Introduction to the Competition and Markets Authority (CMA)
The United Kingdom boasts one of the most internationally recognized competition authorities, the Competition and Markets Authority (CMA). This agency, along with its predecessors, has been a pioneer in conducting market studies and market investigations. These non-penalizing tools aim to understand the functioning of specific economic sectors and, in some cases, lead to structural measures and behavioral rules for businesses. A similar approach is outlined in Mexico’s competition law, allowing investigations into essential inputs’ access conditions and barriers to competition.
CMA’s Strategic Intervention Project
The CMA is leading a project to outline its intervention strategy in markets for the coming years. The goal is to maintain an independent and robust competition regime that fosters growth and investment while safeguarding consumers’ interests. As usual, the CMA has initiated various public discussions on implementing this initiative.
Addressing Unintended Negative Consequences
The CMA acknowledges that its market work may have undesired negative effects on productivity and growth, potentially undermining the positive impact of competition policy enforcement. Specifically, it highlights avoiding business uncertainty, which can harm investment and innovation, as well as unnecessary burdens on businesses through excessive information requirements and process monitoring. Additionally, lengthy investigation periods are often unjustified.
The Four Ps of Competition Policy
To avoid the aforementioned negative effects, the CMA has outlined four guiding principles, referred to as the Four Ps: pace, predictability, proportionality, and process.
Pace
Regarding speed, the CMA recognizes that swift decision-making is crucial to reduce uncertainty and costs for businesses and consumers. To achieve this, the agency proposes more careful selection of intervention tools, increased support for expert work, application of key performance indicators (KPIs), and greater efficiency in conducting procedures.
Predictability
For predictability, the CMA has committed to providing greater clarity on strategic priorities, increased transparency in project execution, and more feedback to involved parties regarding procedural advancements.
Proportionality
Proportionality requires calculating the net benefits of interventions, focusing on cases with higher potential for harm, accurately determining remedy costs, and reducing the burden on affected businesses.
Process
The process should be more agile and interactive with economic agents. This includes greater involvement to better understand the potential impacts of key decisions on businesses, offering more explanations in investigations, and providing greater opportunities for economic agents to update their positions regarding the CMA’s stance.
Lessons for Mexico
The CMA’s experience demonstrates that a robust competition policy requires not only appropriate legal frameworks but also clear principles to guide its application. In Mexico, the competition law reform and the creation of the National Antimonopoly Commission present an opportunity to build a new institutional framework that could catalyze productivity and innovation.
Key Questions and Answers
- What is the Competition and Markets Authority (CMA)? The CMA is a UK-based competition authority responsible for promoting healthy competition and protecting consumers.
- What are the Four Ps of competition policy? The Four Ps—pace, predictability, proportionality, and process—are guiding principles established by the CMA to ensure competition policy enforcement minimizes unintended negative consequences.
- How do the Four Ps impact competition policy? The Four Ps aim to ensure swift, predictable, proportional, and interactive competition policy enforcement, fostering a robust regime that supports growth, investment, and consumer protection.
- What lessons can Mexico learn from the CMA’s experience? Mexico can benefit from adopting clear competition policy principles and building a strong institutional framework to catalyze productivity and innovation.
