CMA adopts changes to guidance on duty to refer mergers for in-depth investigation

 

CMA adopts changes to guidance on duty to refer mergers for in-depth investigation

 

The Competition and Markets Authority (CMA) has adopted revised guidance on the exceptions to the duty to refer mergers for in-depth Phase 2 investigations.

The revisions concern the exception for markets of insufficient importance (de minimis) to justify a reference.

The key changes are that:

1.        There is now a single, increased threshold for the application of the de minimis exception. The CMA will generally consider the market(s) concerned to be of sufficient importance to justify a reference (such that the exception will not be applied) where the aggregate annual value in the UK of the market(s) concerned is more than £30 million.

2.        The application of the de minimis exception is no longer contingent on there being no clear-cut undertakings in lieu of a reference available.

The new guidance is largely unchanged from the draft version on which the CMA consulted in November 2023.

The new guidance will apply to all new merger cases from 25 April 2024. This includes all cases where a Phase 1 investigation has not formally been launched on 25 April 2024.

https://assets.publishing.service.gov.uk/media/662a432d55e1582b6ca7e5e7/Exceptions_to_the_duty_to_refer_-_guidance.pdf

CMA@10

 

CMA@10

I was pleased to attend today’s 10-year anniversary event a decade on from the creation of the Competition and Markets Authority.

The event charted the contributions and challenges of the CMA over the last 10 years and as it continues to evolve. The CMA's stated mission is to make markets work well in the interests of consumers, businesses and the economy.  Its ambition is to be consistently one of the leading competition and consumer agencies in the world.

Kevin Hollinrake MP, the UK Minister for Enterprise, Markets and Small Business said that the Digital Markets, Competition and Consumers Bill will “radically change the balance of power” between big corporations and smaller businesses. He remarked that: “We’re now about to enter a pivotal moment. A seismic shift. A competition revolution.”  Sarah Cardell, Chief Executive of the CMA, described the current times as a “watershed moment” as far as digital issues are concerned.

So what lies ahead for the next ten years?  Cardell hoped that by then every business and consumer will be able to say that “the CMA has done something for me”.  It’s an interesting thought.  It resembles remarks from EU Commissioner Vestager that even though the years roll by and we may get a few grey hairs, some of the fundamental principles of competition law are enduring: “In antitrust, what is at stake is, in some ways, as old as Adam and Eve because it is about greed, to get more”. 

With the challenges of Big Tech, climate change, asymmetric economic shocks and the UK having some of the lowest investment levels in business across the G7, it is tempting to think that competition law can solve most things.  Of course it cannot do that and it cannot do it alone.  Competition law and competition authorities do need to stay relevant and responsive and keep the consumer interest in focus.  Not as an abstract economic concept but consumers as human beings, with real lives and bills to pay.

The Competition and Markets Authority’s CMA@10 event ended today.

CMA produces update to paper on foundational AI models

 

The Competition and Markets Authority (CMA) has updated its September 2023 report in its review of competition and consumer issues in relation to artificial intelligence (AI) foundation models.

In March 2023 the government asked regulators, including the CMA, to think about how innovation in and deployment of AI can be supported.

The CMA sets out its final principles for guiding the market to positive outcomes in terms of access, diversity, choice, fair dealing, transparency and accountability.

The CMA also identifies risks that firms that control critical inputs for developing foundation models may restrict access to them to shield themselves from competition.

The CMA is also intensifying its use of merger control to examine whether AI collaborative arrangements between major players fall within the current rules.  For example, speaking at the ABA Antitrust meeting in Washington the CMA has noted that Google, Apple, Microsoft, Meta, Amazon and Nvidia are involved in an “interconnected web” of over 90 AI partnerships and investments.  The CMA will also consider such arrangements under its new powers anticipated in the Digital Markets, Competition and Consumers Bill.

The CMA will provide a further update in autumn 2024.

 

https://www.gov.uk/government/news/cma-outlines-growing-concerns-in-markets-for-ai-foundation-models

CMA letter to nail technicians about compliance with competition law

 

The Competition and Markets Authority (CMA) has issued an open letter to nail technicians to remind them and their trade associations of their obligations under competition law.

 The CMA has unsurprisingly emphasised that businesses must set their prices independently of their competitors. The CMA has further underscored that businesses should not discuss or coordinate their actions on the timing and amount of future prices increases (whether directly or through a trade body).

The CMA’s guidance comes on the back of media reporting where the CMA notes that it understands that “a campaign has been launched encouraging nail technicians to raise their prices today. In that context, we want to remind all businesses in this sector of their obligations to comply with competition law.” 

The CMA’s guidance is part of its online collection of competition law guidance.  The initiative is a further reminder of the CMA’s education outreach on competition compliance directed at small businesses, many of whom are sole traders.

https://www.gov.uk/government/publications/open-letter-to-nail-technicians-about-compliance-with-competition-law

High Court calls time on refusal to supply claim against Swatch

 

The High Court has rejected an attempt by watch parts wholesaler Cousins to resurrect a claim against Swatch for abuse of dominance in a refusal to supply claim.  The Court ruled that the action would relitigate prior Swiss actions dismissing the claim.

Mr Justice Michael Green ruled that the Lugano Convention applied to the previous Swiss Court rulings.

The case dates back to supply chain events from 2015.  The Berne Commercial Court ruled in 2021 that Swatch’s refusal to supply was part of a rationalisation of its supply chain and was objectively justified and there was no need to consider the effect on UK competition.  The Federal Supreme Court subsequently upheld that decision in 2022.

The case involves consideration of application of the Lugano Convention.   The Convention still applies in this case because the action was commenced before the UK exited the Convention upon its withdrawal from the EU.  However a court can disapply the rules if a jurisdiction has manifestly different public policy objectives.   The Convention also prevents a UK court from re-examining the ruling of the court of another Convention jurisdiction on the merits.

It was argued on behalf of Cousins that the claimant was denied a right to be heard before the Swiss Courts which did not hear vast amounts of evidence relating to the UK.

Green J rejected the claims as “somewhat outlandish”.  He observed that Switzerland is a signatory of the European Convention on Human Rights and it is not obvious that the Swiss judgments are contrary to UK public policy.

The case is a sobre reminder of what Green J described as “a great risk of straying into the forbidden arena” of re-examining the merits of prior rulings and where the impugned judgments were found to reference evidence relating to the UK.

Cousins Material House v Swatch [2024] EWHC 710

Amendments to Digital Markets, Competition and Consumer Bill to prevent acquisitions by foreign powers

 

Amendments to Digital Markets, Competition and Consumer Bill to prevent acquisitions by foreign powers

 

Amendments to the Digital Markets, Competition and Consumer Bill have been tabled, to amend the Enterprise Act 2002 to introduce a new regime for mergers involving newspaper enterprises and foreign powers.

Under the amendments, the Secretary of State must give the Competition and Markets Authority (CMA) a “foreign state intervention notice” if the Secretary of State has reasonable grounds for suspecting that it is or may be the case that a "foreign state newspaper merger situation" has been or will be created.

A foreign state newspaper merger situation will arise where as a result of two or more enterprises ceasing to be distinct, a foreign power is able to control or influence the policy of the person carrying on the newspaper enterprise, or is able to control or influence that policy to a greater extent. The turnover test is reduced to £2 million for such mergers.

The CMA must then report on whether such a merger situation has been or will be created. If it reports that this is the case, then the Secretary of State must make an order containing such provision as the Secretary of State considers reasonable and practicable for the purposes of reversing or preventing the creation of the identified foreign state newspaper merger situation.

 

The DMCC Bill is due to have its third reading in the House of Lords on 26 March 2024.

https://bills.parliament.uk/publications/54855/documents/4610

CMA consults on market investigation into veterinary services for household pets

 

CMA consults on market investigation into veterinary services for household pets

The CMA is proposing to undertake a market investigation into the supply of veterinary services for household pets, including the supply of prescribed veterinary medicines.

This follows the CMA’s September 2023 consultation into the veterinary services market for household pets.  The consultation received an unprecedented level of responses tp its consultation.

The CMA found concerns that consumers may not be given enough information to enable them to choose the best veterinary practice or treatment.

The CMA has found that over 80% of veterinary practices have no pricing information on their websites, even for routine consultations or vaccines.

The CMA has found that while the Royal College of Veterinary Surgeons operates a voluntary standards scheme, around 30% of the market has not committed to this.

The CMA invites comments by 11 April 2024.

https://www.gov.uk/government/consultations/consultation-on-the-proposal-to-make-a-market-investigation-reference-into-veterinary-services-for-household-pets-in-the-uk