Refining the UK Merger Regime: The Impact on the CMA’s Independence

In the latest ThoughtLeaders4 Competition quarterly magazine, European experts Fabrizio Vaselli and Daniel Westrik examine what the CMA’s merger outcomes reveal about the independence of the current merger regime and highlight potential risks associated with the proposed removal of the independent panel in Phase 2 merger investigations that will now be taken forward in the UK Government’s Competition Reform Bill. This article draws on Econic Partners, LLC’s response to the UK Department for Business and Trade’s consultation ‘Refining our Competition Regime’.

Introduction

Will the Government’s proposed reform of the Competition and Markets Authority (‘CMA)’s governance achieve its stated objectives – greater accountability, predictability and speed of decision making – if the CMA’s independence is compromised?

The Government is consulting to change the CMA’s governance structure by replacing independent panel members (‘Panel’) as decision makers in Phase 2 merger investigations and the new single-phase market review tool with sub-committees of the CMA’s Board, composed of (i) senior CMA staff (such as the CEO or Chair), and (ii) non-executive members of the CMA’s Board and/or non-CMA staff experts, accounting for at least 50% of the Sub-committee.

According to the consultation, the reform would have three objectives: (i) greater accountability, given that senior CMA staff (who are ultimately accountable to Parliament) are directly involved in the most significant mergers and markets decisions; (ii) greater predictability and consistency; and (iii) a faster decision-making.

But what about independence?

Independence does not explicitly feature among the stated objectives of the Government’s reform of the CMA’s Mergers and Markets regimes, nor are the effects of the reform on the CMA’s independence discussed in the consultation. Yet independence is crucial for the credibility of any authority such as the CMA.

Compromising independence would not only be undesirable, but also likely to undermine the very objectives the reform seeks to achieve. When decisions are more easily influenced by political interests or lobbying, (i) the CMA becomes less accountable for its own decisions, as politics and/or lobbying play a part in the decision making, (ii) outcomes might differ across factually similar cases  (i.e., less predictability); and (iii) appeals and remittals might increase if the courts remain independent (i.e., lower speed). 

The central question is, therefore: does the reform strengthen or weaken the CMA’s independence?  

Read the full article here.

The views and opinions expressed in this response are those of the authors and do not necessarily reflect the views of Econic Partners or its clients.

This article was first published in ThoughtLeaders4 Competition Magazine here.