Competition Policy 2020-

UK society and its economy faced three serious challenges as the 2020s developed:   Climate Change,  Brexit and the COVID-19 virus.   This web page describes how competition policy developed in response. to those challenges, and in other ways.

COVID-19

The CMA responded quickly to the issues raised by the arrival of COVID-19, threatening action in response to price gouging, and announcing that no enforcement action would be taken against businesses cooperating so as to reduce damage to consumers and others.  (In the case of price gouging, a Georgia (USA) man who bought 200,000 face masks for $2.50 and sold them for $5.00 was charged with committing an offence but this could not then happen not in the UK as such profit incentives were expected to rapidly increase supply of a most needed product.)  Further detail is in a note by Tasneem Azad.

But the CMA's bid for 'temporary new laws' met a cool reception in Whitehall.

The CMA also - very unusually - allowed an otherwise anti-competitive merger to take place on the grounds that one of the companies would fail in the absence of a cash injection, and no other source of funds, nor any other likely purchaser, was available.  The acquiring company was Amazon. The target was Deliveroo.  And the special circumstances were (of course) the COVID-19 pandemic and associated recession.

(Deliveroo's argument is known as the failing firm defence - or - as cynical competition experts call it - the flailing firm defence.   Competition authorities generally conclude that someone will acquire a flailing company, and so maintain competition, if the price is low enough.)

Resignation of Andrew Tyrie

The CMA's Chair, Lord Tyrie, announced his resignation in June 2020, after only around two years in the job.  He made it clear that he was frustrated by the legal limits on the CMA's powers and by the Government's (so far) unenthusiastic response to his request that he be given new powers.  These issues are discussed in my webpage summarising developments at the CMA and elsewhere before 2020

 In short, though, he had bid for powers to intervene decisively on behalf of the consumer - but without first carrying out a detailed investigation - which one commentator described as 'untrammeled'.  It is not surprising that he hit obstacles which he found frustrating. 

He had, however, suggested some interesting ways in which the CMA might more effectively regulate the digital economy and it will not be surprising if these are taken forward by the Government.

The resignation of a Chair of such a prominent and important regulator was undoubtedly unusual and striking, and became all the more so when it transpired that he had in fact been forced out by 'a rebellion' by the CMA's senior executives - presumably supported by the non-execs on the CMA's Board. The 'rebellion' included an approach to the Business Department who must have sided with the execs.  There had clearly been a pretty serious personality clash between the serious-minded and 'political' Chairman and the equally serious-minded economist Chief Exec.  Different characters might have found some room for compromise.

The Penrose Review

The Treasury announced on 14 September 2020 that John Penrose MP had been asked to examine UK competition policy with a view to 'cement[ing] the UK’s position as a leader in this field'.  The review would 'consider ways our regime could evolve in the context of Covid-19 and the end of the [Brexit] transition period'.

It looked very likely that the conclusions of the review had already been decided as:

C. Three months before the end of the Brexit transition period was, of course, far too late to begin such an important review.

 

Martin Stanley

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