The introduction of the Competition and Markets Authority (CMA) has significantly improved the UK’s competition regime, but business awareness of competition law remains low and there is a long way to go before the UK matches the performance other European countries in penalising anti-competitive behaviour according to a report from the National Audit Office (NAO)
In particular, the NAO is critical of the UK’s failure to produce ‘a substantial flow of enforcement decisions or fines’. The watchdog says UK competition authorities issued only £65m of competition enforcement fines between 2012 and 2014, compared to almost £1.4bn of fines imposed by their German counterparts.
The NAO report found that competition work was not significantly disrupted during the creation of the CMA, with front-line work continuing uninterrupted, but teething issues include IT problems and high staff turnover during the early phase of the transition.
To promote retention and recruitment, the CMA used approximately £2.2m of its increased funding of £12m in 2014-15 to increase pay and recruit specialists in competition grades. Staff morale has improved substantially in the last year and the turnover of permanent staff fell to 3.1% in the third quarter of 2015.
Competition authorities have increased their efforts to detect anti-competitive behaviour, particularly in financial services. The CMA is investing in gathering information on such behaviour from a wide variety of sources, including consumer organisations and whistle-blowers.
However, the NAO says business awareness of the competition authorities and of competition law itself is low, with the CMA’s 2014 survey finding that only 23% of businesses felt they knew competition law well. The CMA aims to improve awareness through advocacy work, for example, following enforcement cases.
Amyas Morse, NAO head, said: ‘The newly-created CMA has taken significant steps to tackle the failings we have previously identified, and the competition regime as a whole is now more coherent than before.
‘There are, however, still too few successful enforcement cases, and business awareness of competition law could be improved. While the changes made so far appear likely to improve value for money, the regime has further to go to ensure that value for money is achieved.’
CMA chief executive, Alex Chisholm, welcomed the report which he said highlighted the work it had done so far in releasing firms from undertakings or remedies in 51 out of 76 ‘legacy’ cases. He also noted that NAO had calculated the authority had exceeded its target of £10 of benefits to consumers for every £1 spent in its first year.
Chisholm said: ‘This report is good news for the CMA and reflects the hard work we have been putting in to build an efficient new organisation, as we aim to become one of the leading competition agencies in the world.
However, we recognise there is still much more to be done. We are committed to increasing both the number and the speed of our competition enforcement cases, while maintaining our emphasis on fairness and rigour.
‘This is reflected in our two latest competition investigations being completed in 12 and 18 months, as well as the recent opening of five new cases and issuing of statements of objections in two other investigations.’
