UK competition regulator to review approach after anti-growth criticism

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Britain's competition watchdog will seek more company mergers without forcing companies to sell assets, weeks after Sir Keir Starmer claimed the agency was hindering Britain's growth.

The Competition and Markets Authority will conduct a review in the new year into whether behavioral remedies should be used more frequently when approving deals, CEO Sarah Cardell said in a speech on Thursday.

These may include investment commitments or mandatory price freezes, but typically offer weaker consumer protections than existing requirements that companies sell parts of their merged businesses.

Every regulator in this country, particularly the economic and competition regulator, is growing as serious as this room, Starmer told global executives last month.

Before his speech at Chatham House on Thursday, Cardell defended the agency's record of supporting productive and sustainable growth.

She told the Financial Times that when setting its own strategic priorities for early 2023, it was clear that supporting productive and sustainable growth across the UK economy was a key priority for the CMA.

She added that she was not at all surprised that the government, like other regulators, should support the CMA with its growth mission.

She highlighted that prior to Starmers' latest criticism, plans were in place for next year's review, which will look at whether the sector under the regulator could be more open to behavior modification.

The agency plans to finalize the $16.5 billion deal between Vodafone and CK Hutchisons Three UK in the coming weeks, provided the combined group spends $11 billion to upgrade its UK network and commits to behavioral corrections, including maintaining certain customer tariffs. The merger is widely expected to be completed. period.

The decision marks a departure from the historical approach, which required companies to dispose of assets before a deal was approved. The UK regulator, Ofcom, is responsible for ensuring that companies deliver on their promises.

Cardell warned that he did not believe the approach to the Vodafone Three merger should be taken as an indicator of a fundamental change in approach despite the review due next year.

The CMA has played an increasingly important role in shaping the UK market since Brexit, including overseeing some of the UK's largest corporate transactions.

Last year, Microsoft came under fire for its handling of its $75 billion acquisition of Activision Blizzard.

Regulators ultimately approved the video game industry's largest deal ever, but the agency and Cardell faced criticism from business leaders, dealmakers and legal advisers for their initial moves to block the tie-up.

Cardell said Microsoft's results show that growth can be sustained with the right remedies to move deals forward while remaining competitive.

Cardell said the CMA carried out phase 1 investigations into 54 of the approximately 50,000 transactions announced in the 12 months to March 2024. Of those, only nine moved to a more in-depth Phase 2 investigation, and one Microsoft-Activision deal was initially blocked.

But she said the CMA was taking steps to better engage with businesses across sectors, including venture capitalists and the private equity industry, and could make greater use of secondments.

Next year, regulators plan to designate certain technology companies as companies with strategic market positions under the new law. This means that certain rules of conduct apply to ensure fair market behavior.

Companies must have substantial and established market power and are expected to apply to a small number of Big Tech companies.

But she emphasized that the new rules aren't just about regulating big tech companies.

She added: This is to ensure that key players in digital markets can continue to play their vital role in the UK economy in driving innovation and attracting investment. Smaller players.

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