Competition Markets Authority
Welcome everyone and thank you for joining us today. Its an honour to chair the UKs Competition and Markets Authority as we reach 10 years in action. Its a major milestone in the lifetime of any organisation particularly when we consider how much has changed in the UK, and around the world, over the last decade.
I believe we should use milestone moments like this to look forward. So, with that in mind, on the CMAs 10 year anniversary, the question I want to ask today is this: why is an independent, impartial CMA needed more than ever today and in the future?
And to discover the answer, Id like to take the vantage point of: what are the opportunities the CMA exists to create and the problems we exist to solve? And Im going to look across 3 timeframes: the past, the present, and the future. What were the big issues we tackled in the past? How have they changed today? And what are they going to be in the future?
Context setting
The CMA was formed through a merger of the Office of Fair Trading and the Competition Commission. But the goal was not simply an administrative one to improve efficiency. It was to create a single organisation with the resources, capabilities and mandate to effectively enforce the spirit and the letter of the competition and consumer protection laws that had been enacted by Parliament.
And what was Parliaments intent? I think it comes down to a clear understanding that if you want a vibrant economy, if you want a thriving society and if you want both of these to be resilient to external shocks well then you need choice, you need innovation, you need investment. And that means you need competition.
The single most effective lever, indeed, the prerequisite for driving innovation, productivity and investment, is to have free, open, effective competition in our markets. And this is inherently understood by every one of us. In life, as in business, we instinctively favour choice over constraint. Diversity over uniformity. Quality and value over rip-offs. Where we encounter barriers, we instinctively seek to overturn them. Faced with old, inefficient ways of doing things just because, we have always, in a multitude of creative and determined ways, pushed for advancement. And, where we see that some are not playing by the rules, where we see vested interests imposing their will in those situations we know that its not right, and we do something about it.
And of course, Parliament also understood that, while fair, open, competitive markets are clearly in everyones interests, well, competing day in day out is really hard work. So hard, that there will be a temptation, for those who have amassed market power, to take unfair advantage, to take shortcuts. Shortcuts to do away with competition. To lock out rivals and future challengers. To lock up a market. Competing day in day out is really hard, yes. But thats why it works. Because it forces us to deliver and to improve. And so we move forward, always.
This is the core of the fair, open and effective competition the CMA was established to protect, to foster, and of the consumer protections it was established to safeguard. Markets, where the best products and services win out on their merits. Where fair-dealing businesses can innovate and grow on a level-playing field.
And policymakers across the political spectrum understand that the investment, innovation, productivity, and growth which flow from this fair, open, effective competition are the bedrock of a thriving economy in which everyone has an opportunity to prosper.
With that in mind, what are the biggest issues, shortcuts and opportunities that the CMA has been tackling over the last 10 years?
Broadly speaking, I think these fall into 4 big categories:
First, the consolidation of market power through horizontal mergers. Situations where 2 already major players competing for customers and market share decide to try to combine their businesses. Sainsbury and Asda; viagogo and StubHub; JD Sports and Footasylum. And the common factor in these cases, usually, is that the CMAs independent panel determines that the planned consolidation causes a substantial lessening of competition, resulting in the negative outcomes I described earlier.
Second, anti-competitive behaviour. Effectively, subverting the proper working of fair, open and effective competition. Like using a dominant market position to inflate the price of life-saving NHS medicines by tens of millions of pounds. Or colluding to fix the price of football shirts, robbing fans of a fair deal. These practices are not only exploitative; they stunt the benefits of competition. They are economic sabotage.
Third, opening up markets to create that enormously powerful competitive tension, that feet to the fire dynamism, which I saw first-hand again and again in my 30 years working with businesses of all shapes and sizes. Open banking is a terrific example, but by no means the only one. Opening up electric vehicle charging infrastructure to healthy competition. Recommendations being taken forward by government to overhaul regulation of heat networks. There are many such cases, and each have their own story to tell in terms of enabling more innovation, more choice, more investment, downward pressure on prices, and ultimately contributing to more growth across the wider economy.
And finally, shielding consumers from harm by enforcing against breaches of consumer protection law. This is another core pillar of our work, and our action here has been, and remains, incredibly wide-ranging. From care homes, package travel and events ticket sales; to online marketplaces and the claims companies make about the sustainability of their products, to name just a few. Consumers not only deserve to be treated fairly, but their confidence to engage in markets is a key ingredient of the growth we all wish to see. Thats also why youve seen us run national campaigns, like Online Rip-Off Tip-Off, to make sure people know their rights and how to protect themselves.
So, these have been the fundamental opportunities that the CMA has been enabling, the fundamental challenges that we have been tackling. And they continue to keep us busy.
But the big issues the CMA is tackling today have also shifted in 3 ways. This reflects the macro-economic forces underway that will shape our economy and society for years to come - in particular, heightened economic and geo-political volatility, the continuous, accelerating technology revolution, and a destabilising climate.
With the CMA coming under new leadership in 2022, we thought hard about how we should anticipate these forces, and adapt what we do and how we do it, to make sure we can continue to drive the positive outcomes we all wish to see for this country. And so at the start of 2023, we set out a new long-term strategy.
Our strategy has a clear purpose: to help people, businesses and the UK economy by promoting competitive markets and tackling unfair behaviour. We set 3 ambitions, with tangible outcomes were committed to help deliver over the medium and long-term. Those ambitions help us prioritise and focus our actions on the areas that really matter for people and business in the UK, and where the CMA can have the most positive impact in line with the duties given to us by Parliament.
So, what are the 3 ambitions, and how are they driving the CMAs focus today?
First, to ensure people can be confident they are getting great choices and fair deals
In todays times of economic hardship, that means you see us focusing on areas of essential spend: having somewhere to live, feeding and caring for ourselves and our families, being able to travel and get around, buying the things we need online. Making recommendations for government on bringing down some of the barriers to getting more homes built and making those homes more affordable. Stepping in to drive more transparency and choice in petrol and in the groceries we buy every day. Investigating the markets for funeral care and vet services areas close to our hearts, where we may be particularly vulnerable to exploitation.
Alongside these, weve also seen a shift toward tackling ever more sophisticated, often technology-enabled, methods used by unscrupulous actors to mislead or exploit when we buy goods and services online. Dark patterns in online choice architecture, misleading or pressurising online sales tactics, fake reviews, drip pricing. It is challenging to stem the proliferation of these sorts of harms, but we are constantly alert and active here today.
Our second ambition is for competitive, fair-dealing businesses to be free to innovate and thrive
You will not be surprised that the biggest shift here has been the way we approach digital markets. We know and understand a great deal now, which was not clear a decade ago, about the unique features of digital markets from a competition and consumer protection perspective. Massive fixed costs and near zero distribution costs. Unprecedented network effects, at a global scale, thanks to the universality of the customer proposition. Leading to extremely high scalability and platform dependencies; and resulting winner-take-most dynamics. The critical strategic advantages of data and computing power - particularly where these make it