The Competition & Markets Authority (CMA) is the independent competition regulator in the UK. Its main mission is to prevent anti-competitive behaviour and guarantee that UK markets – and ultimately the economy – work to benefit the wider public and the businesses that serve them.
The CMA began operating in 2014, after a merger of the Office of Fair Trading and the Competition Commission, allowing better cooperation between the two fields and setting up a single, more powerful competition watchdog. It was established through the Enterprise and Regulatory Reform Act 2013 and received royal assent in April 2013.
What does the CMA do?
To fulfil its primary mission of ensuring fair markets in the UK, the CMA is responsible for monitoring businesses large and small. The watchdog typically reviews potential mergers – and even entire markets if necessary – to ensure competition is not unfairly or detrimentally reduced.
The regulator also has control over market prices, notably through the conduction of regulatory appeals and actions against anti-competitive behaviour such as monopolisation, exclusive dealing (when dominant companies require buyers to deal exclusively with them) or bid rigging (when competing parties coordinate bids to create an artificial increase in prices). As an independent body, the CMA is in charge of holding the government and other regulators accountable for using competition effectively and fairly.
The CMA also operates as a baseline for guidance or counsel for people and businesses, providing information about competition and consumer law. It offers technical advice and knowledge about the UK internal market and government subsidies through two of its constituting units: the Office for the Internal Market and the Subsidy Advice Unit.
Disruptions in the tech sector
The independent authority played a significant – and often controversial – role in recent years and surprised industries in more than one instance. The Microsoft/Activision case has been particularly contested, as the regulator unexpectedly blocked the multi-billion deal for several months to rule out a potential monopoly on the gaming market. However, in October 2023, the deal was restructured. Microsoft bought the gaming company for $69bn, although it had to sell Activision Blizzard’s game streaming rights to Ubisoft to pass CMA checks.
This Microsoft/Activision case occurred only a few months after another heated saga, this time between Giphy, Meta and Shutterstock. In 2022, the CMA ruled that tech giant Meta buying the gif platform Giphy was an antitrust issue, prompting Meta to sell Giphy to the stock image service Shutterstock in May 2023. This move resulted in a $210 million loss for the owner of Facebook.
In both cases, some have found the role of the CMA to be overly challenging and restrictive when it comes to approving deals, especially in comparison to its European equivalent, the European Commission. During the Microsoft/Activision case, for example, the CMA was considerably more strict than the European Commission, which gave early approval while the CMA issued formal challenges and imposed stricter conditions. Vittorio Colao, the former CEO of Vodafone, told the Financial Times “it’s clear that Europe is trying to take the [position of] fairness while the CMA is a bit more unpredictable.”
More recently, however, the European Commission and the CMA expressed similar concerns about threats to competition over an acquisition deal that saw Adobe proposing $20bn to buy digital design rival Figma. Following the two regulators’ unified opposition to the deal, the bid was dropped leaving both parties “disappointed”, Tech Monitor reported in December.
Former Justice Secretary Sir Robert Buckland MP wrote in an Institute of Economic Affairs paper that the CMA is being given “free rein to make unchallengeable decisions that affect large swathes of the economy”. As a response to the same paper, more conservative MPs have expressed concerns about the CMA, which they judge as too restrictive and powerful.
The CMA and the AI market
While the CMA operates across all markets, its role in reviewing the tech industry is increasingly relevant. After Prime Minister Rishi Sunak vowed to make the UK a “science and technology superpower” by 2030, it became clear that boosting growth and investment in the country’s tech sector was a key priority for the government. This only reinforces the importance of the CMA, which also acts on behalf of the British public, and is responsible – among other things – for protecting them against potential dangers, especially within the field of AI development.
The CMA’s attention to the tech market has, in fact, only been increasing in recent years. A Digital Markets Unit (DMU) has been established in 2021 to promote innovation while protecting customers and businesses. While the dangers that AI could pose for humanity are not for the CMA to oversee – or at least, not directly – the OpenAI saga of November 2023 showed AI governance and competition between tech companies’ are tightly linked with the development of safe AI.
The CMA and the UK Government
The AI regulation vs. growth debate translates to political disagreements and concerns. As CMA rulings have shown since 2021, competition control over the tech sector could have the potential to eventually hinder growth and stifle innovation, thereby challenging the government’s priorities and plans.
After the regulator published a report on its approach to AI development in September 2023, CMA CEO Sarah Cardell said in a statement that there is “a real risk that the use of AI develops in a way that undermines consumer trust or is dominated by a few players who exert market power that prevents the full benefits being felt across the economy.”
For this reason, Cardell said that the CMA will “help shape these markets in ways that foster strong competition and effective consumer protection.”
This comes after Chancellor Jeremy Hunt told a business conference in May 2023 that “one of the reasons that companies like Microsoft and Google want to invest in the UK is because we have independent regulators that politicians don’t control.” And while Hunt said that he “would not want to undermine that at all,” he also believes that “it’s important all our regulators understand their wider responsibilities for economic growth.”
However, Cardell added in her statement that the CMA remains “ready to intervene where necessary.”