Government departments urged to consider what impact new policies might have on competition

The Competition and Markets Authority (CMA) has published new guidelines (57-page / 1.24MB PDF) for government departments on what things they should consider when assessing whether or not their proposals will impact on competition.

"The CMA is keen to promote competitive markets and, as government itself recognises, the policies developed by other parts of government can help or hinder that," John Kirkpatrick, senior director in research, intelligence and advocacy at the CMA, said.

"These guidelines are intended to help policymakers assess the impact policy proposals may have on competition, whilst achieving their original public policy goals. We will continue to work with government departments to assess specific policy proposals as they arise," he said.

The new guidelines encourage policy makers to conduct an "initial screening" exercise to determine whether a market could be affected by their proposals.

The CMA said that policy plans could raise competition concerns if the measure would directly or indirectly limit the number or range of suppliers in a market, limit suppliers' ability to competitive, their incentives to "compete vigorously" and/or restrict "the choices and information available to consumers".

If the initial screening exercise flags any of these concerns then government departments should carry out "an in-depth competition assessment", the CMA said. This will involve them identifying the market or markets where competition would be affected, establishing "a baseline" measurement of competition in those markets and then conducting "an assessment of the likely impact the policy will have on the market compared to the baseline", it said.

"Where a proposal is likely to adversely affect competition in an affected market, policymakers should consider whether there are alternative proposals that will achieve the same policy objective but with less adverse effects," the CMA said.

"Ideally, alternative policy proposals should be identified that have a less adverse effect on competition but still enable policy objectives to be achieved. If this not possible, then, as a principle of good policy making, it is important that the issue is raised in discussions with decision makers and there is a clear justification as to whether and why other considerations are trumping the impact on markets," it said.

The CMA was handed the power to make written recommendations to UK government ministers on how legislative plans before the UK parliament could impact on competition in UK markets earlier this year.