A trio of consultations looks at fundamental changes to the CMA
The new UK government has announced three significant consultations to changes in operations of the Competition and Markets Authority (CMA), and the operation of key competition legislation including the Digital Markets, Competition and Consumers Act 2024 (DMCC Act).
Consumer enforcement changes
The Direct Consumer Enforcement consultation looks at the operation of significant new powers granted to the CMA via the DMCC Act. This new legislation allows the CMA to directly decide whether a law has been infringed, a shift from the previous regime where only a court can make such a determination. The CMA will have increased powers to request information and make determinations about infringements. If the case goes to court, then the courts will now have the power to issue fines for breach of the law of a fixed amount of up to £300,000 or, if higher, 10% of turnover. Also the court can issue a fine for a breach of an undertaking of £150,000, or 5% of total turnover.
These new powers for the CMA to directly decide whether or not consumer protection laws have been broken and impose their own fines mirror the CMA’s existing competition powers. It also simplifies the scope of the existing court-based regime, whether other key public bodies including the Financial Conduct Authority (FCA) and the Information Commissioner (ICO), will be empowered to seek enforcement orders from the courts and request the imposition of fines.
The consultation on these changes will run until 11 September 2024.
Mergers and acquisitions changes
Further changes introduced by the DMCC Act concern mergers and acquisitions. Currently, the CMA’s guidance on its approach to the mergers regime is set out across a range of guidance documents. As a result of the DMCC Act, the CMA has developed a draft package of new mergers guidance including general guidance on the CMA’s jurisdiction, rules of procedure, and a quick guide to UK merger assessment. Some of the changes introduced by the DMCC Act include the increase in the jurisdictional turnover threshold from £70m to £100m, the new safe harbour threshold, which will exclude certain mergers from merger control, and the CMA’s enhanced penalty powers for failure to comply with interim measures and information gathering requirements, and the new penalty powers for breaches of undertakings and orders.
This consultation will run until 12 September 2024.
Changes to investigations
The CMA is also consulting on changes to investigation procedures under the Competition Act 1998. A number of changes have come about which necessitate the update, including changes to the requirement for agreements, decisions and practices to be implemented in the UK, the duty to preserve documents relevant to investigations, the power to interview any individual irrespective of whether they have a connection to a business under investigation and enhanced power of production during an inspection in relation to information in electronic form which is accessible from the premises.
The CMA is also consulting on changes to the settlement policy, where a business under investigation admits that it has breached competition law and accepts a streamlined CMA investigation in return for a reduced penalty. This includes a requirement that the settling business confirms that it accepts that it will not challenge or appeal the infringement decision to the Competition Appeal Tribunal. The CMA is proposing an increase in discounts for settlements of up to 40% for a business which settles before a statement of objections and 25% for a business which settles after a statement of objections has been issued.
This consultation will run until 13 September 2024.
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