Government announces major overhaul of UK competition policy

22 Jul 2021 01:28 PM

The UK Government has opened two consultations on reforms which would radically overhaul the UK’s approach to competition and consumer policy post Brexit.

The proposals include a new pro-competition regime for digital markets as well as proposals to reform existing competition and consumer policy.

Both consultations are open until 1 October 2021.

A new pro-competition regime for digital markets

The proposed new regime would put into statute the UK’s Digital Market’s Unit, granting it powers to support a pro-competitive environment in digital markets which the Government views as having distinct requirements over those traditionally regulated by the Competition Markets Authority (CMA). 

This consultation is the latest step towards the establishment of a new regulatory regime for digital markets building on recommendations by the Digital Competition Expert Panel, otherwise known as the Furman review as well as advice from the Digital Markets Taskforce.

The Government’s proposals centre around the creation of a targeted Digital Markets Unit which will aim to oversee the competitive environment within digital markets. This will be through a specific focus on firms which are deemed to have strategic market status, those with substantial and entrenched market power as well as holding a strategic position in the market.

The Government proposes that such status will be assigned based on the dominance of specific companies’ product(s) in a specific digital market (for example the social media, e-commerce, search engine or other markets) rather than just based on a particular company’s size or revenue. Whether strategic market status is assigned will be up to an assessment by the DMU based on. This decision will be able to be appealed.

In the consultation the Government is seeking feedback on:

The documents for the consultation can be found here.

Reforming competition and consumer policy consultatio

BEIS has also published a second consultation on Reforming competition and consumer policy.

This takes a much broader focus on competition and consumer policy with three key areas where the Government is seeking input.

The documents for the consultation can be found here.

What opportunities do these proposals present?

The consultations set out by the Government into the UK’s competition framework are well informed and particularly when it comes to digital markets build on a strong evidence base accumulated over the past few years from the Furman review through to a number research pieces and market studies carried out by the CMA, BEIS and DCMS.

The depth of research, detail in the consultation and the length of time to respond should be considered an example of best practice for future policy making. 

If got right there is an opportunity here to create an agile, targeted and informed unit aimed at ensuring the UK maintains its highly competitive digital markets, with benefits both for consumers and the industry as whole. While the wider reforms to competition and consumer policy proposed could see the UK take a more efficient approach to market enquires and enforcement action as well as updating key elements of consumer rights for the modern economy.

However, while the consultation on the DMU is focused and well informed there are a number of possible outcomes that could see the unit lose its focus particularly when it comes to its guiding principles and relationship with other regulators. The merger rules being proposed also need to be clarified particularly where these relate to the UK’s National Security and Investment Act 2021, a major piece of legislation that places strict obligations around companies when it comes to mergers and acquisitions. techUK also wants to see how these plans developed in line with the principles set out in the Govermment’s Plan for Digital Regulation.

However overall, the two proposals represent a focused well informed and targeted approach to updating competition policy in the UK post Brexit and compare favourably to similar proposed regimes in the EU and the US.

techUK looks forward to engaging with the Government over the coming months to ensure the new proposals support a highly competitive environment for technology companies in the UK.

For more details please contact techUK’s Head of Policy Neil Ross.