The Competition & Markets Authority’s process for investigating mergers and acquisitions is up for an overhaul, as the government aims to cut costs associated with red tape for business by 25%.
Launching a public consultation on 20 January, the government has proposed to find a new decision-making model for the CMA’s regime on mergers and markets – increasing the CMA board’s involvement and cutting independent panels’ role in deciding whether deals go ahead.
The Department for Business & Trade also proposed to cut review times, improve flexibility and review market remedies – measures companies take to appease the markets watchdog – to make sure they remained necessary and proportionate.
Reforms would also seek to provide companies better certainty on whether they would be investigated, and more time to provide remedies.
CMA chief executive Sarah Cardell welcomed the proposals, saying they built on the CMA’s own transformation programme to “drive greater pace, predictability, proportionality and improved engagement”.
“In line with our refreshed strategy, the government’s proposed changes will support the CMA’s commitment to promote competition and protect consumers with a clear end goal in mind: to drive economic growth and improve household prosperity,” she added.
Read more: Hovis-Kingsmill merger fast-tracked by CMA to full investigation
RPC partner and competition law specialist Tom McQuail said: “Abolishing the CMA’s panel system would be symbolically significant, but it’s unlikely to dramatically change merger outcomes or the level of CMA scrutiny. Panels already tend to align closely with the CMA’s strategic direction.
“The reforms come against a backdrop of government frustration with the CMA not actively supporting its growth strategy, raising questions about political influence on competition cases.
“For businesses whose deals routinely face CMA scrutiny, the real test will be whether reforms deliver faster, clearer decisions – tightening jurisdictional tests, resolving competition issues earlier, and avoiding unnecessary Phase 2 investigations.”
The DBT’s consultation immediately follows one from the CMA, seeking views on whether 33 historic remedies – including several preventing drinks and ice cream cabinet exclusivity deals – are still appropriate or needed.
“The strategic review is less radical than it sounds,” said McQuail.
“The significance lies in scale rather than substance: reviewing 33 remedies at once is a clear signal that the CMA is serious about stripping out legacy regulation.”
Read more: CMA’s new powers mean grocery faces intensifying regulation
The proposed reforms at the CMA join a host of other measures intended to reduce the administrative costs of regulation, and create a simpler, more predictable environment for business.
These reforms include the scrapping of the Audit Reform Bill, which would thin out reporting requirements for businesses and allow AGMs to take place virtually.
Introduced in the wake of the collapse of UK construction company Carillion in 2018, the bill was intended to tighten up corporate reporting and better hold company directors to account.
The bill was scrapped “to avoid significant new costs” for businesses, according to the DBT. Blair McDougall, minister for small business and economic transformation, likewise said that audit quality and regulation had improved significantly since Carillion’s problems flew under auditors’ radar.
Auditors’ association ICAEW chief Alan Vallance, however, said he “could not hide his disappointment”, but agreed audit quality had “vastly improved”.
Vallance pushed the government to give the Financial Reporting Council watchdog further powers to keep business in line.
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