Going for growth – UK Government consults on refinements to the competition regime

Background to the consultation

The Consultation is set against the backdrop of the UK Government’s broader push for growth. In November 2024, the CMA’s CEO Sarah Cardell launched the “4Ps” – an internal framework to improve pace, predictability, proportionality and process. The Chair of the CMA was replaced in January 2025 – a move widely seen as a pro-business signal of intent on the part of the UK Government. In May 2025, the UK Government published its Strategic Steer to the CMA, which further emphasised the CMA’s role in boosting economic growth.

Although the DBT is leading this Consultation, there is a clear thread linking it with both the CMA’s previous actions and statements, and the general direction of travel of the UK Government. Most obviously, the framing of the Consultation mirrors the exact terminology of the 4Ps. The DBT recognises in the Consultation that the CMA has made progress under these initiatives and that it wishes to support and empower the CMA in realising its full potential and ambition through legislative amendments. This further wave of proposed legislative changes to the competition regime follows (relatively) hot on the heels of the overhaul implemented by the Digital Markets, Competition and Consumers Act 2024 (“DMCCA”), and there are several proposals that seek to align the broader competition regime with the approach to digital markets in the DMCCA.

Proposed changes

The Consultation is broad-ranging and ambitious in places, with some significant proposed changes and some tweaks/minor alterations. Its proposals are grouped into four main themes.

1. Governance: Strengthening accountability for CMA decision-making in mergers and markets

This theme covers the CMA’s governance, specifically for market studies / investigations and merger control. The current system sees members of the CMA Panel – typically independent academics and business experts – form Inquiry Groups to lead on both Phase 2 mergers and market investigations. The Consultation proposes to replace this decision-making system with one that is led by the CMA Board via the establishment of two new Board committees – the Mergers Board Committee and the Markets Board Committee, with sub-committees appointed by those Boards. Decisions would remain appealable to the Competition Appeals Tribunal to judicial review standards. The DBT considers that this strikes a balance between a robust review process whilst minimising time and cost for the parties involved.

With this change, the DBT is seeking to align the CMA’s decision-making process with that of the DMCCA. The proposal is to retain a pool of non-CMA staff experts, but the direct line of accountability to the CMA Board represents a significant change. The Consultation expressly outlines the DBT’s desire to increase the CMA’s accountability and efficiency, whilst also respecting its independence.

2. Mergers

Jurisdictional thresholds

• The current merger control regime rests on jurisdictional tests, including the share of supply test and the material influence test. The Consultation aims to formalise on a statutory footing the factors which the CMA considers under these tests, and to limit them to a closed list.
• Share of supply: The share of supply test already includes quantitative elements. For example, there are triggers relating to turnover and market share. However, the current regime accords significant discretion to the CMA in defining the relevant category of goods and services and how “supply” is measured. The Consultation proposes to remove the CMA’s ability to consider “some other criterion, of whatever nature” and also to limit the criteria that may be considered in measuring “supply” to a closed list: (i) value, (ii) cost, (iii) price, (iv) quantity, (v) capacity and (vi) number of employees.
• Material influence: The material influence threshold refers to the CMA’s consideration of whether businesses have been brought under common control for the purposes of the Enterprise Act 2002. “Legal control” is established where a business acquires 50% of the shares of another business, but there are lesser degrees of control which are also considered by the CMA – de facto control and material influence. The Consultation proposes to limit these lesser degrees of control by defining a closed list of factors that the CMA can consider. These are: shareholding or voting rights (e.g., at least 15%); board representation or appointment rights; special voting rights or veto rights; access to confidential strategic information; and commercial, financial or consultancy arrangements.

Remedies timescales

• Under the current regime, when the CMA issues a Phase 1 decision concluding that a merger could result in a substantial lessening of competition, the parties have up to five working days to submit remedy proposals. The CMA then has 10 working days to respond. The Consultation highlights a concern that these tight timescales may lead to “near misses” – where remedies could be agreed but the parties run out of time and a Phase 2 investigation results by default.
• To address this, the Consultation proposes to extend the CMA’s review period from 10 working days to 20, and to give the CMA power to grant an extension to the parties of a further five working days where there is a reasonable prospect of resolving concerns at Phase 1.

3. Market studies and investigations, including remedies

Process

• The Consultation notes that the CMA’s market studies and investigations have led to substantial consumer benefits. However, the UK Government wants to improve the pace, predictability and proportionality of the CMA’s markets work. The Consultation notes disapprovingly that some studies can take more than three years.
• To address these concerns, the Consultation proposes to replace the dual market study and market investigation system with a single-phase market review process. The UK Government expects that the process should be streamlined to 18-24 months in most cases and is therefore proposing a statutory 24-month time limit for the new single-phase review.
• The Consultation also seeks views on harmonising the legal test under the new single-phase review. In the current system, a market study considers whether there are reasonable grounds to suspect that there is an adverse effect on consumers. A market investigation considers whether there is an adverse effect on competition. The proposed test is whether there is an adverse effect on consumers.

Remedies

• Market investigations often result in structural or behavioural remedies being imposed on market participants. Despite a requirement for the CMA to keep remedies under review, the Consultation outlines concerns that they may remain in place indefinitely – potentially leading to a distortive effect on markets.
• The Consultation proposes to tighten up the rules around remedies in two main ways. First, it proposes that “sunset clauses” should be the default by introducing a requirement for the CMA to set out its reasoning if it judges that a sunset clause is not appropriate for a particular remedy. Second, legislation would introduce a requirement for all market remedies to be reviewed by the CMA at least once every 10 years.
• Consistent with the push for growth, it is especially notable that this Consultation has been published in the same week as the CMA’s strategic review of markets remedies, which is reviewing 33 markets remedies imposed between 1987 and 2017 “to assess whether they should be removed or amended”.

Concurrency

• The CMA shares its market study / investigation powers with certain sector regulators such as the FCA, Ofgem and Ofwat. These sector regulators can initiate market studies, but only the CMA can undertake market investigations and impose orders (including remedies). The Consultation notes that this can lead to blurred responsibilities between the CMA and sector regulators – e.g., if the CMA is required to monitor and enforce remedies in sectors with dedicated regulators.
• The Consultation proposes two changes. First, it will enable sector regulators to assume responsibility for remedies once they have been imposed by the CMA following a market investigation (with a consultative process between the CMA and sector regulator to determine which is best placed to do so). Second, in light of the proposal to move to a single-phase market review process, the Consultation proposes a more consultative and CMA-led approach to referrals from sector regulators. As today, sector regulators would be able to carry out market studies with the CMA remaining the sole authority able to impose remedies following a market review. The key change is that sector regulators would only be able to recommend that the CMA launches a market review under the single-phase review process – with the CMA being required to consider and publish its response within a given timescale. This is a further example of proposed alignment with DMCCA procedures.

4. Other changes

The final theme covers a variety of other proposed cross-cutting changes.

• Algorithms: The Consultation notes the role of algorithms in driving consumer behaviour and broader economic activity. It states that algorithms can also be used in ways which are anti-competitive – facilitating collusion or enabling pricing strategies that might breach consumer law. The Consultation proposes to reinforce the CMA’s enforcement powers for a digital age, by extending powers that it currently has in relation to digital markets under the DMCCA to its broader competition and consumer protection remits. Specifically, it will enable the CMA to send information requests to businesses that would require them to reveal more about the workings of their algorithms and how they affect consumers.
• Secretary of State’s role in CMA guidance: The CMA currently publishes a wide range of guidance documentation. There are very limited instances where the CMA has to seek approval from the Secretary of State for these publications – those relating to the digital markets regime, civil penalties and international cooperation. The CMA does not require Secretary of State approval for guidance which affects significant portions of its work – for instance, the Merger Assessment Guidelines. The Consultation proposes to expand the Secretary of State’s oversight role for what it calls “key guidance documents”, strengthening the link between the CMA and Parliament’s legislative intent, and in DBT's view providing increased predictability for business.
• Excluding Christmas from statutory time limits: Public holidays are currently excluded from any statutory time limits. This does not cover the days which fall into the Christmas period which are technically working days. The Consultation notes that many people take extra holiday around this period, resulting in a squeeze between the CMA and stakeholders in the process – for example, for clients and their advisers who may have to reply to requests for information. The Consultation proposes that pausing the clock over Christmas could promote more positive relationships between the CMA and its stakeholders.

AI tools have been used to support editing of this publication. All content has been reviewed and approved by Hogan Lovells lawyers.

Authored by Chris Hutton, Christopher Peacock, Karman Gordon, and Paul Sanderson.