By Max Clarke
The CBI (Confederation of British Industry) today set out its proposals for the Government’s consultation on competition. These include deregulating mergers where turnover is less than £5 million to stimulate growth and limiting market investigations to clear failures of competition and subject to strict timetables.
“The UK competition regime is well regarded, robust and independent", said Matthew Fell, CBI Director for Competitive Markets "but this consultation is a chance to make the system more efficient, open up markets even more and unlock investment to create growth".
“As an immediate win, the Government should deregulate small mergers where turnover is less than £5 million which would stimulate growth through acquisition.”
The current competition framework is lagging behind some fast moving business sectors such as creative industries, where technology is changing the way people access news and media content.
The CBI also said that businesses had concerns about the lengthy and costly process of market investigations, all too often followed by re-investigations. Currently a competition investigation taking in a ‘super complaint’, an Office of Fair Trading market study and then a reference to the Competition Commission can last more than five years.
Mr. Fell added:
“It’s crucial that the competition framework keeps up with fast moving markets, such as the technology-driven, creative industries sector where business models and life-cycles are rapidly changing.
“Market investigations take a long time, are resource intensive and have a chilling effect on investment, so they should not be entered into lightly or used as fishing expeditions. Instead they must be limited to clear failures of competition and be subject to strict timetables.
“The competition system must deliver timely outcomes, allow companies to invest with a high degree of certainty, and any intervention should be proportionate to the scale of the perceived problem.”
The CBI is calling for:
* A single competition body coupled with a clear timetable for decisions would speed up the system by eradicating duplication. This would reduce the burden and cost to businesses, and help unlock investment.
* There needs to be greater certainty in the mergers and acquisition review process, so that it is straight-forward for a company to work out if a potential merger could be subject to a review.
* The deregulation of small mergers where turnover is less than £5 million would encourage growth in this market.
* New market investigations should be limited to clear failures of competition, and be subject to a strict timetable and ‘super complaints’ should be abolished.