On the 1 April 2015, the Competition and Markets Authority ("CMA") published its first annual report on concurrency (the "2015 Report"). The date marked the first anniversary of the newly enhanced concurrency arrangements following the Enterprise and Regulatory Reform Act 2013 ("ERRA"). The reforms were designed to encourage greater use of the regulators' competition powers under the Competition Act 1998 (the "CA98") and to enhance cooperation between sector regulators and the CMA.
The 2015 Report at a glance
In the last year, there has been a marked increase in enforcement activity in the regulated sectors, with six CA98 investigations launched spanning the postal, broadcasting, aviation, healthcare and energy sectors. Of the six new investigations, five have been opened by the relevant regulators and one by the CMA.
According to the report, both the CMA and the regulators have gone beyond the formal requirements on information sharing and regularly engage in informal discussions to share best practices. The CMA and the sector regulators established the UK Competition Network which encourages further cooperation through regular working-level meetings.
It is also significant that two of the CMA's most high profile market investigations launched in 2014 have been in the energy and retail banking sector. The report highlights that in both investigations, the CMA worked closely with Ofgem and the FCA respectively.
Since April 2014, Ofgem received three new complaints and has launched two formal investigations. Ofgem also made use of its information-gathering powers and powers to enter premises on both occasions. This is a stark contrast to the five investigations launched in the previous eight years and demonstrates Ofgem's determination to make the most of the new concurrency regime.
Since April 2014, Ofcom received two new complaints and formally launched two investigations. Ofcom also made use of its information-gathering powers and powers to enter premises under the CA 98 four times.
One broadcasting case was opened under the competition law prohibitions since April 2014, which brings Ofcom's total number of ongoing investigations to three. It is also due to come to a provisional decision in Spring 2015 in a third investigation in the postal sector.
The 1 April 2015 marked the entry into force of full concurrent competition law powers for the Financial Conduct Authority ("FCA"). The 2015 Report indicates that over the coming months, the FCA intends to carry out market studies using both its pre-existing powers under the Financial Services and Markets Act 2000 and newly acquired concurrency powers. Indeed, the FCA has built an impressive competition department of nearly fifty people including lawyers and economists.
The FCA's 2015/2016 Business Plan sets out its intention to launch market studies looking at competition in four areas, namely corporate and investment banking services, asset management, mortgages and the use of technology and big data by insurance firms. The coming months are therefore likely to be eventful as the FCA explores its new competition law mandate.
The Water Act 2014 (the "Act") paves the way for greater competition in the water industry. In particular, the opening of competition in non-household retail supplies in England is likely to lead to interesting developments. The Act also aims to facilitate the creation of a cross-border retail market. The 2015 Report states that the CMA will be assisting Ofwat with the ongoing implementation of the Act. The reforms to the non-household retail market are due to be implemented by April 2017.
Civil Aviation Authority
In June 2014 the CAA and CMA signed a Memorandum of Understanding setting out their working arrangements in relation to the two elements of the aviation sector in which the CAA has competition powers, namely the Airport Operation Services and the Air Traffic Services. Since April 2014 the CAA has also formally launched an investigation into a suspected breach of competition law by an airport.
The table below shows the overall increase in enforcement activity in the last year compared with the previous eight years. It is a clear indication that sector regulators are on the whole embracing their new powers. This shift is likely to be welcomed by those who believe regulators with industry knowledge are better equipped to carry out competition law investigations than a general competition authority. It remains to be seen whether the trend will be maintained in the coming years.