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Deregulate mergers with a turnover less than £5 million

Reform of the competition system is needed to reduce business costs and bureaucracy to free up companies to invest so they can focus on growth and job creation, the CBI said yesterday.

In its response to the Department for Business consultation Options for reform of the competition regime, the CBI acknowledged that the UK has one of the most highly-regarded competition regimes in the world for being robust and independent, and said reforms should build on these positive features.

But the UK’s leading business organisation said the system needs to be more efficient and fast-reacting, deliver consistent outcomes so companies can invest with a high degree of certainty, and interventions must be proportionate to the perceived threat.

Matthew Fell, CBI Director for Competitive Markets, said:

“The competition regime needs to become more efficient so companies are not bogged down in unnecessary costs and bureaucracy and can focus on investment, growth and job creation.

“It’s right to cut out duplication and to streamline competition framework by creating a single Competition & Markets Authority.

“As an immediate win, the Government should deregulate small mergers to stimulate growth by encouraging acquisitions.

“Market investigations are a significant cost to business and hamper investment so should only happen on the basis of clear failures of competition, not as routine interventions.
“The antitrust regime is currently a major source of frustration for businesses, with enforcement cases dragging on far too long. There is a strong case to move towards a prosecutorial system for enforcement of cartels and abuse of dominance cases to improve robustness and speed up decision making.”

The CBI is calling for:

  • The creation of a single Competition & Markets Authority (CMA) to increase efficiency and strip out duplication
  • Deregulation of small mergers where the target company has a turnover of less than £5 million to encourage growth
  • Retention of the voluntary regime for notification of mergers, which is a strength of the UK competition system, delivering speed and reducing costs to business
  • Merger tests to be made clearer, to help companies make more accurate self-assessments using the “share of supply test”
  • Market investigations only based on clear failures of competition, with no routine interventions
  • The proposal for extension of ‘super-complaints’ to small and medium-sized companies (SMEs) to be dropped because it will not help reduce barriers to entry for these companies or promote growth
  • The antitrust regime for enforcement of cartels and abuse of dominance cases to be significantly reformed to improve the robustness of cases and speed up the decision process for business
  • Sectoral regulators to prioritise the use of competition measures before resorting to regulation.

A full copy of the CBI submission is attached.

Click here for attachments

Notes to Editors:

The CBI is the UK's leading business organisation, speaking for some 240,000 businesses that together employ around a third of the private sector workforce. With offices across the UK as well as representation in Brussels, Washington, Beijing and Delhi, the CBI communicates the British business voice around the world

Media Contact:

CBI Press Office on 020 7395 8239 or out of hours pager on 07623 977 854. Follow the CBI on Twitter at: www.cbi.org.uk/twitter

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