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State aid and competition policy - Business Committee launch inquiry

23 September 2021

The Business, Energy and Industrial Strategy (BEIS) Committee launches an inquiry on state aid and post-Brexit competition policy, as part of its super-inquiry on post-pandemic economic growth, which will address the new policy and regulatory landscape following the UK’s departure from the EU.

This long-term inquiry will cover three main themes relating to:

  • UK Competition Policy and the Competition & Markets Authority (CMA)
  • State Aid and the Subsidy Control Bill
  • Competition in Digital Markets

The inquiry will examine a range of issues including whether competition policy in the UK has weakened over recent years, the CMA’s role and statutory duty, and how the CMA is likely to manage its enhanced responsibilities following the exit of the UK from the European Union. The inquiry is also likely to look at whether devolved nations should have a greater say in shaping the governance of the CMA.

The UK is no longer bound by EU State Aid rules. With reference to the State Aid and Subsidy Control Bill, the Committee’s inquiry will examine questions around the subsidy control framework, the lack of CMA enforcement powers on subsidies, and the main opportunities and challenges for businesses under the new UK state aid regime.

The BEIS Committee’s inquiry will also be looking at how the CMA is likely to tackle competition in digital markets and UK digital regulation in the context of approaches taken in other parts of the world, including in the EU, US and China.

The Committee’s call for evidence is issued ahead of a series of public evidence hearings likely to run into 2022. The inquiry is likely to begin in late October with an introductory session examining some of the broader issues relating to state aid and competition policy. The Committee’s first strand of work is expected to focus on subsidy control and be aligned with the Subsidy Control Bill’s passage through Parliament.

The inquiry is part of the BEIS Committee’s over-arching inquiry in this Parliament on Post-Pandemic Economic Growth.

State aid and post-Brexit competition policy – inquiry terms of reference

Send us your views

The Committee welcomes evidence submissions on the terms of reference outlined below. Those submitting evidence are able, as necessary, to restrict their responses to one of the three strands of work outlined below, depending on their expertise. It is not necessary to respond to all three sets of questions included in the terms of reference.

The closing date for submissions is Monday 1 November.

UK Competition Policy and the Competition & Markets Authority

  • 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 consultations 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?

State Aid and the Subsidy Control Bill

  • 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?

Competition in Digital Markets

  • 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

Chair's comments

Darren Jones, Chair of the Business, Energy and Industrial Strategy Committee, said:

“With the UK having left the EU, primary responsibility for enforcing competition policy now lies with the Competition & Markets Authority (CMA). In our inquiry we are keen to examine this expanded role for the CMA and what changes to competition law Ministers might bring forward following Brexit.

Ministers have indicated a greater willingness to intervene in the economy and to look at bailouts for struggling businesses and industries.  The Subsidy Control Bill envisages a more permissive subsidy regime and, as a Committee, we will want to examine how this legislation supports fair competition and whether it avoids the potential for damaging subsidy races within the UK internal market.

The domination of tech giants in digital markets and is a matter of global debate. In our inquiry, we will be looking at how the CMA intends to approach these issues through their Digital Markets Unit and what more may be required from Ministers.” 

Further information

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