On 1 April 2014 the Competition and Markets Authority ("CMA") stepped into the arena as a major new player in UK regulation. Replacing the Office of Fair Trading (“OFT”) and the Competition Commission ("CC"), the CMA will now be responsible for competition and market investigation and merger regulation.
April brings not only the introduction of a new regulatory body, but a raft of changes to the investigatory powers and sanctions available for merger and competition regulation. In what is already a heavily regulated field, a number of the changes will increase the burden on organisations, whilst others seek to remedy what have been perceived as flaws and gaps in the regime that the OFT and CC operated within.
Below are three key changes to note:
1. Competition investigation
Prompted by governmental concern that not enough competition cases are brought before the courts, and those that have been have involved protracted proceedings, the investigation of competition cases will be boosted by measures, including:
- Powers to issue procedural fines e.g. where parties fail to disclose information on time
- The CMA will now publish details of its caseload, including parties' names, the context of the investigation and the anticipated timescale for resolution
- The CMA will be able to hear oral evidence, where historically it was reliant on written evidence.
The changes are likely to incentivise businesses to actively engage with the new regulatory body and give the CMA greater powers if they do not. There is also a greater PR risk for organisations to consider.
The CMA will have greater powers to look at mergers that have already taken place but have not yet been notified. The obligation to notify the CMA of mergers remains voluntary but there will be increased impetus to do so given that the CMA will be able examine mergers that have taken place and impose sanctions, such as preventing integration of merged businesses and fines of up to 5% of combined worldwide turnover, for breaching such restrictions. However, where a merger is being investigated, there will hopefully be a greater level of understanding of the issues as decision makers will now be able hear representations directly from the parties involved where historically parties had relied on the oft to relay them.
3. Criminal cartel offences
For individuals the most notable of the changes is the removal of the requirement to prove 'dishonesty' in criminal cartel proceedings. In a clear move to make the offence more easily prosecutable, dishonesty has been replaced by a requirement for secrecy. As such there will be increased incentive for individuals to comply with internal competition policies. This evolution in competition and merger regulation offers both substantive and procedural change.
Keep ahead of the changes
To avoid being caught out by the changes, where appropriate:
- Notify early to prevent post-merger disruption and uncertainty
- Engage with the CMA to avoid fines and bad publicity
- Make sure staff are fully informed about internal competition policies.