In this edition of StepAhead: Antitrust and Competition Insights newsletter, we recall the remarkable events of the past two weeks at the Competition and Markets Authority (CMA). And we discuss how a new political reality in the United Kingdom will impact businesses engaging with the CMA across digital market regulation, merger control and beyond.
So, what happened?
- First, it was reported on January 21 that the chair of the CMA, Marcus Bokkerink, had been given his marching orders after an unsatisfactory meeting in Downing Street, with Labour citing a fundamental 'difference of approach' in how best to drive growth and investment.
- Second, Doug Gurr – a former head of Amazon UK and Amazon China – was appointed as Interim Chair. In a letter to the Financial Times, Gurr confirmed an immediate review of the CMA's work, so as to ensure that it makes "Good decisions, clear decisions, rapid decisions — that's what you tell us you need and that's on us to deliver."
- Third, it came to light that the CMA had massively overspent on its budget, resulting in the launch of a redundancy program that is expected to affect up to 10% of its workforce. The CMA has confirmed that the 100-strong Digital Markets Unit (DMU) will be ring-fenced, as well as mergers, meaning deeper cuts in other parts of the agency.
- Fourth, a cohort of Labour politicians requested – on January 26 – a root and branch review of all CMA case work, though the timeline and precise scope is yet to be clarified.
- Finally, the inaugural meeting of the 'Growth and Investment Council' took place on January 28 at which members of the business community met with CMA leaders, including CEO Sarah Cardell and new Interim Chair Doug Gurr, to discuss how the CMA could better support business and the Government's growth ambitions.
So, how will all of this affect...
... the new 'Digital Markets Unit'?
The Digital Markets Unit (DMU) has already launched two investigations into Google and Apple under the Digital Markets, Competition and Consumer Act (DMCCA).
- SMS investigation into Google's general search and search advertising services (launched on January 14)
- SMS investigation into Apple and Google's mobile ecosystems (launched on January 26)
These investigations will continue over the next nine months, culminating in a decision on whether either or both companies have significant market status (SMS). A finding of SMS will then enable the CMA to impose conduct requirements (CR) and potentially pro-competitive interventions (PCIs). This will be an extremely challenging timetable for the CMA – given the number of procedural steps and level of participation encouraged and expected – and will likely take up most or all available resources at the DMU.
In light of recent developments, a key question will be when and whether any further SMS investigations will be launched. The CMA had previously indicated – on January 7 – at a parliamentary select committee and in a press release – its intention to launch a third investigation by July 2025. Possible contenders had included AdTech and Cloud Services. And just last week the CMA's Cloud Services Market Investigation concluded with a recommendation that the CMA DMU commence an SMS investigation into cloud service providers.
However, given the stated willingness of the CMA and its chair to revisit priorities and current investigations, Gurr's big-tech background, the need to demonstrate pragmatism, and the resourcing realities of running three highly labor-intensive SMS investigations, it is unclear whether and when further investigations will be launched, if at all. Much focus may instead be on ensuring that the SMS investigations run smoothly, that potential procedural challenges are headed off and, critically, that any CRs and PCIs arising from the existing SMS investigations are correctly scoped and road-tested. Since neither the CMA (nor the Government of the United Kingdom) has the desire or the political capital to be an outlier in global regulation of tech, it is likely that any interventions will not exceed regulation by the European Commission under the Digital Markets Act (DMA).
... the CMA's merger control functions?
Much of the controversy surrounding recent events has focused on the CMA's merger control function, which has become largely over-engineered, bureaucratic and extremely expensive – both in diverted management time, and legal and professional fees – for the businesses concerned. Since most mergers are cleared, many businesses have questioned whether the process could be run better, quicker, and more economically.
In recent times, the CMA has disproportionately focused its merger investigations on the tech sector and, in particular, activities involving Artificial Intelligence (AI), opening and closing multiple investigations in the past 18 months. Yet the emergence of Deepseek as a serious disruptor to OpenAI and others is again a reminder of just how nascent and undefined the AI sector is, and suggests that this level of scrutiny may be unwarranted. Since the CMA has wide discretion with which type of merger to call in (given the very low threshold for establishing control – material influence, and establishing jurisdiction – via the share of supply test), there is a strong case for the CMA to be more transparent about its approach to merger call-ins, by publishing a type of 'enforcement priorities' paper setting out which sectors it is more or less likely to examine, and why a recalibration of approach to merger 'call-ins' may be called for.
One option for the CMA is to run more of its decision-making through the Mergers Intelligence Committee (MIC). For those marginal cases where the CMA might be minded to commence a full-scale Phase 1 investigation, or parties require a formal clearance decision, it is open to the CMA to run a lighter-touch Phase 1 investigation, issuing short-form decisions in certain cases where an ITC is sufficient to allay concerns (without the need, for example, for a 'case-review meeting'). This type of dynamic, business-friendly approach would save businesses huge cost on lengthy Phase 1 investigations that, more often than not, result in unconditional clearances, and would be entirely consistent with Gurr's objectives of delivering "good decisions, rapid decisions."
... businesses seeking to offer behavioral remedies in return for merger clearance?
Even prior to the events of earlier this month, the CMA had already commenced a review of its remedies guidance, with the expectation that behavioral remedies will be more readily accepted. This followed widespread criticism of the CMA's approach in Microsoft / Activision, a decision that initially set the CMA apart from the European Commission in rejecting a comprehensive remedies package, before it back-tracked in the face of its decision being overturned in the CAT, and accepted a fix-it-first licensing remedy and monitoring mechanism. The unprecedented decision in Vodafone / Three in November 2024 – which involved the clearance by the CMA, with investment commitments and a short-term price control – of a 4:3 telecoms merger in the UK – further paved the way for an open conversation with the regulator, at an early stage, about the possibility of behavioral remedies.
Therefore, the stated intentions of the new chair to be more pragmatic and business friendly, together with the legacy of Microsoft / Activision and Vodafone / Three, mean that businesses now have a real mandate to offer lighter-touch behavioral remedies to get their deal through.
... the CMA's new DMCCA single-party merger control jurisdictional thresholds?
Set against the above, the new single-party threshold, whereby a merger can be called in where an acquirer generates £350 million or more, even if the target has no turnover in the UK, seems ever more an outlier. The power has extremely broad potential application, and has already injected great uncertainty for international deal-makers. While the vast majority of qualifying mergers won't be called in, the risk of a call-in and the commensurate need to engage in briefing notes or formal notifications, adds further burden to business.
The CMA must urgently issue guidance clarifying whether and when it intends to make use of this new power, and how it will do so in a manner compatible with its new light-touch and business-friendly approach.
... everything else?
Both Doug Gurr and Sarah Cardell have been at pains to emphasize that the change in direction won't impact the core of the CMA's work (ie, antitrust, cartels and consumer protection) though activity was already down in all of these areas in 2024. Market studies and investigations have shared some of the criticism leveled at the merger control function around the cost of engagement.
What is clear is that the substantial reduction in the CMA's workforce (outside the DMU and mergers), and the prioritization of smarter and faster merger reviews, will affect the capacity of these other functions to run at full tilt. And where the CMA enjoys some discretion around case opening, the themes of growth, innovation and investment will need to be carefully considered (and submissions made) before a final decision is taken.
Possible future reforms to the CMA's practices
To achieve Gurr's objective of shorter, more effective, decision-making in mergers, the CMA should immediately reform its approach to Phase 1 reviews; in particular, shorten pre-notification, reduce information requests, and curtail the use of IEOs, derogation and penalty notices.
In the mid-term, the CMA should also seriously consider reforming Phase 2 merger reviews and market investigations, including the possible replacement of panels with case-decision-groups (CDGs), alongside full-merit appeals of merger decisions. This would enable straightforward engagement and align the interests of agency and business to find workable solutions to genuine competition concerns from the get-go (and align the UK's approach with that of the EU and US). While requiring legislative reform, there may now be the political will – and necessity – to do this.
The DMU should seek so far as possible to align its work and remedies with the European Commission under the DMA. There is clearly little political appetite for UK interventions that go beyond the high-water mark set by the EC (though there may be space and merit for lighter touch, more dynamic approaches).
Conclusion
The dust is still settling from the events of the past couple of weeks. And there may yet be more changes to come. It is unclear whether Gurr will be confirmed as the permanent Chair (there still needs to be a process, of course) or whether the current CEO will remain in situ. The 10% workforce reduction is likely to curtail activity outside merger control and digital market regulation. And it remains unclear whether the CMA will open additional SMS investigations beyond those already commenced against Apple and Google.
It is welcome that Gurr is taking a hard look at how to better resource the CMA by investing in front-line case teams. And it is clear is that businesses now have a renewed mandate to demand faster decisions from the CMA, to push-back on overly burdensome requests and to seek more proportionate commitments (whether in merger control, markets or digital regulation). Only time will tell however if this is the lasting change that business in the UK desperately needs.
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