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CMA chair removal heightens uncertainty around pro-growth pivot

The sudden replacement of Competition and Markets Authority (CMA) Chair Markus Bokkerink as part of the UK government’s “growth agenda” has taken the antitrust community by surprise, and raises questions as to how the CMA may change its regulatory approach.

On 21 January, the government announced that Bokkerink had stepped down and that it had appointed former Amazon [NASDAQ:AMZN] UK “boss” Doug Gurr as interim chair “in a bid to boost growth and support the economy.” The government wants to see regulators, including the CMA, “supercharging the economy with pro-business decisions,” Business and Trade Secretary Jonathan Reynolds said in the announcement.

The leadership change, and Reynolds’s statement, should be taken as part of a broader initiative that Prime Minister Keir Starmer laid out in a mid-October speech that called for UK regulators to focus on growth. In November, the government said it would be consulting on a “Strategic Steer” to the CMA on its priorities and this was reiterated in this week’s announcement with the additions that the steer will be growth-focused and the consultation will happen “shortly.”

Even if placed in the Labour government’s new growth framework, however, this move came as a surprise to practitioners.

On the merger front, the CMA has been seen as interventionist in recent years, calling in mergers unexpectedly and taking decisions that diverged from other regulators, such as the European Commission. The latter culminated in the Activision/Microsoft [NASDAQ:MSFT] episode.

“If you look at the CMA’s track record in the last few years, its public profile and the perception of business and the political classes as to its performance, there was clearly a degree of dissatisfaction with its decision-making,” said Ronan Scanlan, a partner with Steptoe and a former deputy director at the CMA.

This perception is recognised by the CMA itself; only two weeks ago CMA Chief Executive Sarah Cardell told parliament the authority has been working to reassure investors that it is not interventionist.

The announced change in leadership is the next step.

The CMA now has to support the government’s growth and innovation objectives, Scanlan said. “So how do you as a government effect change, you feel that the CMA isn’t listening? Ultimately you change the name on the door.”

The CMA’s mantra that competition is good for growth and business was echoed by the government, but this development and recent comments from the government suggest that there may be a desire to rein in the CMA’s more interventionist approach and to reduce the burden on businesses when engaging with the authority, even if this does result in reduced enforcement of the rules, Giles said.

Veronica Roberts, UK head of competition, regulatory and trade at Herbert Smith Freehills called the move a crystal clear indication from the government that the CMA needs to focus more on its pro-growth and investment agenda. “Change is afoot, but it will likely take a few months before we see clear evidence of the impact this will have on the CMA’s current workload and future priorities. I expect the CMA will likely re-issue the draft plan that was published only last week but with a different focus.” The agency is currently consulting on its draft annual plan.

Although the CMA made changes to its merger control procedures last year, its structure in itself raises issues, Scanlan said. It is very top-heavy and “there are all these layers of management and reporting, which are actually not really suited to giving either case teams or investigations sufficient autonomy to run cases and take decisions,” he said.

When it comes to merger control, there is, according to Scanlan, a lack of clarity around decision-making and the independent expert panel for Phase II investigations often adds further opacity, particularly in remedies negotiations. “These sorts of difficulties came to the fore in Activision/Microsoft, which while an extreme example, was one story that told the whole story about the dysfunction,” he said.

“The panel idea doesn’t work,” one Magic Circle firm competition partner agreed. It does not really deliver independence of decision-making, yet hamstrings the CMA from articulating clear and consistent policy, this lawyer argued. The excessive administrative complexity means that the CMA’s structure needs significant reform, the lawyer said.

Ultimately, the CMA has to bring a lighter touch to regulation through shorter investigation timeframes, less cost, less intervention and a more collaborative approach to business, said Scanlon. Parties’ general experience is that the UK merger control process is “really over-engineered, extremely expensive, extremely time-consuming, diverts a huge amount of management time, and in most cases results in an unconditional merger clearance,” leaving them to ask “why did I go through all of that?”, he added.

The CMA will still need to be mindful of the various competition-based tests imposed by the relevant legislation in terms of the way in which it exercises its powers, said Roberts at Herbert Smith Freehills.

Change cannot go far without new legislation, the Magic Circle lawyer said, noting that the panel system, the substantive test, and the duty to refer anticompetitive mergers for a Phase II probe are all hard-coded into the law.

Assuming the government had the appetite to legislate, one option could be a “US-style” body that would require lawsuits at the Competition Appeal Tribunal to block transactions, this lawyer added. This would have the benefit of clear roles, would improve rights of defence for US companies and could help to improve the UK’s investment reputation, he argued.

Move raises eyebrows

The surprise replacement of the CMA chair has raised some eyebrows, particularly as Bokkerink was only two years into a five-year term.

The outgoing chair was seen as an impressive operator within the CMA, who had a good understanding of business, while also having engaged effectively with the competition law framework the agency enforces, said Norton Rose Fulbright’s EMEA head of antitrust and competition, Ian Giles.

The fact that the government touted Gurr as a former Amazon executive also raises questions. “The CMA has been at the forefront of global efforts to push back against rising market concentration, and only recently acquired new powers to promote competition in digital markets. Replacing the CMA’s chair with a former Amazon executive, at a time when a handful of US tech monopolies are tightening their grip over AI, is a major strategic blunder that will harm, not help, growth and innovation in the UK,” said Max von Thun, Europe Director of the Open Markets Institute.

Bokkerink himself posted a statement outlining the CMA’s duty to promote competition for the benefit of consumers, which he tried to deliver on during his time as chair.

The fundamentals of “genuine choice, effective competition, a level playing field, safeguarded by an independent, impartial and transparent competition and consumer protection authority”…are essential to achieving the kind of growth that fosters opportunity and prosperity for all,” Bokkerink said in the statement.

Chancellor of the Exchequer Rachel Reeves reportedly said at the World Economic Forum in Davos that Bokkerink decided to step down after recognising that the Labour government has a different strategic approach to regulation, and recognised it was time for him to move on.

The Magic Circle competition partner questioned how significant the move really was, dubbing it “Davos theatre.”

The difficult merger or market decisions the “big corporates or Americans don’t like” are made by independent panels, not the chair, and the staff all report to CMA Chief Executive Sarah Cardell, this lawyer said.

“It creates the impression of activity but without rattling the CMA,” the lawyer argued.

In his October speech, Starmer said regulation stands in the way of economic growth. The UK is open for trade, is what Labour wants to convey.

On the heels of Starmer’s speech, Cardell announced that the CMA would review its merger remedies practice, including being more open to behavioural remedies and looking at a balance between efficiencies and ensuing customer benefits and competitive effects.

This was put to practice in the CMA’s approval of the joint venture between Vodafone [LON:VOD] and CK Hutchison’s [HKG:0001] Three in December, which was based on investment commitments and a price cap. This decision was seen by many as a change in approach – such a deal would typically have required a divestment to get the go-ahead – although the CMA’s chief economist has argued there was no paradigm shift, as reported.

In response to the chair announcement, Chief Executive Cardell said: “I would like to thank Marcus for his leadership and support over the last two years. He has tirelessly championed consumers, competition and a level playing field for business, as well as being steadfastly committed to openness and stakeholder engagement across the UK.

“The CMA has a critical role to play supporting the government’s growth mission. I welcome the appointment of Doug Gurr as the CMA’s new interim chair and look forward to working closely with him as we drive growth, opportunity and prosperity for the UK.”

The Department for Business & Trade declined to comment on specific questions put to it by this news service, pointing to its press release and a parliamentary debate yesterday (22 January).