owned by the British Airports Authority (BAA), a privatised company, accounted for 90 per cent of airport passengers in south-east England and 3 BAA airports accounted for 84 per cent of airport passengers in Scotland. Our predecessor body, the Competition Commission (CC), concluded that common ownership precluded effective competition between these airports with consequences reflected in BAA’s performance – lack of engagement with its airline customers, insufficient strategic management, inefficient investment, and an unsatisfactory passenger experience.

The CC required the divestiture of Gatwick and Stansted in the south-east and either Edinburgh or Glasgow. We later commissioned independent experts to evaluate the effectiveness of the remedy. They concluded that all 3 of the divested airports had grown passenger numbers above levels at comparable airports. This led to quantifiable benefits relating to improved connectivity and choice and downward pressure on fares that would total around £870 million by 2020 [Footnote 4].

While BAA was probably dominant in the south-eastern and Scottish airport markets, there was no obvious abuse that would have satisfied the Article 102 test. Instead we had inefficiencies and low quality with detrimental impacts on other businesses and UK consumers. The market investigation tool allowed us to address poor outcomes resulting from inadequate competitive pressures in a way that other instruments would not and gave us a remedy not practically available under other instruments.

I now turn to 4 specific areas of interest:

  • the test for poor market functionality
  • remedies
  • protecting the interests of businesses
  • the relevance of all this to digital markets

Well functioning market

The CMA is required to decide whether there are features of a market that prevent, restrict or distort competition. If so, there is an adverse effect on competition (AEC). Although the language is similar to Article 101, the focus is on whether the market as a whole is working well rather than whether specific firms are compliant with a legal requirement,

A feature of a market can be its structure, as with airports, but it could be the conduct of suppliers or customers. Market outcomes, such as prices, profits, quality and innovation are not market features but indicators of whether competition is working effectively.

As originally envisaged, the regime was particularly aimed at structural problems in oligopolistic markets. This has been an important focus although we have also considered monopolistic markets such as airports and more fragmented markets such as funerals.  

In recent years, there has been an understanding that a categorisation of competition issues as either structural or behavioural is too simplistic. Competition problems often arise from a combination of features – concentration, combined with difficulties in switching, lack of transparency of charges and barriers to entry. Behavioural economics has given us a greater appreciation that consumer behaviour can be an important impediment to effective competition and this is taken into account in our assessment of market features and remedies.

In the funerals market an important feature was the vulnerability of customers which made it difficult for them to shop around even though there were alternative sources of supply [Footnote 5]. When we considered retail banking services we found that, although around 90 per cent of standard account customers could make substantial financial gains from switching banks, they were not responding to variations in price and quality by switching [Footnote 6]. This weakened banks’ incentives to compete to gain and retain customers. The issue was not so much that banks were actively deterring switching but that customers were not inclined to do so. In a well functioning market we would expect customers to be more inclined to switch in response to variations in price and quality.

What is a well-functioning market? Perfect competition is a theoretical and unrealistic benchmark. We consider the features of a market that might prevent, restrict or distort competition and how the market might operate in the absence of those features. So, for example, in a funeral services market in which customers were more willing to shop around what would that mean for competition and with what impact on prices and quality?


The power to directly impose remedies is what distinguishes market investigations from the sector inquiries that exist in many jurisdictions. The quality of the remedies determines the effectiveness of the regime. The CMA Board would be unlikely to refer a market for investigation if any problems could not be addressed effectively through the use of remedial powers.

The focus in market investigations is forward-looking – not to rectify or punish a past infringement but comprehensively bring about a well-functioning market in the future or, where that is not possible, mitigate the harm to consumers from the market failure. Remedies may be imposed by undertakings agreed with the parties or by order. They must be effective and proportionate and we are required to consider whether certain customer benefits might be harmed by a particular remedy.

We start our assessment of potential remedies at the very beginning of the inquiry, before we have determined whether there is an AEC, giving us time to conduct in-depth analysis of potential options in consultation with relevant parties.

The strong preference is to address the cause of the AEC. In airports the divestiture created competition in previously monopolistic markets. In private healthcare we prohibited hospitals and clinicians from offering or accepting inducements to treat patients. We might impose information requirements to ensure that consumers are better informed about choices, as in funerals.

In retail banking, we required the 9 largest banks to agree common open standards for application programming interfaces, so customers could share their data securely with other banking service providers, manage multiple accounts through a single app and easily compare products. As of April 2023, over 7 million consumers and businesses were using innovative open banking enabled services to manage their money and make payments. The UK’s fintech sector has achieved a world leading role in leveraging open banking technology.

Where it is not possible to directly address the cause of the AEC, we consider measures to mitigate customer harm. In our recent investigation into mobile radio services to the UK emergency services we found a virtually unconstrained monopoly with the supplier making a supernormal profit of around £1.27 billion over a 9 year period. There was no short term way of addressing this by increasing competition. We imposed a price control, limiting the price of the services to a level that would apply in a competitive market.

This year a number of improvements to the remedies regime will be introduced. These include the opportunity to accept binding commitments during the investigation; the ability to conduct remedy trials; the power to vary undertakings or orders up to 10 years after the end of the inquiry and the ability to fine firms that do not comply with orders.

A challenge is how we effectively oversee the implementation of long term behavioural remedies, for example the open banking remedy. A competition authority exercising its general competition powers is better geared towards one off interventions than long term remedial oversight. The ideal is where we can ensure the appointment of an independent oversight body overseen by a sector regulator but this is not always possible and one has to be prepared to learn and adapt to get this right.

Protecting businesses

Market investigations play an important function in protecting consumers, particularly salient during a time of cost of living pressure. There may be additional beneficiaries such as small businesses, taxpayers and shareholders

These benefits come at a cost. Businesses who have done nothing unlawful, and are not parties to transactions leading to structural market changes, can be subject to investigations that are costly, time consuming and might be reputation damaging. The remedies can be highly intrusive including, in the most serious cases, divestiture and price controls.

There are therefore important procedural safeguards. A market investigation reference must be made by the CMA Board or a sector regulator – not CMA executives. The investigation is conducted by members of an independent panel of experts that I chair. This includes people with significant relevant experience including law, economics, business, finance, academia, accountancy and consumer advocacy. The inquiry group operates independently of the CMA Board. It must give parties affected the right to be heard, including orally, and the right to see, and comment on, provisional findings prior to any determination being made. The procedure is highly transparent with relevant evidence and working papers published on the CMA’s website.

The legality of the process can be judicially reviewed before a specialist tribunal – the Competition Appeal Tribunal. Such challenges are not unusual and, while the CMA has a good track record of success, this is not always so, for example, in private healthcare a divestment requirement was quashed.

Digital markets

We are currently conducting 2 investigations in digital markets with some of the biggest global companies as parties [Footnote 7].

But the challenges presented by digital markets cannot be solely addressed by an investigatory system designed around one-off interventions even where, as with open banking, one can build in longer term oversight of remedies. Market investigations are also not always optimal in fast moving markets where more rapid interventions may be required.

New UK legislation will allow for ex ante regulation of firms with market power in a digital activity. There will also be an investigatory tool, similar to a market investigation – pro-competition interventions (PCI). PCI investigations will have a shorter timeline than market investigations, but the same remedial powers. They will enable us to address the root cause of market power and promote dynamic competition and innovation. Remedy options could include personal data mobility and interoperability – critical in addressing features, such as barriers to entry, which prevent innovative new competitors driving greater competition.


A challenge for competition authorities in an age of populism and mass social communications is to demonstrate that our activity is relevant to the lives of ordinary citizens. It is too easy for our work to be seen as technocratic, based on legal and economic concepts to which people cannot relate. Market investigations are not a substitute for competition prohibitions, but a helpful adjunct allowing us to address real world impacts of potential market failures in a way that resonates with citizens. 

This matters to businesses. There is widespread distrust of market mechanisms, many people feel powerless when faced with markets controlled by strong businesses or where there are consumer vulnerabilities. A competition authority able to intervene when markets are failing can help build trust and consumer confidence which businesses need if they are to thrive.

This also benefits the wider economy. As we saw in airports and retail banking, remedies that help that markets work more effectively support productivity and growth.

In this way, a market investigation tool can contribute to improving prices and quality for consumers; supporting small businesses; building trust in markets for the benefit of all businesses and advancing economic growth.


[1] Lord Sainsbury of Turville, Hansard 18 Jul 2002, column 1513

[2] Funerals Final Report paragraph 7.119.

[3] Funerals Final Report paragraph 8.33.

[4] Ibid, at 1.13.

[5] See Funerals Final Report at 3.87 to 3.90.

[6] See Retail Banking Final Report at 5.143.

[7] Mobile browsers and cloud gaming opened 10 June 2022; Cloud services market investigation, opened 5 October 2023.


Channel website:

Original article link:

Share this article

Latest News from
Competition & Markets Authority