Competition | UK Regulatory Outlook November 2024

Merger remedies approach to be reviewed

The UK Competition and Markets Authority (CMA) is set to review its approach to merger remedies in the new year. This is to address competition concerns arising from merger deals. 

In a speech at the Chatham House Competition Conference, CMA CEO Sarah Cardell, emphasised the importance of pace and proportionality in merger reviews. The merger remedies review will focus on when behavioural remedies are appropriate, the scope for rivalry-enhancing efficiencies, and preserving customer benefits that offset anti-competitive effects. 

Additionally, the CMA plans to enhance engagement with businesses, investors and startups through a new outreach series. The goal is to ensure that every merger capable of being cleared with effective remedies should proceed, while only truly problematic mergers should be blocked.

Businesses should take note of the reviewed merger processes when they are available. While it is positive that the CMA is committed to ensuring growth, what this means in practice remains to be seen.

Booking.com removes all parity clause in EEA

On 13 November Booking published a summary of the steps it has taken to comply with the Digital Markets Act (DMA). From a competition perspective, a significant change is the removal of all parity clauses in the EEA.

These clauses previously required BHI's partners to offer the same or better rates and conditions on Booking.com as on any other online or offline channels. By eliminating these requirements, BHI ensures that partners are free to offer better prices or conditions on other platforms. Booking says this change was communicated to partners and relevant teams were trained to enforce the new rules. Additionally,  Booking has introduced new data access tools and APIs to improve transparency and control over personal data.

Parity clauses are a hot topic in competition law, with different approaches between the UK, the European Commission and some Member States.  This latest development demonstrates the higher standard that may be applied to "gatekeepers" under the DMA.

UK-EU cooperation agreement

On 29 October, the UK government and the European Union concluded technical negotiations on the UK-EU Competition Cooperation Agreement, aimed at enhancing cooperation between the EU's competition authorities and the CMA. This agreement will facilitate greater dialogue and information sharing on cross-border competition cases, supporting effective enforcement of global competition laws. 

According to the government, the agreement is expected to benefit businesses and consumers in both the UK and the EU by promoting fair competition and economic growth. The agreement will be reviewed by Parliament before being signed. Business and Trade secretary, Jonathan Reynolds, and CMA CEO, Sarah Cardell, have both expressed support for the agreement, highlighting its importance in a globalised economy.

The UK and EU have negotiated the agreement with a view to signature in the coming year. Parliament will have the opportunity to consider the agreement in detail once the text is published for scrutiny.

Businesses with operations in both the UK and EU will welcome this development as divergences between regulators can increase the compliance burden.  However, the full details have not been published.

Pricing algorithms

On 8 November the CMA published a blog post on pricing algorithms. These set or recommend prices based on market data, can enhance competition, reduce costs, and allow for quicker price adjustments. 

However, the CMA considers they may also pose legal risks, such as facilitating price-fixing or the exchange of confidential information between competitors, which can harm consumers by raising prices and reducing innovation. The CMA highlights the importance of understanding and legally complying with these tools, advising businesses to avoid sharing sensitive information and to seek legal advice if unsure. Providers of pricing services are also warned about their responsibilities. 

The report outlines the severe consequences of breaking competition law, including fines, director disqualification, and potential criminal charges. The CMA encourages reporting of anti-competitive behaviour and offers guidance and resources to support fair competition and innovation in the use of algorithms and AI.

Businesses that use an algorithm to drive pricing decisions, get pricing recommendations using software or an external supply, and all those who sell pricing software solutions need to review their practices to ensure continued compliance with the law.