Small business mergers to be kept outside of CMA purview

The government today unveiled proposals to reform the competition regime in the UK by giving new and enhanced powers for the regulator, the Competition and Markets Authority (CMA).

However, to keep the burden on smaller businesses to a minimum, mergers between small businesses – where each party’s turnover is less than £10 million – will be removed from the CMA’s merger control altogether, as per the proposals.

The consultation on Reforming Competition and Consumer Policy sets out new and enhanced powers for the CMA, which will help it to wrap up investigations faster and impose stronger penalties on firms that break the law or fail to cooperate with the regulator’s work.

The proposals also include provisions to disqualify company directors who make false declarations to the regulator; accept voluntary binding commitments from businesses at any stage in its investigations, rather than having to wait till the end – leading to quicker outcomes and reduced costs for both businesses and the regulator; block a wider range of harmful mergers, including so-called ‘killer acquisitions’ where big businesses snap up prospective rivals before they can launch new services or products.

“The UK’s economic recovery relies on the strength of our open markets and consumers’ faith in them,” Business Secretary Kwasi Kwarteng said. “By delivering on our commitment to bolster our competition regime, we’re giving businesses confidence that they’re competing on fair terms, and the public confidence they’re getting a good deal.”

The government has also unveiled several consumer protection reforms as part of the consultation. These include requiring prepayment schemes like Christmas savings clubs to safeguard customers’ money and making it mandatory for businesses in the used car and home improvement sectors to take part in arbitration or mediation where disputes arise over a transaction.

The government is also clamping down on subscription traps by requiring businesses to make it clear exactly what consumers are signing up for and letting them cancel easily. Bogus online ratings will also be targeted by rules that make it automatically illegal to pay someone to write, or host, a fake review.

Tough penalties for non-compliance are being put forward, with new powers for the CMA and similar enforcers to hit unscrupulous traders who breach consumer law with fines of up to 10 per cent of their global turnover, and civil fines for businesses who refuse or give misleading information to enforcers.

The government added that it is also considering several options – including introducing financial penalties – when firms breach the commitments given to enforcers that they will change their ways. The CMA will also be able to enforce consumer law directly rather than having to go through a court process that can take many months or even years.