Penrose Competition Review

CMA should publish an annual 'State of Competition and Consumer Detriment' report which measures and analyses progress and problems in both these areas across all sectors of the economy, and all parts of the country. CMA should use the findings as part of the measures of its own success, as should the sector regulators too, alongside other measures such as (for example) the number of cases or successful prosecutions it completes, or the direct impact of its cases and market studies and investigations.

The Government should make cutting red tape costs into an automatic burden-reduction process, with a revived and stronger Better Regulation regime. Specifically, this means: Reinstating the gateway condition, so Ministers and regulators must first remove or modernise old rules before they can introduce new ones. Increasing the ambition of the regime's target from 'one-in-one-out' to 'one-in-two-out', so we are moving forward rather than (at best) marking time. Including all forms of Government and regulator rule-making in the new process, with no exceptions. This includes all the previously-excluded EU rules which have become UK laws as part of the Brexit transition process; the independent sector regulators which were exempt in the past; Government Department and, through them, all the other regulators (such as the Environment Agency) as well.

the Government should implement the broad changes outlined in the Green Paper as fast as possible.

the new digital unit's extra-strong upfront powers must be ring-fenced tightly, to prevent regulatory creep, otherwise they will steadily spread to cover every digital sector of the economy. To reinforce this vital, central point, the new unit should be called the Network & Data Monopolies Unit (NDMU) and its extra-strong upfront powers must: Be a ring-fenced addition to the rest of CMA's existing competition and consumer powers, so it can use the normal ones wherever possible. Only apply to individual firms that own and run new network and data monopolies, rather than to the rest of the sector in which they work. Only apply to problems which CMA's existing competition and consumer powers can't solve already. Only be extended with Parliament's consent. To add a new monopoly, CMA should undertake a Market Study and then write a public letter to its Government Minister explaining that a new monopoly has emerged, and asking Parliament to approve an extension to its powers through secondary legislation. To remove a former monopoly the process should be quicker, and CMA should be able to abolish the power without approval from Parliament.

NDMU should have a legal duty to extend and promote competition in the monopolies it regulates, by making pro-competition interventions to reinstate normal competitive conditions wherever it's possible and proportionate. As the Furman Review also recommended, this should include: designing and enforcing a pro-competitive code of conduct to give both smaller players and incumbent platforms more certainty on the acceptable rules of the game; overseeing data portability schemes so users can seamlessly switch providers and interoperate services, and allowing access to key anonymised incumbent data sets where privacy and data protection are not an issue.

NDMU's legal duty to reinstate normal competitive conditions wherever possible should be extended to every sector regulator too, for the same reasons.

CMA should continue this work, potentially by extending its initial market study into a full-scale market investigation in future, to improve transparency of the price consumers are paying through their data for digital goods and services, so they can make informed choices about whether each one represents good value or not, and whether they wish to switch to others which might be better.

Require each economic regulator to publish and execute a multi-year project plan, to turn as much of their sector into a 'normal' pro-consumer, high-standards competitive market as possible. As the plan progresses, the sector regulator should formally hand over responsibility for more and more of its sector to CMA (initially by simple changes to the Memoranda Of Understanding which each of them has with CMA, but some statutory transfers may be needed later too) so they are progressively left with a smaller and smaller piece of less-competitive activity centred on the industry's core network monopoly. This planned, long-term schedule of CMA-handovers will create a risk-reduction ratchet of milestone moments for business leaders and investors, when political and regulatory uncertainties are permanently reduced as the changes are locked in forever.

Each sector regulator will be subject to the newly-strengthened Brexit Dividend better regulation target (see chapter 3 above). This will apply to everything they do, whether it is economic or other types of regulation, and whether it is aimed at areas of the industry which are currently inside or outside the network monopoly.

We must audit and amend all the sector regulators' legal duties so they all have a strong, clear 'competition for the benefit of consumers first, regulation only as a last resort' primary legal duty.

we should independently-auction the contracts to build and upgrade the network monopoly infrastructure in each regulated industry, rather than handing them to the incumbent monopoly-owners instead.

CMA also holds regular monthly intelligence-gathering meetings with consumer complaints organisations such as Citizens Advice Bureau, Trading Standards and Ombudsmen; the conclusions and findings of these meetings should be published transparently whenever possible (there may need to be exceptions where live investigations are discussed, for example), to show details of which parts of the country and sectors of the economy are making progress or causing concern.

the sector regulators should share the same mandate as NDMU to erode the power and strength of their network monopolies by making pro-competitive interventions, for example by encouraging more data sharing, or reducing barriers to new entrants, wherever it's possible and proportionate to do so.

Each sector regulator should publish its workload figures annually and, in each year that economic regulation forms less than half of its activity, the regulator's Chair should write a public letter to the CMA's Minister explaining whether their residual economic regulation duties should be transferred to the NDMU or not. This residual safeguard shouldn't start for between three to five years, to allow time for the multi-year project plans to 'normalise' each sector regulator's industry to take effect.

There is an existing (and unused) statutory power to transfer some of the economic regulators' powers to CMA, but it doesn't cover all of the regulators or all of their economic regulatory powers, so it should be updated to do so, and to allow incremental, partial transfers of powers as each step of the 'sector normalisation' project plans unfold over time.

If any of the existing consumer groups that hold legal 'supercomplaint' powers believe a sector regulator is becoming deskilled or captured, they should also have the power to trigger a formal, public request to Ministers to table the statutory motion to transfer the economic regulatory responsibilities to CMA. For fairness, this power should also be triggered if more than ½ of the regulated firms in a sector (by revenue) write a joint open letter to the same effect. However it was triggered, it would only transfer the legal powers and responsibility for future regulatory decisions; it should not allow retrospective unpicking of any decisions (particularly pricing decisions) that were already in place, since that would increase uncertainty rather than reducing it.

Small Claims Courts and ADR services should all become fully 24/7, to match the modern digital economy, and be as easy, cheap and simple as using an app on your phone.

We should create new, cheap, efficient, fast-track Competition Courts for local and regional cases (the tier below existing CAT fast-track cases) with very tight case management, a low cost cap for losing firms and a 1 or 2-day maximum hearing length too.

We should create a new statutory duty for minimum standards in LATS teams, including powers to mount antitrust and consumer investigations, and provide ring-fenced resources so they can deliver them well. The new statutory duty should define the outcomes which have to be achieved (in line with the Better Regulation principles described in Chapter 3 above) but leave local Councils to decide how best to deliver them, to allow more local control and creativity. This will also allow LATS to decide whether and how to join forces with their neighbours to tackle regional scams and cartels, in the same way as police forces pool resources in Regional Organised Crime Units at the moment.

We should apply it (or a close cousin of it) as a general consumer-protection regulation across the entire economy, so it provides a complete solution that covers energy and any other affected sectors of this £3.4bn rip-off too.

CMA should update its guidelines on what treating customers fairly means in practice, including 'transactional fairness' in its work, so it is as easy as possible for businesses, charities and public bodies to identify and avoid problems in advance, and so the guidelines keep up with changing attitudes of what society views as 'fair' in future too.

CMA must: Track whether DCTs are continuing to grow in power and reach, to level the playing field so buyers can make reliable and well-informed choices regardless of how vulnerable or short of time they are, or how complicated a particular contract may be. If they aren't growing fast enough to close this knowledge and information gap in the sectors where it causes the most consumer detriment soon, CMA must reopen their 2017 market study and introduce measures to make sure they can.

The CMA's civil consumer enforcement powers should be updated to bring them into line with, and have the same importance as, the competition toolkit. The CMA should be able to decide cases itself and impose fines in the same way as it already does for competition law cases.

CMA must consider how to improve transparency of the price consumers are paying through their data for digital goods and services, so they can make informed choices about whether each one represents good value or not, and whether they wish to switch to others which might be better.

CMA must consider how to introduce more competition as described in section 4.3: 'Rebuilding Normal Competitive Markets'. Or, if that isn't possible in these particular cases, evaluate whether these monopoly-owners should be held to a higher standard of minimum contract terms and standards so that customers with less choice have stronger legal rights to protect them from being ripped off.

CMA should undertake a market investigation to assess how we should recognise and measure sludge in future, and identify what consumer protection rules and analytical techniques will be needed to protect consumers from it as digital technologies evolve and develop over time.

Ministers should develop new options on how to prevent fast-growing UK-based firms in fast-growing sectors (in other words, successful firms in the industries of the future) from being poached offshore for non-commercial reasons, without damaging our attractiveness for FDI by creating disproportionate political risks at the same time.

penalties for non-compliance with investigations should be strengthened and brought into line with international norms.

CMA should be allowed to accept legally-binding undertakings at any stage in a market study, market investigation, or Phase One or Two merger review.

The Government should continue to pursue co-operation arrangements so our laws allow appropriate and safe information exchange, and so cases can be decided faster as well as fairly.

CMA has proposed the system should be simplified so that any appeals which they currently consider should instead be dealt with by CAT. This is a pragmatic step and should go ahead promptly.

the Government to establish a taskforce to complete an end-to-end review and redesign of procedures and case management in CMA and CAT. It should include CMA, CAT, business leaders, investors, entrepreneurs and start-up representatives, sector regulators and senior competition law practitioners. Its scope must include changes to any and all existing internal governance or statutory process requirements, including appeal standards, from investigation and case launch to appeal. It should be led by a senior expert in managing legal processes efficiently, appointed by Ministers, who is independent from both CMA and CAT. The reformed end-to-end process it creates must deliver three equally-important goals: Resolve all but the small number of most complicated cases (competition, consumer or mergers) within weeks or months rather than years, and Be as predictably simple and certain as possible, so business leaders and investors can take decisions with minimal legal risk, and so small entrepreneurial firms with limited legal budgets aren't disadvantaged, and Fulfil the 'fair trial' requirements of Article 6 of the European Convention on Human Rights.

The taskforce should be reformed in 5 years to review their work, and to recommend any further changes that may be needed to deliver their three unchanged goals.