Post-pandemic economic growth: state aid and post-Brexit competition policy – Report Summary

This is a House of Commons Committee report, with recommendations to government. The Government has two months to respond.

Download and Share

Summary

Since 1 January 2021, following the end of the Transition Period, EU competition law has no longer been enforced in the UK, and the UK and EU now operate separate competition regimes. The UK Government is establishing new competition, consumer rights, and digital markets regimes. This offers a major opportunity: strong competition and consumer law will drive economic growth.

The new UK regimes will lead to a significant expansion in the roles and responsibilities of the Competition and Markets Authority (CMA). Additional powers must be accompanied by additional accountability, and the Committee will step up its oversight of the CMA in 2023. The increase in the CMA’s responsibilities and powers is likely to lead to a corresponding increase in its public profile: that is something which the CMA should embrace. We encourage the CMA to be more proactive in explaining to the public how its work has delivered for consumers, both in its annual reporting and its press notices.

Divergence from the EU’s competition regime will introduce new compliance costs for UK businesses. We therefore call upon the Competition and Markets Authority to supply the Committee with an assessment of the cost to business of trading in both the EU and the UK, and its impact on competition.

An effective subsidy regime will help deliver on the Government’s levelling up policy. The Subsidy Control Act, which is expected to come into force in Autumn 2022, will introduce a new subsidy control regime; but the Government has yet to publish final guidance on various aspects of it. Meanwhile, public authorities seeking to award subsidies (such as from the Shared Prosperity Fund) are in limbo. The Government needs to end this uncertainty by publishing final guidance on the new subsidy control regime without delay.

The Queen’s Speech announced a Draft Digital Markets, Competition and Consumer Bill, to promote competition, strengthen consumer rights and protect households and businesses. The Draft Bill is expected to increase the CMA’s consumer enforcement powers to tackle consumer detriment and to strengthen the CMA’s ability to fine businesses that abuse their market position, by reducing the minimum turnover threshold for immunity from financial penalties from £50 million to £20 million and imposing penalties of up to 10% of global annual turnover where consumer protection laws are broken. We welcome these proposals, but there is as yet no sign of the Draft Bill.

The Draft Bill would also give the Digital Markets Unit, which has been established within the CMA in shadow form and which is working to operationalise the future UK competition regime for digital markets, the enforcement and other powers it needs to fulfil its role. Within digital markets there is strong evidence of abuses of market dominance which warrant intervention. We encourage the CMA to investigate these instances closely and to collaborate internationally to promote further competition between digital firms. Meanwhile, consumers and others are at risk. The Draft Bill should be published without delay.