Greener competition law: coming to the UK in 2022?

Today the UK Government published a consultation on major proposed reform to competition and consumer policy. The main elements of the reforms are not ESG focused but cover:

• More effective market inquiries enabling the Competition and Markets Authority (CMA) to act more quickly and flexibly including through use of interim measures and more flexible remedies.
• A rebalanced merger control regime with revised turnover thresholds to reduce the burden on small businesses and a new jurisdictional test to allow faster action in so called “killer acquisitions” as well as procedural changes aimed at a faster merger review process.
• Reforms to CMA panels (who decide merger cases in Phase II and form part of the decision making apparatus in competition investigations) aimed at faster decision making and flexibility.
• Stronger enforcement against anti-competitive conduct including greater incentives for businesses and individuals to blow the whistle on unlawful conduct, stronger interim measures and a number of changes to allow more flexible and efficient decision making.
• Stronger consumer rights protections for online shoppers and those taking out subscription contracts.
• Stronger consumer enforcement powers and alternative dispute resolution fora.

Interested in further detail? Our full client alert will be coming soon. 

But ESG is far from forgotten. The consultation document points out that the UK’s commitment to achieving net zero must be supported by competition policy. And whilst competition alone cannot deliver the changes needed to address the challenges posed by climate change, competitive markets can support this. And the Government believes there is more that competition policy in the UK can do to support net zero commitments. It is, therefore, requesting that the CMA prepare advice for government on how competition and consumer law can better support the UK’s transition to an environmentally sustainable economy. 

The CMA’s response to Government is expected in early 2022. It will deal with:

• how the current competition and consumer framework might constrain or frustrate initiatives that support net zero goals;
• any changes that should be made to the regimes; and
• whether there are other policy tools that could be used to support the UK’s progress to net zero.

As we wrote in January, the CMA’s existing guidance on Environmental sustainability agreements and competition law was disappointing. It shied away from tackling crucial issues and failed to provide any comfort that companies engaged in bona fide sustainability initiatives would not be exposed to fines or enforcement action. It is to be hoped that this Government directed reboot might open the door for the CMA to provide more guidance and a framework for analysis for sustainability issues.

But with a response to government only forthcoming in early 2022, a similar timeframe to expected guidance at EU level (see our post here), meaningful frameworks for the private sector looking to pursue collective sustainability initiatives are still some time away. For now businesses will need to continue to self-assess their sustainability collaborations for competition risk and continue to lobby antitrust agencies for comfort letters and clarity.