Out-Law News 2 min. read

NAO report contains mixed review of UK competition authority's activities, says expert

A recent review of the work undertaken by the UK's Competition and Markets Authority (CMA) has revealed mixed results, an expert has said.

Competition law expert Guy Lougher of Pinsent Masons, the law firm behind Out-Law.com, said that the National Audit Office's report on the UK's competition regime (55-page / 582KB PDF) reserved some praise for the work being done by the CMA, but that it also highlighted issues the authority should improve on.

"There is acknowledgment of the scale of the challenges facing the CMA, and for the fact that its creation has not led to significant disruption in its competition work," Lougher said. "There is also praise for the CMA in several areas, especially in its mergers work, its dealings with other concurrent regulators and in improving the robustness of its decision-making. But the NAO report identifies the need for more antitrust enforcement by the CMA and sector regulators, and highlights the low number of competition enforcement decisions and the low level of fines imposed by the CMA when compared to its counterparts in other jurisdictions."

According to the NAO's report, the CMA is "investing 16% of its front-line competition resources" into its continuing market investigations in the energy and retail banking sectors. It said that "businesses are also incurring substantial unmeasured costs" as a result of the investigations.

In its report the NAO compared the number of enforcement decisions issued by competition authorities in the UK with their counterparts in Germany and France. According to its analysis, German authorities issued 36 enforcement decisions in 2013, compared with 23 in France and 3 in the UK. In 2014, there were five enforcement decisions issued by UK authorities, whilst regulators in Germany and France issued 29 and 22 respectively.

"The UK competition authorities issued only £65 million of competition enforcement fines between 2012 and 2014 (in 2015 prices), compared to almost £1.4 billion of fines imposed by their German counterparts," the NAO's report said.

The NAO said that the UK government should step in to help improve the "flow of enforcement decisions" in the UK if action the CMA is itself taking does not result in a "significant" increase in the number of enforcement decisions issued. Specifically, the government should consider "removing any legislative or institutional barriers" that are the cause of the low flow of cases, it said. It said the low flow of cases has a bearing on the value for money derived from the CMA's work.

"The CMA should take further action to step up the flow of successful enforcement cases," the NAO said. "Caseflow has been low for a long time and it is important to convert the pipeline and ongoing cases into results. This could include ensuring dedicated, tightly‑focused, expert teams for the most high-impact cases, led by decision‑makers with strong internal and external reputations. The CMA should continue to develop its understanding of how leading European counterparts manage their enforcement casework, and review its own approach in light of lessons learned."

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