Brexit presents many questions for a regulator at a crossroadsby George Peretz / November 4, 2020 / Leave a comment
One of the aspects of the controversial Internal Market Bill that has attracted little attention is its creation of another role for the Competition and Markets Authority (CMA), namely that of monitoring market access and regulatory provisions between different parts of the UK. Depending on the outcome of negotiations with the EU and the current government’s decision on a future state aid regime, the bill—by making subsidy control a UK rather than a devolved power—also potentially opens up another role for the CMA, as an independent regulator of subsidies throughout the UK. So what is this body to which so much power is potentially being given?
The CMA is the successor of bodies that have been around since the 1950s, but which from the 1970s were known as the Office of Fair Trading (OFT) and the Monopolies and Mergers Commission (and later the Competition Commission, or CC). The OFT’s role was transformed by two pieces of legislation introduced by the Blair government. The Competition Act 1998 swept away much of the previous ramshackle domestic regime and replaced it with legal prohibitions on anti-competitive agreements and abuses of monopoly power. Those provisions were based on EU competition law, which applied to agreements and abuses affecting trade between member states, and gave the OFT power for the first time to impose huge fines and order practices to stop, subject to an appeal to a new Competition Appeal Tribunal (CAT).
A few years later, the Enterprise Act 2002 generally removed politicians from other aspects of the UK competition regime (ie merger control, except in cases involving media plurality and national security, and a system for review of anti-competitive market structures and practices known as the “market investigations” regime)—where the secretary of state for trade and industry had been the final decision-maker—and gave his final decision-making powers to the CC. The latter’s job was, in essence, to carry out a detailed review of any merger or market problem referred to it by the OFT and then to impose remedies. That Act also sought to increase deterrence for those considering getting involved in secret price-fixing or market-sharing, by making it an imprisonable offence for individuals to take part in such cartels.
Finally, the coalition government decided to combine the OFT and CC into the CMA, in the Enterprise and Regulatory Reform…