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Call for Evidence

State Aid and Post Brexit Competition Policy

1. UK Competition Policy and the Competition & Markets Authority

Competition law in the UK aims to limit practices that harm free and fair competition to the detriment of consumers. This includes the abuse of a dominant market position by a firm, anti- competitive agreements between firms, and mergers or takeovers which, if allowed, would result in a substantial lessening of competition. Following the exit of the UK from the European Union on 31 January 2020, primary responsibility for enforcing competition policy in the UK now lies with the independent competition authority, the Competition & Markets Authority (CMA).

  • Is the CMA’s statutory duty – to promote competition for the benefit of consumers – the right one?
  • Has competition policy in the UK weakened over recent years? What impact is the COVID-19 pandemic and digitalisation having on competitive forces in the UK economy?
  • How will the CMA manage its enhanced responsibilities for merger control, anti-trust control, Digital Markets Unit, Subsidy Advice Unit, Office for the Internal Market? Given the large expansion of its role post-Brexit, should its governance be reformed?
  • Should there be more involvement from the devolved assemblies in shaping governance of the CMA given its role in the internal market? If so, what involvement should that be?
  • Are Government and the CMA using the autonomy over competition policy gained as a result of EU Exit to the fullest extent? What opportunities exist to do things better?
  • Do the new tools and powers for the CMA proposed by the Government in its two consultations1 sufficiently equip the CMA effectively to respond to the challenges in the modern economy, and ensure markets remain dynamic and competitive in the years ahead?
  • What do changes to competition policy in other jurisdictions – particularly in the US under the Biden administration – mean for the UK? How will the CMA collaborate with the European Commission on competition policy?

 

2. State Aid and the Subsidy Control Bill 

State Aid (also known as subsidy control) forms one part of competition policy in the UK. It is the system used in the EU which requires all Government and public body subsidies to business (approx. £8bn a year in the UK in 2018) to be approved by the European Commission.

The UK is no longer bound by the EU’s State Aid rules. The Subsidy Control Bill, introduced to Parliament at the end of June 2021, sets out a new framework for subsidy control in the UK. The Bill aims to support fair competition, avoid harmful or distortive subsidies and prevent damaging subsidy races within the UK.

  • Is the framework for subsidy control set out in the Subsidy Control Bill fit for this purpose?
  • What are the gaps in the Subsidy Control Bill and how will these be filled by secondary legislation? For example: How should subsidies of interest and subsidies of particular interest be defined?
  • How will the Bill be enforced when the CMA has no enforcement powers on subsidies?
  • How can the new subsidy control regime effectively protect competition within the UK internal market?
  • What will be the main opportunities and challenges for businesses under the new UK state aid regime?

 

3. Competition in Digital Markets 

A prominent debate is now taking place about the dominance of tech giants in digital markets. Following the recommendations of an expert panel and a Digital Markets Task Force, a Digital Markets Unit (DMU) was set up within the CMA in April 2021. This unit was set up to monitor and regulate the behaviour of platforms with significant market power. A Government consultation is currently taking place on the design of the DMU, and the Government will legislate to put the DMU on a statutory footing in due course.

  • What will the CMA’s approach to digital markets be? Will it, and should it, be more interventionist?
  • How should the CMA learn from, and work with, the European Commission and the Federal Trade Commission?
  • What risks arise from a divergent policy response in different jurisdictions (especially the EU, US, and China to the growing power of online platforms?
  • How should the government ensure the pro-competition digital markets framework is sufficiently flexible and fast-moving to meet the challenges created by digital markets?
  • How can the government ensure that digital markets regulation interacts coherently with other fields such as data protection?
  • What is the UK's role in digital regulation in the global context of the EU, US, China?

 

This call for written evidence has now closed.

Go back to Post-pandemic economic growth: State Aid and Post Brexit Competition Policy Inquiry