Competition | UK Regulatory Outlook June 2024

UK general election 2024: competition aspects  

The two main political parties (Conservative and Labour) competing to win in the general election on 4 July 2024 have published their manifestos.

Neither manifesto mentions the Digital Markets, Competition and Consumer Act 2023 (DMCCA), which became law under the current Conservative government on 24 May 2024, but which had received strong cross-party support; indeed Labour had supported proposed amendments that would have given the CMA more interventionist digital market powers. As a result, regardless of the next government, the DMCC will bring in the significant changes to both digital markets and competition regulation over the coming months and years.

Additionally, Labour has said it will "ensure a pro-business environment, with a competition and regulatory framework, that supports innovation, investment, and high-quality jobs", however it has not set out exactly how it will achieve this. Although with it intending to create a Regulatory Innovation Office, which will essentially regulate the regulators and make them more accountable, we anticipate that this new body, should Labour come into power, will ensure the CMA is implementing and regulating against this new regulatory and competition framework – perhaps including the CMA's new "duty of expedition", designed to speed up decision making.

Digital Markets, Competition and Consumer Act

The highly-anticipated Digital Markets, Competition and Consumers Act (DMCCA) received Royal Assent on 24 May 2024.  We explain the five things that businesses need to know in our recent Insight.  The first action being that businesses have until 12 July 2024 to respond to the CMA's consultation on how it proposes to use its digital powers.

This consultation seeks views on the draft guidance on the new digital markets competition regime and the draft guidance on merger reporting requirements for firms designated with strategic market status (SMS). At 188 pages the draft guidance on the digital markets competition regime is substantially longer and goes into significant detail on the operation of this new regime. In this update we focus on this digital draft guidance.

Throughout the guidance, the CMA emphasises the participative and collaborative approach it will take to:

• SMS designations, both in terms of which firms should be designated with SMS and considerations during the investigation process;
• designing and imposing Conduct Requirements (CRs) and Pro-competition Interventions (PCIs);
• monitoring compliance with and the effectiveness of the regime.

Considering the broad scope of the DMCCA, all businesses engaged in digital activities are advised to actively participate in the consultation process and make representations to the CMA regarding any concerns covered by the DMCCA. Concerns can be raised directly with the CMA or highlighted through its horizon scanning programme, which operates in conjunction with other UK and overseas regulators.

The CMA has previously indicated that it expects to receive its new responsibilities in autumn 2024 and intends to publish guidance at this point, having considered feedback received during the consultation. It anticipates launching the first SMS investigations very soon after commencement, expected for autumn 2024. In the first year the CMA anticipates initiating three-four SMS investigations. Under this timeframe we can expect the first SMS designations and associated conduct requirements in July 2025.

Having cleared the parliamentary process with substantial cross-party support it is unlikely that there will be substantive changes in policy approach following the election, but the timetable for it to be brought into force by secondary legislation is largely down to the next government now.

National Security and Investment Act – further development

In our May Regulatory Outlook we reported on the proposed updates to the NSIA regime and how these have been thrown into uncertainty as a result of the election.

Although the government was able to publish an updated statement on the exercise of the call-in power and updated Market Guidance Notes it has not been able to follow through with proposals to:

• launch a public consultation in summer 2024 on the definition of activities within the 17 sensitive sectors;
• table secondary legislation in autumn 2024 to exempt the appointment of certain insolvency professionals from the NSIA regime; and
• consider how to make further improvements to the NSIA review process and improve the online notification portal.

Although it is unlikely that a Labour government would pursue a substantially different policy approach, the timetable for consultations and secondary legislation will undoubtedly be affected by the election, whoever emerges victorious.

Neither Conservative nor Labour manifesto specifically considers the NSIA regime, but national security is considered as a key early priority for both main parties. Additionally the Labour Party suggests incentivising British funds and companies to invest in promising British companies while continuing to monitor investment from foreign countries which pose a security risk.