28 May 2015

CMA gets power to make written recommendations on proposals for legislation

On 26 May 2015, the UK Competition & Markets Authority (CMA) gained additional powers to make and publish written recommendations to UK government ministers about the potential impact of proposed Westminster legislation on competition within any UK market for goods or services. These enhanced powers came into effect by virtue of section 37 of the Small Business, Enterprise and Employment Act 2015, which amended section 7 of the Enterprise Act 2002.

These new powers supplement the CMA’s more informal powers to make proposals or give information or advice (which may not be published) to ministers or public authorities. The CMA proposes to use the new powers sparingly and will explicitly state when it is making recommendations under the new powers. In deciding whether or not to publish a written recommendation, the CMA will apply its 'prioritisation principles', which include taking into account both the direct and indirect effect on consumer welfare of intervention in the relevant market.

The CMA anticipates that it is more likely to employ its new powers where it considers it is appropriate to make written recommendations on the public record and where, based on previous work, wider knowledge and experience, and acting as a constructive expert, it expects to be able exert an influence over the proposed legislation. When such written recommendations are made, they will be published on the CMA’s website. However, the CMA notes that the absence of written recommendations on a particular piece of legislation should not be treated as suggesting that the CMA has taken a view on, or approved the proposal.

With these new powers at its disposal, the CMA may face added pressure from businesses to intervene with proposed legislation. However, the CMA retains complete discretion over the use of the powers and it is likely that a high threshold will need to be reached before the CMA is persuaded to exercise its powers and make written recommendations to government ministers.

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