Written evidence from Ronan Scanlan[1] (RAG0082)

1. INTRODUCTION

1.1.                      The purpose of this submission is to share, as a former staff member of the Competition and Markets Authority, and a solicitor practicing competition law in the UK, my personal perspective on why some of the problems experienced by the UK’s competition regime in recent years have arisen, and to identify ways to better align the CMA’s work with the Government’s growth objectives and set the agency on a more sustainable footing for the future.

1.2.                      Economic growth spurs employment and increases earning power, pays the exchequer’s bills and supports better public services and better living standards.[2]  One way in which the UK can stimulate growth is through increasing inward investment.  In this regard, the experience of our Atlantic neighbours is instructive. 

1.3.                      In Ireland, the Industrial Development Authority (“IDA”) was established with the singular goal of “encouraging investment into Ireland by foreign owned companies … as a strategic partner ….”.[3]  The IDA has been at the forefront of developing free trade zones, business parks, advocating for better transport linkages, championing Ireland abroad and introducing companies to government ministers and regulators.  Ireland has long recognised that securing growth requires a whole of government response, involving all departments, agencies and non-ministerial bodies.  And this permeates through constant contact and feedback between business, regulator and Government.  Today, multinational corporations (“MNCs”) account for over 10% of total employment in the State and 66% of exports.[4]  Without this inward investment, Ireland would have run a budget deficit for the last 20 years.

1.4.                      In the United States, recent studies have suggested that investment in the tech sector, by major tech companies, is a critical driver (and possibly one of the most important drivers) of economic growth.  In the first half of 2025, Jason Furman found that growth in the US was almost entirely driven by investment in data centres and information processing technology.  Without it, he estimated that growth of the US economy would have been just 0.1% on an annualised basis.[5] 

1.5.                      It is clear that any strategy to grow the UK economy must ensure that all of Government, including regulators, take due account of the impact of their actions on inward investment.  Ultimately, a country’s regulatory framework, and the burden it places on business, is an important consideration for companies in deciding whether and where to locate and build from. 

1.6.                      Consequently, there is a pressing need for regulators to gain a much more sophisticated understanding of the full cost of their regulatory interventions, to assist them in weighing the costs and benefits of their actions before they are taken.[6]

2. THE COMPETITION AND MARKETS AUTHORITY

2.1.                      The Competition and Markets Authority (the “CMA”) exercises a wide range of statutory powers in two distinct ways:

(i)               First, it makes use of extensive powers to levy civil and criminal fines for anti-competitive conduct, such as price-fixing, market-sharing and bid-rigging, and for breaches of consumer protection legislation.  These functions are more ‘law enforcement’ than regulation and, given their quasi-criminal nature, these cases are subject to full judicial oversight (ie full merits appeals).  While competition investigations can involve novel theories of harm, such as excessive pricing and disparagement, the Courts have been shown to be capable of applying legal rigour to the CMA’s approach. 

(ii)             Secondly, it has broad powers to review and if necessary intervene in mergers or markets where it suspects competition is not working well and, most recently, impose bespoke regulatory frameworks on large providers of digital services.  The CMA has wide discretion in which mergers and markets it chooses to investigate and what remedies it requires (up to and including structural divestiture).  The legal thresholds for its interventions are modest for mergers,[7] lower for markets,[8] and lower still for digital markets.[9]  And appeals in all cases are limited to judicial review.

2.2.                      Distinguishing the CMA’s work in this way is helpful in parsing what has been going well from what has been going less well in recent years.

2.3.                      A common thread to what has gone well has been where the agency has exercised its wide discretion in case selection to focus on issues close to home, deployed well-resourced teams with clear directions, been focussed on maximising the positive impact of its work to markets and consumers, undertaken well-run investigations, and imposed fair and proportionate remedies. 

2.4.                      Examples include:

(i)               the break-up of the London airports, ushering in low-cost flying and fierce competition;

(ii)             interventions in clear-cut cases of competitive harm in consumer-facing markets, such as blocking major supermarket mergers;[10]

(iii)          the promotion of open banking, which continues to drive innovation in banking and financial services;[11]

(iv)          interventions to reduce sharp practices and over-charging in the pharmaceutical sector (with a particular focus on the NHS and its patients, including through pay-for-delay, excessive pricing and disparagement cases), which have put money directly back into the NHS and the pockets of its patients;[12]

(v)            the prosecution of cartels in the construction industry (with the important deterrent that has for would-be future cartelists); and

(vi)          market investigations where they have focussed on home markets – care homes, infant formula, road fuels and veterinary services being a few of many good examples.

2.5.                      Conversely, there is also a common thread to what has gone particularly badly in recent years.  This has often been where the CMA has used its wide discretion to repeatedly open speculative investigations that lead to no action, attempted to tackle global markets without establishing consensus across jurisdictions, opened investigations with unclear motivations (often following, or trying even to jump ahead of, other regulators), adopted case strategies with no or only vague objectives, and ultimately imposed significant regulatory burden on companies without delivering meaningful benefits to competition or consumers.

2.6.                      Examples include:

(i)               the disastrous intervention by the CMA and subsequent reversal of its prohibition in Microsoft / Activision;[13]

(ii)             the protracted and unproductive block of Meta / Giphy;[14]

(iii)          the call-in and prohibition of Sabre-Farelogix, a foreign-to-foreign merger where the parties had no turnover in the UK and the merger was not opposed in the US;[15]

(iv)          the call in of at least five AI partnerships and acqui-hires involving Amazon, Google and Microsoft, with one taking over two years to complete, and all bar one resulting in the CMA finding that it did not have jurisdiction to investigate the transaction in the first place);[16]

(v)            the three-year cloud market investigation of Amazon, Google and Microsoft (which included an Ofcom investigation, resulted in no remedies, and closed with a recommendation to undertake another investigation);[17] and

(vi)          the strategic market status investigations by the CMA’s new Digital Markets Unit into Appstores (Apple and Google) and Search and Search Advertising (Google), which – despite being incredibly resource-intensive – will do little more than what the EU’s Digital Markets team has already achieved.[18]

2.7.                      The CMA seeks through its case work to address the risks of market failure arising from the concentration of economic power.  This is an important and laudable objective.  However, every regulatory intervention involves a trade-off between the cost of that intervention (to agency and business, as well as the market in which the investigation takes place) and the perceived benefits of that intervention. This is essential to working out, in advance, whether ‘the juice is worth the squeeze’.  As we have seen, there are sheer down sides to getting it wrong.

2.8.                      Yet this balancing exercise, which should be the foundation of proportionate regulation, simply does not happen in practice.  This increases the risk of poor case selection and outcomes, as outlined above.  And these ‘bad cases’ speak to persistent problems in the CMA’s approach to case opening, including:

a)                a failure to gauge upfront the likely total cost of intervention (both to the taxpayer and the businesses concerned, as well as the potential disruption to the markets affected and the impact that may have on growth and investment);

b)                a failure to consider in advance what remedies may be required, how workable they are in practice and whether they are likely to help or hinder economic growth and investment in the markets affected;

c)                 a failure to consider upfront the potential pitfalls of cases that seek to impose rules on companies operating in markets wider than the UK, including the challenges of international comity and the likely reaction of foreign governments;

d)                a failure to thoroughly weigh the costs (both economic, financial and political) against the probable outcome in light of known execution risks; and

e)                a lack of political or parliamentary involvement in the case selection process, which could temper the CMA’s broad discretion and reduce the likelihood of highly disruptive investigations being launched in the first place.

2.9.                      In the last five years alone, the CMA has investigated over 30 cases across its digital, markets and mergers work specifically involving the GAFFAM.  Repeatedly calling in tech mergers that were not even within its jurisdiction undermined the CMA’s credibility and the value of self-assessment, and with it business confidence, and applied friction to prospective deal making where there should have been none.  All of these investigations involved significant costs both to the businesses concerned and interested parties and have had a cumulative negative impact on business confidence in the UK.

3. PROPOSALS FOR REFORM

3.1.                      With the above in mind, I have set out below a number of possible proposals to better align the CMA’s work with the Government’s growth objectives and set the agency on a more sustainable footing for the future.

(i) Case opening decisions should be informed by meaningful cost-benefit analyses

3.2.                      The Department of Business and Trade (“DBT”) should urgently commission an in-depth study of the true cost of the CMA’s interventions across its discretionary functions; in particular, mergers, markets and digital markets. 

3.3.                      These cases are not costless, even if they ultimately result in clearances or decisions not to intervene.  These costs are measurable and need to be correctly understood so as to inform future decisions on case opening by the CMA and DBT, as well as evaluations of the CMA’s work from a value-for-money perspective and to net-off future estimates of the actual benefit of various interventions to consumers (versus the costs to business).

3.4.                      DBT should issue a call for evidence and encourage companies that have been involved in market and merger investigations to provide information – if necessary on an anonymous basis – indicating the true total cost, from a financial perspective (including internal resource and external fees) and a time perspective (including diverted management time).  All examples where interventions have impacted a business’s day-to-day and strategic decision-making should also be captured.

(ii) Market and Digital Market case opening decisions should be overseen by Government

3.5.                      DBT should also play a more proactive role in guiding the CMA, not in a single annual ‘steer’ but in regular engagement and input into decision-making including, critically, case opening.  The CMA’s greatest asset, its staff, is a finite resource.  The statutory timetables to which they work are considerable and, therefore, how they are deployed is of critical importance.  Checks should exist to prevent the CMA’s staff being deployed in unproductive ways, such as inappropriate merger call ins or protracted and overly ambitious market and digital market investigations. 

3.6.                      DBT could go further and oversee case opening decisions, for example, in regard to market work (where they already provide the CMA with steers) and digital markets work.  This could involve the CMA sharing with DBT a proposal for a new market or digital market investigation, setting out why it is compatible with the strategic steer, its powers, and its stated prioritisation and 4P principles.  This would be accompanied by (i) an impact assessment, weighing the cost of the intervention (direct and indirect) against the perceived benefits; and (ii) a risk assessment, describing the legal, practical and technical and regulatory challenges that any eventual action (whether remedies under the MIR or conduct requirements under the DMCR) is likely to face.  This could also include whether the markets affected are UK or wider and any challenges that interventions may have in the context of regulatory regimes in other jurisdictions (or planned regulatory interventions).

(iii) The Digital Markets Competition Regime should be urgently reviewed

3.7.                      The Digital Markets Competition Regime grants the CMA quasi-legislative powers, no real legal threshold to pass, very limited recourse to the Courts and almost no backstop for Government or Parliament to have a say.  It was created at a time when such intervention was seen as largely costless and aligned with the preferred approaches in both the EU and US. The regime is designed to focus almost exclusively on American tech companies, which the US administration is seeking to protect from undue foreign regulation. 

3.8.                      Parliament should consider whether the DMCR fits with the UK's approach to encouraging inward investment (given the regime’s focus on US tech companies).

(iv) The current ‘voluntary regime’ should be replaced by higher merger jurisdictional thresholds and mandatory notification

3.9.                      The CMA’s jurisdictional thresholds for mergers should be urgently reformed.  The share of supply test and the material influence threshold sets the bar too low and has led to huge uncertainty across business as to when the axe will fall.

3.10.                 The introduction of a mandatory, turnover-based threshold for notification, in place of the current briefing note procedure. This would, by far, provide the greatest certainty for business and allow the CMA review process to be accounted for in global deals alongside all other jurisdictions.  Given that businesses are now submitting upwards of 200 briefing notes a year to the CMA MIC, such a move, which would simply bring the CMA into line with every other jurisdiction globally, would not represent a huge change except that it would improve certainty for all and bring to an end the CMA picking and choosing merger cases based on whether or not they involve big tech.  Ultimately, businesses demand certainty and reforming the UK’s regime to better align with other major jurisdictions would go a considerable way to providing that.

3.11.                 With a mandatory regime in place, the share of supply test could instead be converted to a safe harbour, below which only short-form notifications need be made (since acquisitions resulting in combined shares of less than 25% can be assumed not to give rise to competition concerns).

(v) Plans to reform decision-making for Phase II mergers should proceed

3.12.                 The announcement that DBT intends to consult on reforms to the Phase 2 decision-making process reflects the growing acceptance that the panel system is no longer fit-for-purpose.

3.13.                 There are two main alternatives to the panel system:

a)    Delegate decision-making to 'case decision groups' overseen by the CMA Board (with full merits appeals).  This would give the CMA much more flexibility to reach proportionate decisions; in particular, where mergers are also being reviewed in other jurisdictions.  Full merits appeals would also encourage the CMA to be more pragmatic and only move to prohibit the most clear-cut cases.

b)   Delegate decision-making to 'case decision groups' overseen by the CMA Board (including for remedies that may be agreed in place of prohibition at Phase II) but require the CMA to seek a court order to prohibit mergers (ie before the CAT).

3.14.                 On balance, there are good arguments for option 2.  This would further motivate the CMA and parties to agree remedies in place of prohibition – in cases giving rise to significant concerns – and would be quicker than option 1.  This would ensure that only tried and tested and evidence-based theories of harm were put forward earlier in the case cycle.  It would also ensure that parties received full disclosure of relevant evidence, including that from third parties (and not simply the ‘gist’ that they get today).  This is the approach in the US (and other common law jurisdictions). 

3.15.                 As Judge Boasberg said in FTC v Meta Platforms, the sooner that incoherent or irrational theories of harm meet the "crucible of trial" the better.  And much of the criticism in recent years has been that the CMA’s panels have been willing to entertain shaky theories of harm that would not survive judicial examination.  Further, a formal Court process would ensure a greater level of disclosure of evidence to the merging parties than is currently provided for in the CMA’s administrative process.

(vi) Government should be given a clear route to intervene in mergers, market and digital market investigations related to the UK’s strategic economic interest

3.16.                 The last 12 months have demonstrated that certain decisions by the CMA can have ramifications well beyond its remit.  There is therefore the need, in appropriate cases, for Government to intervene.  Yet, it serves neither agency nor business for political involvement in mergers to be opaque and ad hoc.  Government should therefore have a clear statutory basis for intervention in merger, market and digital market cases.

3.17.                 A formal mechanism for Governmental involvement exists in regard to merger cases and can be used and expanded.  This is the public interest intervention notice regime (PIIN).  Where the Government assumes control of a merger decision in this way, this gives interested parties (both main and third) clarity as to who they should petition.  It also allows the CMA to focus on an assessment of competition, rather than attempting to take account of non-competition factors, which it is not well-placed to do and can undermine the regime.  Such an approach could also be used for markets and digital markets investigations. 

3.18.                 A further means of Government involvement would be at ‘relevant customer benefits’ stage, when a Government body or agency could make a submission about the expected benefits of a particular merger (as, for example, Monitor used to for the CMA in regard to NHS mergers, becoming the de facto decision-maker on those, or Ofcom did more recently in regard to Vodafone / Three). Again, this would give clarity and transparency to the process.

(vii) CMA staff pay, grading and case resourcing should be reviewed

3.19.                 The Department of Business and Trade should urgently review and take steps to reform the CMA management structure and pay grades.  This should include removal of the myriad middle management roles and the reclassification of grades HEO, Grade 7, 6 and SCS1 and SCS2 as Case Handler Grades I-V (with IV and V having supervisory functions), enabling experienced lawyers, economists and practitioners to join and work on the cases (and the CMA to be able to offer them the pay to do it).  That is what the DOJ, FTC and European Commission each do and should be the case in the UK too.

3.20.                 It is no secret that the agency is struggling to attract and keep good people (Principal Case Officers top out at £74,000, which would barely cover the salary of a trainee lawyer in the City these days).  And experienced professionals that do join are often placed in middle-management roles rather than on the front lines.  This is also notwithstanding the significant headcount reduction in the last 12 months as a result of a voluntary exit programme required as a result of budget forecasting errors for financial year 2024.

3.21.                 Having sufficiently senior people running cases on a day-to-day basis would help telescope issues quickly, unblock misunderstandings and keep things moving. The current system, where an HEO or Grade 7 ostensibly run a case despite often having no legal or economic training, or competition enforcement experience, with oversight from an Assistant Director, Director, Senior Director and Decision-Maker (and that is just the Delivery side) is not efficient. Senior grades need to return to the bread and butter of case work and that can happen with some imagination in the way the grades are labelled and deployed.

3.22.                 This moment of reform is an opportunity for the Government to acknowledge that the CMA needs to pay its staff fairly, to recruit and retain the best talent, and to have grades that encourage front-line work, even at senior levels.

Next steps

3.23.                 I hope that these observations are of assistance to the inquiry and am happy to provide any further information that may be required.

19 January 2026