CMA proposes changes to streamline and speed up market investigations

Proposals put forward by the Competition and Markets Authority (CMA) include reducing the number of formal publication and consultation stages, and assessing potential remedies to improve the market at an earlier stage in the investigation than is currently the case.

The consultation runs until 2 May.

Competition law expert Richard Snape of Pinsent Masons, the law firm behind Out-Law.com, said that it seemed like an "appropriate time" for the CMA to reflect on how best to manage its resources in future investigations, given that it had recently completed its "ambitious and sizeable market investigations" into the energy and retail banking markets.

"Since 2014, the preliminary timeline for market investigations has been 18 months, having previously been set at 24 months - however, in both its energy and retail banking investigations, the CMA had to extend this timeline," he said. "Market investigations can be very resource intensive – for both the CMA and those parties involved - and therefore the consultation to streamline the process is to be welcomed."

"However, given the wide variety of structural and behavioural remedies at the CMA's disposal, the challenge will be to ensure any changes in the name of efficiency do not compromise the accuracy, robustness or fairness of its decision making processes. In particular, it will be interesting to see how the CMA balances the intention to consider remedies at an earlier stage without giving rise to concerns around pre-determination of an investigation's outcome," he said.

The CMA committed to reviewing the way it conducts market investigations in its annual plan for 2016/17. Changes to the law in 2014 reduced the statutory time limit for a market investigation from two years to 18 months, although the CMA may extend this period by up to a further six months if there are special reasons why the investigation cannot be completed within 18 months.

The watchdog has proposed to revise the market investigation process to allow for more interaction with stakeholders at an earlier stage in the investigation, including by holding formal hearings sooner in the process. It also intends to assess potential remedies at an earlier stage. Doing so will "ensure a fuller discussion with all parties involved, ensuring the most effective remedies possible", according to the CMA.

It has also proposed reducing the number of publications issued for consultation during the course of an investigation, which it describes as "not the most efficient or effective means" of achieving its aims. This would mean an end to the 'updated issues statement' which follows the initial statement, and combining its provisional findings and provisional remedies into a single 'provisional decision report'.

The consultation also proposes allowing market studies, which are shorter programmes of work which can lead to market investigations, to carry out a broader range of preparatory work if they are likely to lead to a full market investigation. Where a market study has been carried out, the CMA has also proposed to allow the CMA board to give the independent panel that will conduct the market investigation an advisory steer on its scope. The panel would be expected to take any such steer into account, but would retain independence over the substance of the investigation.

Any changes which the CMA decides to proceed with following the investigation will be incorporated into its supplemental guidance on market studies and market investigations.