High profile investigations and subsequent fines imposed by the European Commission and other national competition authorities have demonstrated the need for private equity firms to monitor the impact of competition law. This has coincided in the UK with an expanding role of the Competition and Markets Authority (CMA) following the competition law reforms in 2014 and further consultations in 2021.
The Government has consulted on reforms to competition and consumer policy, covering merger control, market studies and investigations, enforcement and government’s relationship with the Competition and Markets Authority. The BVCA response supported the measures proposed that will enhance the effectiveness and efficiency of the UK competition law regime, including proposals to streamline the Phase 2 process for UK merger review. We highlighted our concerns around the suggested third jurisdictional test for merger control, interim measures and the imposition of remedies which do not appear to have sufficient safeguards to protect the legitimate interests of companies. On enforcement powers and penalty caps, we suggested the Government re-examine and refine the approach to aspects of the application of parental liability in the specific case of the investment fund or financial investor liability for the activities of portfolio investee companies.
A draft Digital Markets, Competition and Consumer Bill was announced in the Queen’s speech and will be published in the third session of Parliament. The draft Bill will take forward a number of government proposals relevant to the industry, including enhancing the role of the CMA as an economic adviser and introducing non-binding strategic steers for the CMA. The CMA will also be granted enhanced market inquiry procedures and jurisdiction to increase the effectiveness and efficiency of merger investigations. These changes aim to improve the CMA’s competition enforcement capabilities. The proposals will include the raising of merger control turnover threshold and the introduction of a small merger safe harbour, which the BVCA advocated for.