Screaming Lord Sutch, founder of the Monster Raving Loony Party, once famously asked, “why is there only one Monopolies Commission?” It was an interesting question, after all, wasn’t having one competition regulator something of, er, a monopoly. Well, back in the late 1990s, Lord Sutch’s question appeared to have some resonance as the situation was somewhat addressed by the then Labour Government who, in effect, split the ‘monopoly’ and divided the responsibilities of competition law enforcement between two bodies – the OFT and the Competition Commission (CC).
So who knows what Lord Sutch would have made of yesterday’s development, which marked one of the biggest changes in competition regulation regime in decades, with the merger of OFT and CC to form the new single UK antitrust authority – the Competition and Markets Authority (CMA). Whilst the new Authority will not take on any new cases until April 2014 (it is still working through the respective backlog of market studies and investigations of the OFT and CC), it is now officially in existence and will set about delivering on its functions of enforcing antitrust breaches and identifying markets not working well in the interests of consumers or businesses.
Why does this change matter – some would ask? Regulatory bodies come and go – or be renamed and reformed by politicians – with relative frequency and the same people seem to carry on running them and operating in the similar fashion. The creation of the CMA, however, appears to be quite significant, particularly for all those involved in M&A and antitrust activity. Firstly, the CMA will be keen to prove itself as a robust, tough regulator with new statutory powers of enforcement against cartels and price-fixing companies. The CMA will, in particular, be aiming to avoid some of criticisms leveled at the OFT over its handling of its only previous contested trial (the collapsed price-fixing case against British Airways in 2010) by taking advantage of new Government reforms in competition law making it easier to bring criminal cases.
Secondly, the CMA has indicated that it will take a greater and more proactive role in ‘sectoral regulation’ and ensure that market regulators such as the FCA and Ofgem enforce competition powers much more effectively. The CMA’s Chairman Lord Currie recently pledged to target the banking, energy and transport industries and issue them with “heavy penalties” if they are found to be anti-competitive. The stated focus on the banking and energy sectors, in particular, is significant – with the two industries attracting much anger and negative attention from politicians and the media in recent months and years.
Indeed, it could be argued that the role of effective competition regulation has never been more important as a political issue, in terms of its impact on consumer trust, prices and on the cost of living – issues which are dominating the political agenda (after all, just witness the recent announcements from all parties at this year’s party conferences). Time will tell if the new ‘monopoly regulator’ is up to the job…