In November 2013, David Currie – then Chairman of the CMA – identified the low volume of competition cases in regulated sectors: “These sectors account in total for some 25% of the economy. They are also typically characterised by monopolistic or oligopolistic market structures. This might suggest the need for more, rather than less, competition enforcement than in other parts of the economy.”[1]
From 2004 to 2013, sectoral regulators issued just two infringement decisions, despite receiving almost 50 substantiated complaints of anti-competitive behaviour.[2] The OFT’s former Chief Executive Officer, John Fingleton, identified a ‘chicken-and-egg’ problem of enforcers being reluctant to bring competition proceedings in regulated sectors where there were few competition precedents, which in turn contributed to the lack of competition cases.[3] Others suggested that sectoral regulators preferred to rely on their non-competition powers.
Enhanced Concurrency
To address these concerns, the Enterprise and Regulatory Reform Act 2013 (ERRA) aimed to “enhance competition and make markets work more effectively in the regulated sectors,”[4] including greater competition enforcement among the (currently) nine sectoral regulators.[5]
The ERRA introduced a requirement for sectoral regulators to consider whether it is more appropriate to use their powers under the Competition Act 1998 (CA98) in a particular case, rather than sector-specific regulation. If so, CA98 powers must be used. At the same time, the government gave the CMA a ‘strategic steer’ to work with sectoral regulators to make fuller use of competition law and afforded the CMA a ‘leadership role’ in deciding which agency should lead a particular case.
Five years after the ERRA came into force, the Department for Business, Energy & Industrial Strategy (BEIS) is carrying out a review of the UK’s competition regime. Its April 2018 Green Paper, ‘Modernizing Consumer Markets,’ asks whether “the 2014 reforms to the competition regime helped to deliver competition in the UK economy for the benefit of consumers.” As the Green Paper notes, the Secretary of State has the power to withdraw concurrent CA98 powers from sectoral regulators. So where does concurrent competition enforcement stand?
[1] David Currie, The new Competition and Markets Authority: how will it promote competition? Speech, Beesley Lecture, 7 November 2013.
[2] See Office of Rail and Road, English Welsh and Scottish Railway Limited (2006); and GEMA (now Ofgem), National Grid (2008), upheld on appeal. Both of these cases concerned abuses of dominant positions.
[3] John Fingleton, Challenges and opportunities for the competition regime, Speech, King’s College, 5 July 2010.
[4] CMA, Baseline annual report on concurrency, 2014, p.5.
[5] These are the Civil Aviation Authority (CAA), Financial Conduct Authority (FCA), NHS Improvement (NHSI), Northern Ireland Authority for Utility Regulation (NIAUR), Ofcom, Office of Rail and Road, Ofgem, Ofwat, and the Payment Systems Regulator (PSR).