Clifford Chance

On 13 February, the UK Government published, for consultation, a draft "Strategic Steer" to the Competition and Markets Authority (CMA), the national competition/antitrust authority. The main focus was, in line with recent statements from UK Government Ministers, that the CMA should not impede economic growth and investment, with various suggestions about how the CMA can more effectively work with businesses, including faster investigations, more transparency, collaboration and a proportionate approach.

For M&A transactions, there are indications, in line with other recent pronouncements, that there is scope for greater flexibility and pragmatism from the CMA, with the potential for more M&A deals to be allowed to go ahead.

One particular aspect of this is worth highlighting. In recent years, the CMA has, in a number of cases - like Sabre/Farelogix, Facebook/Giphy and, to a lesser extent, Microsoft/Activision - intervened in mergers that would have had their primary impact elsewhere, often in the United States. US antitrust agencies were often opposed to these deals too, but faced hurdles in proving their case before their domestic courts. The CMA, which is subject to a lower degree of judicial scrutiny than the US antitrust agencies and, since Brexit, is empowered to scrunitise large global deals, was able to step into the breach. In Microsoft/Activision, the CMA went as far as rejecting a remedy that the European Commission had considered effective to address the same competition concerns that the CMA was considering, and insisted on a more intrusive divestment remedy. 

However, in raising its prominence in this way, the CMA also put itself in the firing line of criticism from international investors. Critics have said that the CMA was being too interventionist. Investors also maintained that CMA merger investigations are too long, overly burdensome and not coordinated enough with merger control authorities in other jurisdictions. Those investors seem to have the ear of the new UK Government, and their concerns that the CMA's interventionism may deter them from investing in the UK has chimed with the Government's drive for economic growth, including through foreign investment. This can be seen in, or reading between, a number of lines in the draft Strategic Steer. In particular:

• "The CMA should consider the actions being taken by competition and/or consumer protection agencies in other jurisdictions internationally, and, where appropriate, seek to ensure parallel regulatory action is timely, coherent and avoids duplication where these parallel actions effectively address issues arising in markets in the UK."
• "[T]he CMA should give appropriate consideration to prioritising pro-growth and pro-investment interventions [and] focusing on markets and harms that particularly impact UK-based consumers and businesses."

In practice, this seems intended to require the CMA to focus its merger investigations on cases that have a primary impact in the UK and that, where deals have their primary impact in other countries (as was arguably the case in some of the cases referred to above), being more open to alignment with the assessments and remedies devised by the antitrust agencies of those jurisdictions. The draft Strategic Steer also emphasises greater transparency, engagement with businesses and speed in procedures (in both merger reviews and investigations of competition law infringements), to reduce uncertainty for businesses caught up in CMA investigations. It remains to be seen how much will happen in reality and how quickly – but it affords businesses a basis for pointing to the imperative for this in dealings with the CMA, for example when requesting the chance to speak with senior decision-makers on a case, rather than just the most junior case handlers.

The draft Strategic Steer talks about boosting “international competitiveness” in the eight key sectors of the Government’s industrial strategy: advanced manufacturing; clean energy industries; creative industries; defence; digital and technologies; financial services; life sciences; professional and business services. This echoes the language that is increasingly being used by the European Commission in the context of merger control. It suggests that, particularly in those key sectors (which are quite a wide swathe of the economy), a degree of consolidation may be allowed more than previously if it can be shown to boost the competitiveness of UK businesses on global markets. Permitting the Vodafone/Three mobile telecoms merger last December was perhaps an early indication of this approach.

The CMA has new powers to regulate digital markets under the Digital Markets, Competition and Consumers Act 2024. The "big tech" companies that will be the primary focus of these new powers are major investors in the UK, which may explain why the draft Strategic Steer directs the CMA to use its new powers "flexibly, proportionately and collaboratively". Referring to the Government's "AI opportunities action plan", the draft goes on to say that "the development of markets driven by new and emerging technologies is not always easily predictable, [so] the CMA should take particular care to ensure growth and innovation benefits are prioritised." While the CMA's new powers to impose regulatory obligations on tech companies are subject to a light-touch "judicial review" by the courts, the draft Strategic Steer puts the CMA on notice that the Government will be judging its actions too. That should increase the CMA's incentives to develop a robust evidence base for the effectiveness and proportionality of its interventions and gives businesses a hook to insist that these ideals are met if the CMA appears to be falling short.

Overall, the draft Strategic Steer is a practical and concrete expression of the Government’s repeated insistence in recent months that the CMA should not overreach in ways that impede growth, investment and innovation. It remains to be seen how much the CMA will heed this, but the message is very clear, and can be deployed by businesses in dealings with the CMA.