Addressing Current Economic Challenges
Good morning, everyone. I would like to extend my gratitude to the International Chambers of Commerce (ICC) and Clifford Chance for their gracious hosting today. It is always encouraging to be invited back, suggesting that my previous presentation did not go awry. Unless, of course, you are hoping for another slip-up.
In my remarks last year, I emphasised the critical role that competition and consumer regimes play in fostering economic growth and enhancing household prosperity. This was particularly relevant given the economic sluggishness, the pressures of rising living costs, and the prevailing geopolitical uncertainties. Nearly a year later, the urgency to stimulate growth across the UK remains pressing, and the geopolitical landscape is as unpredictable as ever, a sentiment echoed by the theme of this conference.
The ongoing conflict in the Middle East is exerting additional strain on both national and household finances. Moreover, the technological, social, and investment environments are being rapidly transformed by advancements in artificial intelligence. Additionally, you may have noticed we now have a new Prime Minister.
In this climate of uncertainty, the significance of growth and investment cannot be overstated. I firmly believe in the distinctive role that the Competition and Markets Authority (CMA) can play in supporting these objectives.
Embracing Long-Term Goals
Since my last appearance at the ICC, there has been a notable development: I have been honoured with the position of permanent Chair of the CMA.
Those who have served in interim roles will understand that there is a tendency to focus on short-term goals, always asking, “What can we do to achieve the maximum immediate impact?” However, upon being appointed permanently, the focus naturally shifts towards long-term horizons: what legacy are we creating, and how do we achieve it?
To this end, I have been actively listening to businesses and consumers, reflecting on what you require and desire from an effective regulatory body.
As I embark on the early stages of my five-year tenure, I am pleased to reaffirm three commitments regarding our regulatory approach:
- We pledge to exert every effort to maintain a stable and predictable regulatory environment.
- We will continue to enhance our operational processes.
- We aim to be as transparent as possible in our activities.
Ensuring Regulatory Stability
Firstly, on the subject of maintaining a stable and predictable regulatory regime, I hope you’ll indulge me as I engage in a quintessentially British pastime: discussing the weather.
For those of us residing in rural areas, this season marks the time when farmers prepare for the harvest. Having planted their seeds months ago, they must trust in the right balance of rain and sunshine to reap the rewards of their labour.
Businesses, too, require clarity and predictability to flourish. At the CMA, we strive to create the right conditions by contributing to a regulatory landscape that fosters business confidence.
This is why we have published a clear three-year strategy for the first time, aimed at delivering on two fundamental principles:
- The core of our mandate remains unchanged: to promote competition and safeguard consumers through independent and objective decision-making.
- The execution of our mandate must be grounded in the real-world context to yield tangible benefits for the UK economy, its citizens, and businesses.
Our focus is on delivering this strategy while ensuring that our approach remains consistent and predictable.
As I learned during my time in the industry, this stability is crucial as companies make investment decisions that span ten, twenty, or even thirty years. It becomes increasingly difficult to invest if one believes the rules may be subject to sudden change. Effective regulation provides certainty, reducing the burden of uncertainty regarding rule changes, jurisdictional issues, and the consistency of our investigative processes.
Transforming Operational Effectiveness
However, predictable outcomes do not equate to guaranteed ones. Our decisions are always based on independent, evidence-driven assessments. Supporting business investment does not negate the necessity for stringent enforcement when required. The CMA will consistently take action against anti-competitive behaviour and violations of consumer law that compromise taxpayers, diminish market dynamism, and stifle innovation.
Our intention is not to create obstacles for businesses; rather, we wish to foster an environment where they can trust the processes, legal frameworks, and criteria that guide our decisions. It is essential that businesses believe that competitors who disregard the rules will be held accountable and that they can rely on the UK as an attractive destination for investment, collaboration, and innovation, even amidst external challenges.
Secondly, we recognise that to cultivate a predictable environment in which businesses can thrive, it is not solely about what we do, but also about how we do it.
This brings me to my second commitment: we will persist in transforming our operational practices to enhance agility and consistency by embedding the four principles of pace, predictability, proportionality, and process. Implementing this framework across the CMA has already improved our speed of impact, and we will continue to report our progress in our annual reviews.
A prime example of this transformation is our mergers regime. Our mergers charter delineates what businesses can expect from their interactions with us, including key performance indicators for achieving essential milestones. This has led to significantly shorter pre-notification periods and expedited clearance decisions.
Enhancing Stakeholder Engagement
We conduct thorough reviews at the conclusion of our processes. Where parties previously expressed frustrations regarding our pace, some now acknowledge us as one of the fastest regulators. While we remain rigorous in our assessments, we have been informed that our engagement now provides clearer visibility regarding our requests for detailed information.
This progress highlights the importance of deepening our engagement. The results of our inaugural stakeholder survey, released in July, underscore this sentiment. While it is encouraging to see that 83% of respondents rated their interactions with us as ‘good’, the report also identifies areas where we can further enhance our application of the four principles.
Successful engagement is reciprocal; we benefit just as much as you do. We have been consistently meeting with our Consumer Forum and the Growth and Investment Council, which includes UK businesses and investor groups. Their insights are instrumental in ensuring effective competition delivers real advantages across the economy. We are evolving to be not just enforcers of competition but also enablers.
Our perspective on our role has expanded. Competition is not solely about addressing issues retroactively; it can also empower policymakers to utilise available levers to foster dynamic, innovative, and resilient markets from the outset. This is why one of our strategic objectives is to leverage our expertise and resources to advise the government on pro-competition policies that underpin growth.
Optimising Public Procurement
I would like to delve deeper into a specific area of work that encapsulates this mission, focusing on public procurement over the past two years.
In our discussions with businesses and while advising the government on its industrial strategy, a recurring theme has emerged: the UK possesses a formidable tool in public procurement, yet we are not harnessing its full potential. Recently, we released two reports summarising our findings: one concerning the use of public procurement in the national interest, and another addressing the urgent need to combat the detrimental practice of bid-rigging that drains public funds.
Each year, the UK government allocates approximately £400 billion to purchase goods, services, and infrastructure from the private sector. This represents a substantial amount of taxpayer money and purchasing power. Considering that bid-rigging can inflate procurement prices by 20% or more, it is evident why we are concerned about illegal collusion among suppliers; our conservative estimates suggest that taxpayers could be overpaying by as much as £3.5 billion annually.
While I won’t delve into the intricacies of the reports here, I encourage you to read the speech by our Chief Executive, Sarah Cardell, on our website. However, I would like to highlight a few recommendations that illustrate how fostering competition can drive growth and investment.
In addition to the need for clearer objectives and trade-offs, improved coordination across various markets and regions, and enhanced data collection and analysis, we identified an opportunity to lower barriers to entry for British SMEs and scale-ups.
We believe that every requirement placed on bidders should pass a simple test: does the benefit outweigh the burden? These burdens can determine whether a determined startup remains small or evolves into the next great British industrial powerhouse. Therefore, the government should systematically review requirements through the lens of competition, innovation, business dynamism, and sovereignty to ensure processes remain as straightforward, proportionate, and predictable as possible.
Furthermore, in an era where rapid technological advancements are reshaping economic security, resilience, and geopolitical standing, we must shift our focus from merely procuring current solutions to laying the groundwork for the firms of tomorrow. The UK must become more comfortable accepting a certain level of risk that encourages innovative firms to test, scale, and commercialise new capabilities.
The work surrounding procurement and bid-rigging exemplifies our broader approach to how we operate; leveraging our unique expertise and insights as a regulator to facilitate competition in alignment with national priorities while remaining vigilant against harmful practices.
Commitment to Transparency
This leads me to my third and final commitment: transparency.