Competition | UK Regulatory Outlook January 2025

The Digital Market Competition and Consumer Act

The digital market and competition aspects of the Digital Market Competition and Consumer Act (DMCCA) came into force on 1 January 2025.  The DMCCA introduces a number of changes to the competition regime as well as creating a new digital markets regime.

For a full list of these changes, please see our previous Insight. Note that the  consumer changes are likely to come into law at a later date, but the Competition and Markets Authority (CMA) is already consulting on guidance on its new powers (see our Insight). 

Businesses should anticipate that a newly empowered CMA will be active in respect of its competition, markets and merger powers and now is a good time to think about internal compliance and dawn raid policies and training – see below for the CMA's likely priority areas.

While its digital markets powers have perhaps been most hotly anticipated, it may take some time for the CMA's new powers to take practical effect – we can expect initial "strategic market status" (SMS) designation investigations to commence swiftly once the CMA has its new powers (with mobile ecosystems, search and digital advertising tipped to be priorities). 

Each of these investigations is likely to take nine months and the CMA may also face legal challenges (including litigation) as it seeks to designate large tech companies and impose new codes of conduct.  While the CMA will have greater interventionist powers to regulate SMS companies, we expect these "pro-competition interventions" to experience a further period of lag, while the CMA flexes other powers first.

For non-SMS companies, they can expect the CMA to seek out views on designation and codes of conduct as it looks to understand a wide range of digital markets.  With tougher powers to compel responses to requests for information – and extraterritorial powers that may place additional burdens on UK companies part of a global group – this may place a regulatory burden on businesses far beyond those considered to have SMS.  We would recommend that legal teams consider how they will resource and project manage requests for information, before they start to land in 2025.

Procurement

The Procurement Act is due to come into force on 24 February 2025. Please see the Regulated procurement section for a more in-depth update.  To coincide with the new Act, the government has published regulations that will come into force on the same date allowing the CMA and other regulators to share specified information with contracting authorities and the procurement review unit in relation to the exclusion of suppliers for infringements or potential infringements of competition law.

When coupled with the CMA's recently announced investigation into bid rigging in school construction contracts, it is clear that the CMA intends to maintain a substantial focus on anticompetitive conduct in public procurement procedures in 2025.

CMA's focus for the next year

In the upcoming year, the CMA will continue to drive growth, deter anti-competitive conduct and keep markets contestable. According to CMA chief executive, Sarah Cardell, (in her speech at the Chatham House Competition Policy 2024 conference) and CMA interim executive director for competition enforcement, Juliette Enser, (in a speech at King's College London) the CMA will focus on several key areas to support the UK's economic growth and prosperity.

Driving growth

The CMA will prioritise competition as a core component of the government's industrial strategy. This includes removing perceived barriers that stifle innovation and investment, particularly in the tech sector, through the new Digital Markets, Competition and Consumers Act (DMCCA).

Deterring anti-competitive conduct

The CMA will enhance its enforcement activities to deter harmful anti-competitive behaviour. This includes imposing punitive fines and disqualifying company directors involved in wrongdoing. The CMA aims to amplify the deterrent impact of its enforcement actions by preventing further harmful behaviour and ensuring fair competition.

Review of merger remedies

A significant focus will be on reviewing the approach to merger remedies. This review is anticipated to launch in the new year. The review will cover when behavioural remedies may be appropriate (including at the end of Phase I), the scope for remedies that lock in rivalry-enhancing efficiencies and the role of remedies in preserving customer benefits. This aims to ensure that merger reviews are fair, consistent and proportionate.

External engagement and reporting 

The CMA will further enhance its engagement with the business, investment and start-up communities. This includes launching a new outreach series for investors and start-ups and reporting annually on the impact of its work on economic growth.

Overall, the CMA is committed to evolving its processes to support growth, build stakeholder confidence and deliver outcomes at pace, while remaining true to its statutory purpose.

Review of subsidy control regime

The UK government is conducting a consultation into refining its subsidy control regime, focusing on two main areas: thresholds for mandatory referral to the CMA and new streamlined routes for subsidy delivery.

Adjusting thresholds for mandatory referral to the CMA:

• Subsidies of particular interest (SSoPI): Reviewing the current threshold of £10 million for mandatory referral to the CMA.

• Sensitive sectors: Considering revisions to the list of sensitive sectors and the associated £5 million threshold for mandatory referral.

• Subsidies of interest (SSoI): Evaluating the suitability of the current voluntary referral threshold for subsidies between £5 million and £10 million.

Creating new streamlined routes for subsidy delivery: Potential new streamlined routes – exploring new routes focused on community regeneration and arts and culture, and seeking feedback on other potential areas.

The consultation also addresses the potential impacts of these changes on persons with protected characteristics under the Public Sector Equality Duty (PSED) and considers environmental effects in line with the Environment Act 2021.

Responses to the consultation, which closes on 21 January 2025, will help shape the future of the UK's subsidy control regime, ensuring it remains effective and responsive to economic needs while safeguarding competition and addressing social and environmental considerations.

National Security and Investment Act 

On 5 December, Jacqui Ward, director of the investment security unit in the Cabinet Office, stated that "consistency, stability, continuity" was the headline message of the Labour approach to the NSIA.  She added that it is important to keep the legislation under review and that an update on the impact of the notifiable acquisition regulations will be provided "shortly".  

While it was expected that the new government would tinker with the NSIA regime, this update unfortunately gives business little insight into its plans going into 2025.

Employment and competition

The CMA is investigating possible anti-competitive behaviour by several international fragrance companies, including Firmenich, Givaudan, and International Flavours & Fragrances. This investigation, which began in March 2023, was expanded in January 2024 to look into whether these companies have been unfairly coordinating their hiring practices. The CMA is examining if these companies made reciprocal arrangements about hiring certain staff. The investigation is ongoing, with updates expected in April 2025.