Two thirds of businesses do not know that the Competition and Markets Authority (CMA) enforces competition law in the UK; two fifths have never heard of it, and one in ten discuss prices with their competitors because they do not know the practice is illegal.
In a new report with the Policy Institute at King’s College London and Centre for Policy Studies think tank, Andrew Tyrie expresses his concern that the CMA’s effectiveness will be eroded without urgent reform. Its relative invisibility currently undermines the CMA’s capacity to deter uncompetitive and unfair trading. Consumers, and the economy as a whole, are both paying the price.
In the report, Tyrie, who chaired the watchdog from 2018 to 2020, makes many recommendations for reform of the competition watchdog, which can be taken forward without further legislation.
Among his suggestions for immediate reform are greater openness to consumer complaints, through the introduction of a simple online form to alert the CMA to rip-offs in products and services; the publication of regular progress reports on its work and the state of UK markets; and far more comprehensive collection and analysis of data on the health of competition in the economy – something on which, so far, the CMA has done insufficient work.
Tyrie also reveals that decisions on which cases to investigate have been delegated to a small group of senior executives, rather than being taken directly by the CMA’s Board, as originally envisaged by Parliament in legislation. He says this practice – which has meant the CMA has taken a number of cases that have little strategic justification or connection to the lives of ordinary consumers – must end. Better, and better explained, decisions can and should result.
The CMA will need to improve its capacity to serve as a repository of expertise on the micro-economy, and also to take a much more active role in offering constructive advice to the Government, devoting more of its staff time to both tasks.
Arguing that the Chairman and the Chief Executive should be much more visibly and directly accountable (the former answerable for the choice on which cases to initiate; the latter for the subsequent decisions) he says both should engage much more vigorously than at present with Parliament, the media and the wider public.
Major legislative reforms are also needed. Tyrie set out what may be required publicly, over two years ago. He warns that competition and consumer protection policy is currently struggling to keep pace with the growing power of online platforms, and the scope for the growth in consumer detriment in much of the economy that they make possible. The Government is likely to consult shortly on legislative change. It grasps the problem; the challenge will be to legislate quickly to address it.
Taken together, these reforms could and should greatly improve the accountability, transparency and effectiveness of the CMA, hugely benefiting UK consumers, and the economy as a whole.
Releasing the report, Lord Tyrie said: “The fact that so many businesses either haven’t heard of the CMA, or don’t understand what it does, is a very concerning state of affairs and cannot be allowed to persist. It urgently needs a stronger public voice, as without it, the CMA’s ability to deter anti-competitive behaviour will be sharply reduced. Again, it is the consumer – millions of us – who lose out.
“By releasing the considerable abilities and energies of its staff with major legislative, cultural and institutional reforms, and with new priorities for its work signalled by Government and Parliament, much consumer detriment can be tackled and public trust restored and a more efficient and competitive economy will be able to develop. What’s needed has been pretty clear for a long time. With swift implementation, these reforms can transform the CMA and enable it to serve as a beacon for other parts of the regulated sector. With the Government’s forthcoming consultation pointing the way, there is now a great opportunity to tackle many of the intractable weaknesses of the current legislative and regulatory framework.”