The Competition and Markets Authority (CMA) is a non-ministerial government department in the United Kingdom, responsible for strengthening business competition and preventing and reducing anti-competitive activities. The CMA launched in shadow form on October 1, 2013 and began operating fully on April 1, 2014, when it assumed many of the functions of the previously existing Competition Commission and Office of Fair Trading, which were abolished.
In situations where competition could be unfair or consumer choice may be affected, the CMA is responsible for:[8]
Responsibilities
- investigating mergers
- conducting market studies
- investigating possible breaches of prohibitions against anti-competitive agreements under the Competition Act 1998
- bringing criminal proceedings against individuals who commit cartels offences
- enforcing consumer protection legislation, particularly the Unfair Terms in Consumer Contract Directive and Regulations
- encouraging regulators to use their competition powers
- considering regulatory references and appeals
- Monitoring and regulating prices: Regulators aim to ensure that companies do not exploit their monopoly power by charging excessive prices. They look at evidence of pricing behaviour and also the rates of return on capital employed to see if there is evidence of 'profiteering.' For example, recently the EU Competition Commission has enforced a number of cuts in the charges that can be made by mobile phone businesses when customers travel overseas. When setting price caps, regulators need to decide how much profit companies should be allowed to earn in exchange for the risks they are asked to take.
- Standards of customer service: Companies that fail to meet specified service standards can be fined or have their franchise / license taken away. The regulator may also require that unprofitable services are maintained in the wider public interest e.g. BT keeping phone booths open in rural areas and inner cities; the Royal Mail is still required by law to provide a uniform delivery service at least once a day to all postal addresses in the UK
- Opening up markets: The aim here is to encourage competition by removing or lowering barriers to entry. This might be achieved by forcing the dominant firm in the industry to allow others to use its infrastructure network. A key task for the regulator is to fix a fair access price for firms wanting to use the existing infrastructure. Fair both to the existing firms and also potential challengers. A good example to use here is the attempt in the UK to introduce more competition into the banking industry by encouraging the entry of challenger banks to compete against the large established commercial banking businesses.
- The "Surrogate Competitor": Regulation can act as a form of surrogate competition – attempting to ensure that prices, profits and service quality are similar to what could be achieved in competitive markets. Fear of action by OFT and other regulators may prevent anticompetitive behaviour (i.e. there will be a deterrent effect)
Protecting the public interest
The key role of competition authorities around the world including the European Union is to protect the public interest, particularly against firms abusing their dominant positions
A firm holds a dominant position if its power enables it to operate within the market without taking account of the reaction of its competitors or of intermediate or final consumers.
An example of this happened in the summer of 2014 when the Competition and Markets Authority (CMA) recommended a full competition inquiry into UK retail banks claiming that the market for current accounts was not sufficiently competitive to work in the consumers' interest.
The key role of competition authorities around the world including the European Union is to protect the public interest, particularly against firms abusing their dominant positions
A firm holds a dominant position if its power enables it to operate within the market without taking account of the reaction of its competitors or of intermediate or final consumers.
An example of this happened in the summer of 2014 when the Competition and Markets Authority (CMA) recommended a full competition inquiry into UK retail banks claiming that the market for current accounts was not sufficiently competitive to work in the consumers' interest.
Recent news....
The competition watchdog has raised concerns that a takeover of a payments system by Mastercard could have an impact on the Link cash machine network.
The Competition and Markets Authority has given Mastercard a week to tackle its concerns that its takeover of Vocalink will restrict the number of companies able to provide systems to Link, which operates more than 70,000 automatic teller machines (ATMs) around the UK.
Andrea Coscelli, acting chief executive of the CMA, said: “The Link ATM network provides an essential service for millions of customers. It’s important that Link has a good choice of providers when it comes to supplying the necessary infrastructure so it can take advantage of the opening up of payment systems to competition.
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