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1. Summary
On 20 January 2026, the UK's Department for Business & Trade ("DBT") launched a consultation on a significant overhaul of the Competition Market Authority's ("CMA") regime, aiming to "promote effective competition, support economic growth, and deliver benefits for consumers and businesses, while maintaining the independence of the CMA".
As part of the consultation, DBT is seeking views on a package of reform proposals to improve the UK's competition regime with responses invited by 31 March 2026. Although the changes will take time to come before Parliament, these proposals will in the meantime serve as informal guidance to businesses on the CMA's policy direction in mergers and markets cases.
2. Key Proposed Changes
The proposed reforms should be viewed in the context of the Government's Strategic Steer and the CMA's own programme of reform. The final Strategic Steer, published on 15 May 2025, identifies economic growth as an overriding national priority and calls on the CMA to exercise its functions in a manner that supports business confidence and investment.1 The CMA's Chief Executive, Sarah Cardell, has articulated the authority's "4Ps" framework for delivering meaningful change, focusing on pace, predictability, proportionality and process.2 Against this backdrop, the key proposals outlined below are intended to enable faster and more efficient decision-making, provide greater clarity as to the CMA's remit and approach, reduce unnecessary burdens on businesses, and promote open and constructive engagement between the CMA, businesses and investors.
The proposed reforms are as follows:
- Clarifying the merger jurisdictional thresholds by specifying which factors should be considered in relation to the share of supply and material influence tests
- Replacing Panel-led Inquiry groups in Phase 2 merger and market investigations with new sub-committees of the CMA Board
- Replacing market studies and investigations with a single-phase market review tool
- Sunset clauses must be considered when designing remedies and future remedies should be reviewed at least once every 10 years
- The CMA to be given stronger powers to investigate algorithms across its competition and consumer protection responsibilities
- Other procedural reforms to merger and markets processes.
A. Clarifying merger jurisdictional thresholds
The Government has proposed reforms to the share of supply and material influence tests set out in the Enterprise Act 2002 ("EA") with the CMA stating that these changes are intended to increase business confidence in self-assessing whether a transaction is subject to CMA jurisdiction3. The reforms are aimed at improving predictability in the UK merger control regime as the tests have been criticised as being too broad and lacking clarity, making it harder for businesses to know whether their transaction is likely to be caught.4
The proposals would require the CMA to rely on a defined, exhaustive list of criteria when applying the share of supply test, removing the current ability to assess shares of supply by reference to "some other criterion, of whatever nature"5. Instead, the CMA would be limited to the established criteria already set out in the EA, namely value, cost, price, quantity, capacity and the number of workers employed, which should reduce uncertainty in how the 25% share of supply threshold, as well as the share of supply element of the hybrid Digital Markets, Competition and Consumers Act 2004 ("DMCCA") jurisdictional test, is applied.
Similarly, the Government proposes to place the material influence assessment on clearer statutory footing by introducing a closed list of factors that the CMA may consider when determining whether an acquirer has the ability materially to influence the commercial policy of a target. These factors include shareholding or voting rights thresholds, board representation or appointment rights, special voting or veto rights, access to confidential strategic information, and commercial, financial or consultancy arrangements. Codifying these factors would largely reflect existing CMA practice but would provide greater legal certainty for businesses when structuring transactions and assessing regulatory risk.
B. Replacing decision-making structures
A central feature of the proposed reforms relates to structural changes in CMA decision-making, particularly in Phase 2 merger and market investigations. Under the current system, such investigations are led by members of an independent Panel of around 30 experienced members appointed by the Secretary of State. Although this model provides external expertise, it also means that the CMA's senior leadership, who are accountable to Parliament, cannot participate directly in some of the authority's most significant decision making functions. For businesses, this division between operational responsibility and formal accountability can create uncertainty around ownership of key outcomes.
The consultation proposes to replace these Panel-led Inquiry Groups with sub-committees of the CMA Board. These sub-committees would be appointed by a Mergers Board Committee and a Markets Board Committee and would be empowered to take substantive Phase 2 merger decisions as well as decisions under the proposed single-phase market review tool. The reform is intended to ensure that those ultimately accountable to Parliament are directly involved in major mergers and market reviews, improving the consistency of CMA decisions.
However, while the proposed shift to CMA Board sub-committees is intended to enhance accountability, it raises questions around procedural fairness. The UK merger control regime continues to lack certain safeguards commonly found in other jurisdictions, such as a general right for merging parties to access the authority's file or a merits-based appeal against adverse decisions. The reform package does not introduce any alternative institutional safeguards to offset the removal of Panel-led Inquiry Groups, e.g., access to file in Phase 2.
Consolidating decision-making within CMA Board sub-committees may increase consistency, but it also risks entrenching early analytical assumptions, as a smaller group of senior officials may carry forward initial positions into final decisions. This concentration of decision-making influence could limit flexibility in complex cases and reduce the ability of businesses to correct or challenge preliminary assessments, particularly in the absence of any merits-based review.
While judicial review of Phase 2 decisions before the Competition Appeal Tribunal will remain available, it is limited to procedural legality rather than substantive merits, something which had previously been justified by the Government partly because of the Panel model. Consequently, successful challenges typically result in remittal to the CMA rather than a definitive resolution, prolonging uncertainty. Under the proposed move to CMA Board sub-committees, this risk may be amplified, as any remitted case would return to the same decision-making body, potentially reinforcing prior analytical positions and extending the overall regulatory process.
C. Streamlining the market review regime
The CMA has also proposed reforms designed to streamline market investigations. Under the existing regime, the CMA must decide at the outset whether to launch a market study or a market investigation, often before it has access to compulsory information-gathering powers. This creates a risk that the CMA either embarks on a market study that later proves insufficient or initiates a full market investigation that ultimately turns out to be unnecessarily onerous, in both cases adding delay and cost for affected businesses. Further inefficiencies arise from the transition between the two processes, which are overseen by different decision-makers, the CMA Board and the independent Inquiry Group consisting of CMA Panel members, resulting in an inevitable loss of momentum.
The proposed single-phase market review is intended to address these issues by allowing the CMA to assess markets in a more flexible manner, while retaining robust procedural safeguards, including evidential thresholds, statutory consultation requirements and parties' rights of defence. In most cases, the end-to-end review is expected to conclude within 18 to 24 months, compared with more than 30 months under the current regime, with a statutory time limit of 24 months and only limited scope for extension in defined circumstances. The structure of the new process would allow the CMA to identify potential adverse effects and the types of remedies under consideration at an earlier stage, providing greater transparency and predictability for businesses. Executive-led engagement would continue from diagnosis through to remedies, supporting a more participative approach between businesses and the CMA, reducing uncertainty and compliance costs. Decision-making safeguards would also remain in place, with the CMA Board retaining responsibility for launching reviews and key statutory decisions taken by a decision group including non-executive Board members and external experts. Taken together, these changes are intended to deliver a quicker, more proportionate markets regime that reduces the burden on businesses while addressing competition issues.
Although efforts to streamline the markets review process are positive in principle, investigation remedies are often technically and commercially complex. Compressing the timetable may constrain the CMA's ability to craft remedies that adequately address identified concerns, potentially affecting their effectiveness in practice.
D. Review of market remedies
A further significant aspect of the proposed reforms concerns market remedies. Under the new proposal, the CMA would be required to consider the use of sunset clauses when designing remedies and to review remedies at least once every ten years. Although the CMA currently has a statutory duty to keep remedies under review, there is no requirement to specify when such reviews must take place. The Government is therefore seeking to place the CMA's stated commitment to the use of sunset clauses on a statutory footing, making it a legal requirement for the CMA to consider whether remedies should fall away after a defined period unless there is good reason for them to remain in place. Where the CMA determines that a sunset clause is not appropriate, it would be required to set out its reasoning publicly, improving transparency and accountability. In conjunction, the CMA has opened a consultation on the potential removal of 33 existing remedies that may no longer be justified, which could materially reduce ongoing compliance burdens for businesses, including in sectors such as retail banking and travel. Furthermore, any departure from the ten-year review requirement would need to be justified and publicly explained, including when a review is expected to take place. These measures are intended to ensure that remedies remain proportionate, necessary and fit for purpose, while providing businesses with greater certainty and flexibility to operate and grow.
E. Increasing digital and algorithmic investigatory powers
The Government is proposing targeted enhancements to the CMA's information-gathering powers to address competition and consumer protection risks arising from the use of algorithms, which can facilitate collusion or enable harmful practices such as exploitative pricing. While the CMA already has powers under the Competition Act 1998, the EA and the DMCCA to require documents and information, investigations involving algorithms can require multiple rounds of requests and written information may be insufficient to understand systems operation.
To strengthen the CMA's ability to investigate and remedy algorithm-driven harms, the proposals would extend the enhanced powers currently available in the digital markets regime to the CMA's wider competition and consumer protection functions, allowing it to require the generation of new or simulated algorithmic outputs, mandate limited changes to how digital services are presented to users, and compel demonstrations or testing of algorithms under specified conditions. These measures are intended to improve the effectiveness of CMA investigations, while equipping the authority with enhanced tools to scrutinise complex digital conduct.
In practice, these proposals may increase the scope and intensity of regulatory engagement for businesses using algorithmic systems, particularly where investigatory requests extend beyond existing documentation to the creation of new outputs or system testing. Given that the economic evidence on algorithm-driven pricing effects remains mixed , companies may face increased compliance costs and operational disruption even where competitive harm is uncertain, underscoring the importance of robust internal governance, documentation and auditability of algorithmic decision-making processes.
F. Other procedural reforms to merger and markets processes
The reforms also introduce a series of targeted procedural changes aimed at improving efficiency, prioritisation and engagement across the mergers and markets regimes. First, statutory timetables would exclude the Christmas period from formal deadlines, providing practical relief to businesses and enabling more constructive engagement with the CMA during a traditionally constrained period. Second, changes to the concurrency framework would clarify the respective roles of the CMA and sector regulators by allowing regulators, by agreement, to assume responsibility for monitoring and enforcing market remedies in their sectors. The reform will also limit sector regulators' role in triggering market intervention to recommending that the CMA launch a single-phase market review. This is intended to reduce duplication, streamline regulatory touchpoints for businesses and give the CMA greater discretion to prioritise cases in line with its strategic objectives. Third, the Government proposes extending the period for the CMA to consider remedies at Phase 1 of a merger investigation from 10 to up to 20 working days following a substantial lessening of competition decision, with limited flexibility for parties to refine proposals. This additional time is designed to facilitate more meaningful engagement on remedies, increasing the likelihood of resolving competition concerns at Phase 1 and avoiding the cost and uncertainty of a full Phase 2 investigation.
Lastly, DBT proposes to expand the Secretary of State's oversight role for what it calls "key guidance documents" including documents such as Merger Assessment Guidelines. Currently, the CMA is only required to seek formal approval of the Secretary of State for a limited number of guidance documents concerning digital markets, civil penalties and international co-operation. DBT highlights that this proposal will improve predictability for businesses as it will strengthen the link between the CMA and Parliament's legislative intent. However, this may result in the CMA becoming more susceptible to political influence. For businesses, this shift could reduce the neutrality of regulatory decision-making, particularly in high-profile or politically sensitive cases. Greater ministerial involvement in core guidance may introduce policy-driven considerations into merger assessments, increasing regulatory risk and making outcomes harder to anticipate.
3. Next Steps
DBT's consultation closes on 31 March 2026, with further detail expected to emerge thereafter as draft legislation and updated CMA guidance are developed. While the precise timing and final scope of the reforms remain subject to change, the direction of travel is clear, with an emphasis on faster, more predictable processes for businesses, enhanced efficiency of the CMA and closer scrutiny in digital markets. While these objectives are welcome, some elements of the proposals may heighten concerns around procedural safeguards, which could affect business confidence. These issues are likely to be a focus of debate as the reforms take shape in the coming months. Businesses may therefore wish to begin considering how the proposed changes could affect future transactions, market conduct and compliance strategies, particularly in relation to merger planning, long-running market remedies and algorithmic systems. We will continue to monitor developments closely and provide further updates as the reforms progress.
Footnotes
1 https://www.gov.uk/government/publications/strategic-steer-to-the-competition-and-markets-authority
2 https://www.bakerbotts.com/thought-leadership/publications/2025/november/cma-updates-merger-guidance
4 https://www.bakerbotts.com/thought-leadership/publications/2025/november/cma-updates-merger-guidance
6 www.oecd.org/daf/competition/algorithmic-competition-2023.pdf
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