European Competition Journal

ISSN: 1744-1056 (Print) 1757-8396 (Online) Journal homepage: http://www.tandfonline.com/loi/recj20

Making the case for competition in policymaking –

lessons from CMA advocacy 2014–2018

John Kirkpatrick

To cite this article: John Kirkpatrick (2018): Making the case for competition in policymaking
– lessons from CMA advocacy 2014–2018, European Competition Journal, DOI:
10.1080/17441056.2018.1460974

To link to this article: https://doi.org/10.1080/17441056.2018.1460974

Published online: 19 Apr 2018.

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EUROPEAN COMPETITION JOURNAL, 2018
https://doi.org/10.1080/17441056.2018.1460974

Making the case for competition in policymaking –

lessons from CMA advocacy 2014–2018
John Kirkpatrick*
Senior Director, Advocacy, Competition and Markets Authority, London, UK

ABSTRACT
This article draws on the experience of the Competition and Markets Authority
(CMA) of using its powers to provide information and advice to government,
including the power to make recommendations on legislation, and derives
some lessons for the CMA itself and for other competition authorities
seeking to use similar powers. It describes the regime within which the CMA
operates, places its current activities in a historical context, and then uses
five case examples of public CMA advocacy activity to illustrate various
aspects of the use of its powers, in relation to energy, education, transport
and public information policy. It highlights the importance of bringing to
bear knowledge based on casework, of understanding the political context,
of matching the scale and nature of intervention to both the importance of
the issue and the prospects of success, of persistence and timing of advice,
and of choosing whether to advise publicly or privately on the prospects for
influence. It also comments on the CMA’s assessment of the impact of this
work.

ARTICLE HISTORY Received 28 March 2018; Accepted 2 April 2018

KEYWORDS Advocacy functions of competition authorities; powers to advise government; implications

of policy for competition; assessment of impact of interventions

Introduction
In November 2015 Andrew Gavil, former Director of the Office of Policy
Planning at the United States Federal Trade Commission (FTC), wrote an
article in the George Washington Law Review entitled “The FTC Study
and Advocacy Authority in its second century: A look ahead”.1 The
UK’s Competition and Markets Authority (CMA) cannot compete with
the FTC for longevity – the CMA celebrates its fourth birthday this

CONTACT John Kirkpatrick john.kirkpatrick@cma.gsi.gov.uk Competition and Markets Authority,

Victoria House, Southampton Row, London WC1B 4AD, UK
*John Kirkpatrick was responsible for the CMA’s advocacy activity from 2014 to 2018.
1
<http://www.gwlr.org/wp-content/uploads/2016/01/83-Geo-Wash-L-Rev-1902.pdf>.
© 2018 Informa UK Limited, trading as Taylor & Francis Group
2 J. KIRKPATRICK

year2 and its predecessor organizations date their roots back about 70
years3 – but it does have responsibilities akin to those Professor Gavil
described. Specifically, the general power in section 7 of the Enterprise
Act 2002 (EA02)4 to “provide information and advice on matters relating
to any of its functions to ministers or other public authorities” is now in its
second decade, and a deliberate enhancement of that power enacted by the
coalition Government in the Small, Business Enterprise and Employment
Act (SBEEA15)5 is now in its third year of operation.
This article draws on the CMA’s experience of using those powers, par-
ticularly the new formal power to make recommendations on legislation,
and to derive some lessons for the CMA itself and for other competition
authorities seeking to use similar powers. It describes the regime within
which the CMA operates, places its current activities in a historical
context, and then uses five case examples of public CMA advocacy activity
to illustrate various aspects of the use of its powers, and seeks to draw
some lessons. It also comments on the CMA’s assessment of the impact
of this work.
Its broad thesis is that the power to challenge Government publicly or
privately, formally or informally, to think about the impact of its activities
on markets, remains a demonstrably valuable complement to the enforce-
ment and investigation activities of a competition authority. The scale of
Government influence over markets and the potential for it to promote or
harm the interests of present and future consumers is considerable. While
a competition authority must recognize that Government has other priori-
ties against which the impact on markets of its policy intentions must be
weighed, effective advocacy can:

. ensure that the potential impact of policy measures on markets is

understood and properly weighed alongside other policy priorities,
. demonstrate how effective competition in markets can protect the
interests of consumers,
. encourage government to use market mechanisms and incentives as a
means of achieving its goals cost-effectively and
. provide a useful counterbalance to the voices of vested interests.

2
The CMA was formed from the merger of the Office of Fair Trading (OFT) and the Competition Commis-
sion (CC), effected by the Enterprise and Regulatory Reform Act 2013 (ERRA13) <http://www.legislation.
gov.uk/ukpga/2013/24/contents> and assumed its powers on 1 April 2014.
3
Stephen Wilks’ In the Public Interest 1999 traces the origins of the current UK competition regime back to
1948.
4
<http://www.legislation.gov.uk/ukpga/2002/40/section/7>.
5
<http://www.legislation.gov.uk/ukpga/2015/26/section/37>.
 EUROPEAN COMPETITION JOURNAL 3

Context
The intent of the regimes in the US and UK is broadly the same – to ensure
that government takes proper account of the implications of its policies for
competition in markets. The FTC regime and approach is well summar-
ized by Tara Isa Koslov of the FTC.6 She argues that stopping policymak-
ing that can harm the interests of consumers before it takes effect is
efficient, that advocacy may be the only way to achieve that and that it
may be a quicker and less resource intensive form of intervention than liti-
gation or enforcement. She also describes the advocacy tools at the FTCs
disposal – amicus briefs, workshops, reports and testimony.
The CMA’s ambition is similar but the tools at its disposal reflect the
differences from the FTC regime. They also reflect a recent period in
which successive UK Governments have been consistently supportive of
competition and of the work of competition agencies as a means of enhan-
cing consumer welfare, productivity and growth in the economy. Neither
the Competition Act 1998 nor the EA02, which established the core of the
current regime, were politically controversial pieces of legislation. That
fact was referred to in the course of parliamentary debates on the Enter-
prise and Regulatory Reform Act 2013 (ERRA13),7 which established the
CMA, and which followed a similar pattern. Neither the general power in
s7 of the EA02 nor the SBEEA15 enhancement provoked significant
debate in Parliament.
Active encouragement to the competition authority to focus on the
actions of Government and to challenge them based on its expertise in
the workings of markets has come since the creation of the CMA. The
Government’s initial strategic steer to the CMA at its establishment in
2013 included an injunction to
challenge government where it is creating barriers to competition.

The revised steer published in 2015 amended this to

actively challenge … government and encourage the use of effective
competition,

and the “A Better Deal” policy document published alongside the Autumn
Statement in December 2015 extended the scope of this steer by inviting
the CMA to:
6
<https://www.competitionpolicyinternational.com/competition-advocacy-at-the-federal-trade-
commission-recent-developments-build-on-past-successes/>.
7
See, for example, the official record of the debate in the House of Commons Public Bill Committee
<https://publications.parliament.uk/pa/cm201213/cmpublic/enterprise/120705/am/120705s01.htm>.
4 J. KIRKPATRICK

examine how the action of local authorities can support competition, and chal-
lenge them when they do not.

This steer has been accompanied by two commitments on the part of

central Government: to respond to CMA recommendations within 90
days, and to
accept the CMA’s recommendation for improving competition. There will be a
presumption that all recommendations will be accepted unless there are strong
policy reasons not to do so.8

The explanatory notes to the SBEEA15 restate these commitments, and

add that
The Act gives the CMA a new power, to use at its discretion, to publish rec-
ommendations on the impact on competition of proposals for legislation.

Arguably, this provision only added incrementally to the existing EA02

power, save for the obligation to publish recommendations made under
it. The Government’s intention, made clear in discussions with the CMA
before its introduction, was in part to encourage Departments to discuss
policies likely to affect competition in markets with the CMA before
legislation is presented, to avoid the risk of public criticism. The effect
has indeed been to motivate Departments to engage with CMA. Since
the passage of the Act the CMA has engaged on some part of their
policy agenda with the overwhelming majority of Government Depart-
ments with responsibility for domestic policies. Those issues have
varied from the application of the land use planning regime to betting
shops to the procurement of drugs by the National Health Service.
The new power is directly applicable only to Westminster legislation,
where the UK Parliament is sovereign. That implies four things:

. First, the new power refers explicitly to Westminster legislation. Never-

theless, the EA02 power does extend to the devolved administrations,
and the CMA has used it to comment, for example, on transport and
social policy proposals in Scotland, Wales and Northern Ireland. More-
over, the CMA has, since its foundation, invested in relationships with
those administrations. It has maintained a presence in all three capi-
tals,9 its Board has met at least twice in each, and it has brought a
8
The CMA’s original strategic steer can be found at: <https://www.gov.uk/government/uploads/system/
uploads/attachment_data/file/245607/bis-13-1210-competition-regime-response-to-consultation-on-
statement-of-strategic-priorities-for-the-cma.pdf>. The Government is consulting on a revised strategic
steer at the time of writing.
 EUROPEAN COMPETITION JOURNAL 5

competition perspective to policymaking in all three jurisdictions on

issues from public procurement to alcohol pricing.
. Second, the power relates to the actions of national not local Govern-
ment. Nevertheless, the CMA has responded to the Government’s
steer from 2015 in relation to local Government described above, and
published its findings in December 2017.10
. Third, because it relates to domestic legislation it does not apply to pro-
posals for legislation at a European level. The CMA has, however, sub-
mitted views on proposals for European legislation through a variety of
channels; an example is the CMA’s responses to various consultations
on the digital single market.11
. Fourth, the power relates specifically to proposals for legislation. Once
policy ideas have reached that stage they are often well established in
Ministers’ and officials’ minds and may be hard to change without
political embarrassment or loss of face. Often it is more valuable to
be able to influence the direction of policy at an earlier stage. The
CMA has actively commented on published policy papers at all
stages of policy development,12 and continues to discuss with Depart-
ments policy proposals that might not involve new legislation. This
continues the practice of its predecessor organization, the OFT,
which used its EA02 powers extensively in the same way. An evalu-
ation of the OFT’s competition advocacy prepared in 201013 described
the pattern of formal and informal advice the OFT provided and pro-
vides some examples of successful advocacy, for example, in relation
to the regulation of will writing and the introduction of energy effi-
cient lightbulbs.

An important difference between the CMA and the FTC is that the
CMA does not need to be asked for advice or input. It can comment on
any aspect of Government policy at its discretion. But Departments are
under no obligation to seek or heed CMA advice, nor do their standing
orders explicitly require them to conduct an impact assessment setting
out the likely impact of a policy proposal on competition in markets.
This is in contrast to other assessments which are required by UK

9
And has recently announced its intention to expand its presence in Edinburgh significantly.
10
<local_authorities_and_competition_final_report.pdf>.
11
<cma-responses-to-consultations-on-the-digital-single-market>.
12
The CMA has, for example, commented on recent green papers on Industrial Strategy and Housing
Strategy.
13
<Evaluation-of-OFT-Competition-Advocacy.pdf>.
6 J. KIRKPATRICK

government guidance.14 The absence of such a requirement might be

interpreted as a missed opportunity to ensure that all policies are properly
screened for their impact on markets. However, unless such assessments
are conducted willingly, promptly and rigorously they are likely to be of
limited value. Few analysts in central Government Departments have
experience in conducting a competition impact assessment. So the
CMA sees its role as being to encourage and support officials in conduct-
ing a timely competition impact assessment consistent with the approach
described in its published guidelines,15 rather than rely on an externally
imposed obligation.
Taken together, these powers, the commitments that accompanied
them and the policy disposition of Government in the four years since
the establishment of the CMA (illustrated by the pro-competition
language of the “A Better Deal” document), constitute a particularly, poss-
ibly uniquely, favourable environment for competition advocacy in the
UK since 2013.

Advocacy and the markets regime

Though this level of active encouragement from Government may be his-
torically unusual, advocacy activity by UK competition authorities pre-
dates it. Prior to 2013 OFT had used its s7 powers extensively,
including to make recommendations arising out of market studies.
Several of these identified obstacles to efficient functioning of markets
in regulation or Government action and made recommendations for
change (for example, the market study that recommended the deregula-
tion of entry to the community pharmacy market in 2002).16
14
Guidance on the forms of impact assessment required of Government officials when preparing policy
proposals is published periodically – see, for example, the Treasury’s Green Book <https://www.gov.
uk/government/uploads/system/uploads/attachment_data/file/220541/green_book_complete.pdf>
and UK Government’s current Impact Assessment template <https://www.gov.uk/government/
publications/impact-assessment-template-for-government-policies>. The 2018 revision of the Green
Book includes references to the value of competition impact assessment which were largely absent
through the period covered by this review.
15
The CMA’s guidelines, which were refreshed in 2015 to accommodate the latest international best prac-
tice, can be found at <https://www.gov.uk/government/publications/competition-impact-assessment-
guidelines-for-policymakers>.
16
This was one purpose of market studies. Others included building an evidence base and a perspective on
problematic markets to support a market investigation, building knowledge and perspective on imper-
fectly understood markets, and sometimes correcting public misapprehensions about a market, and
scanning markets for evidence that the prohibitions relating to agreements and abuse of dominance
are being breached, which might support identifying enforcement cases. A speech given by John Fin-
gleton, then Chief Executive of the OFT, at the Law Society in May 2011 describes how the OFT saw the
markets regime under his tenure <http://webarchive.nationalarchives.gov.uk/20140402142426/http://
www.oft.gov.uk/shared_oft/speeches/2011/1011.pdf>.
 EUROPEAN COMPETITION JOURNAL 7

Advocacy activity and the markets programme have always been

closely integrated, both in the OFT and in the CMA. Discussions with gov-
ernment about a market in which it has an interest as supplier, buyer or
regulator may identify markets that are not working well or where the gov-
ernment has concerns and which might be good candidates for a market
study. At the other end of the process, market studies and investigations
identify remedies for the problems they seek to address which are in the
power of Government to effect. Though the CMA’s power to make
orders is a core characteristic of the UK’s unusual market investigation
regime, most market investigations have used recommendations to gov-
ernment as part of a package of remedies either alone or alongside
orders or recommendations to others.
While the CMA’s markets programme in the first two years of its exist-
ence was dominated by market investigations (now completed) in the
energy and retail banking markets, it has nevertheless also completed:

. A policy paper on regulation in Higher Education arising out of an OFT

Call for Information,
. A policy paper on competition in passenger rail services,
. A call for information on commercial use of personal data,
. A call for information on Online Reviews and Endorsements and
. Market studies on legal services, Digital Comparison Tools and Care
Homes.

Several of these (notably the work on higher education, rail, legal ser-
vices and care homes) were always likely to be platforms for advocacy
to Government. In each case, one avenue for investigation was whether
Government action was inhibiting the effective functioning of the
market. Once a market study is completed, if it makes recommendations
it is the task of advocacy to follow them up and seek to get them
implemented. Even if it makes no recommendations or they are rejected,
the market study will have created a strong evidence base as a foundation
for further advocacy, whether seeking later opportunities to press on the
same issues or enabling a response to future policy development in the
field. A good example of the former is the continuing private input to
the Government’s evolving policy on passenger rail transport. A good
example of the latter is the intervention in relation to the privatization
of the Land Registry, described below.
Not all advocacy is informed by past market studies. An expert compe-
tition authority can often be helpful to Government by providing an
8 J. KIRKPATRICK

analysis of market incentives – bringing the perspective of microeconomic

analysis to bear on an issue, or drawing on insights from economic litera-
ture or the work of overseas authorities.17 But the CMA’s experience has
been that its advocacy is strongest when informed by market insight
drawn from its own in depth work. That need not be markets work.
Advice to the Department for Transport on competition in passenger
rail services and to local licensing authorities on taxi regulation has
drawn on recent merger control experience (see below). Advice to the
Department of Health on the pharmaceutical supply chain has drawn
on analysis originally conducted for merger control.

The CMA’s advocacy interventions

This paper focuses on five recent advocacy interventions which built on
past competition authority work to make specific recommendations to
government. All were successful, high profile pieces of advocacy; three
of them involved using the SBEEA15 power.
The Energy Act 2016 gave effect to the Government’s plan to maxi-
mize the economic recovery of oil and gas from the UK continental
shelf. Specifically, it established a new regulator – the Oil and Gas
Authority (OGA) – with responsibilities to encourage co-operation
among operators to that end. While such collaboration would not
necessarily give rise to competition concerns, the CMA was keen to
ensure that policymakers and the new regulator were alert to the risk
that legitimate collaboration could open the door to anticompetitive
exchanges of information or more harmful forms of collusion. At the
request of the (then) Department of Energy and Climate Change, the
CMA engaged in a series of discussions with Government policymakers
to seek to ensure:

. that the policy framework or the actions of the regulator did not risk
facilitating or encouraging anticompetitive agreements or exchanges
of information among operators,
. that legitimate collaboration in the interest of consumers was not
chilled by the fear of competition enforcement and

17
As an example, advice provided to the Scottish Government’s Expert Advisory Panel on the Collaborative
Economy referred to the FTC’s work in this area.
 EUROPEAN COMPETITION JOURNAL 9

. that, where possible, competitive dynamics could be used to support the

Government’s aims.18

This engagement entailed commenting on policy papers and member-

ship of the programme board charged with implementing the Govern-
ment’s proposals. Ultimately, the CMA used the SBEEA15 power to
recommend for the first time in a letter to the Secretary of State for
Energy.19 It did not propose changes to the Bill itself, but set out principles
and considerations that the Government should have in mind in imple-
menting its policies. In this case, that meant ensuring that the OGA:

. acts at all times in accordance with competition law (as it is bound to

do),
. does not act in ways that might, even inadvertently, encourage or facili-
tate breaches of competition law by others,
. promotes and supports competition in industries it regulates and
. where possible, uses pro-competitive mechanisms to advance its aims.

Specifically, given risks associated with the OGA’s powers to encourage

industry collaboration, attend industry meetings and require information,
it recommended that the Government consider how to ensure that the OGA:

. does not inadvertently facilitate the exchange of sensitive information

or the formation of anti-competitive agreements between competitor
firms,
. conducts an assessment of agreements of which it becomes aware,
. exercises its powers, including, for example, its licencing conditions and
processes, so as to have a pro-competitive impact in relevant markets
and
. considers whether and how market incentives and mechanisms can be
used in pursuit of its objective to maximize economic recovery of oil
and gas from the UK continental shelf.

The Government responded publicly to the CMA’s letter within the 90

day time period, accepting all the CMA’s recommendations and setting
18
These concerns go wider than this industry. Ensuring that Government does not increase risks of com-
panies breaking competition law (for example, by encouraging competitors to collaborate) has been a
common theme in our advocacy, and some companies and trade associations have told us that they
have been reassured to know that the Government Department with which they are dealing has
sought CMA advice.
19
<https://www.gov.uk/government/publications/energy-bill-cma-recommendations-to-ministers>.
10 J. KIRKPATRICK

out how it proposed to implement them through its sponsorship of the

OGA. The direct effect of this advocacy effort included explicit recog-
nition of competition as a consideration the regulator had to have
regard to in its activities. In the CMA’s view, the presence of this duty,
the public recommendations and the Government’s agreement to
implement them serve as a useful commitment device for the Government
and the regulator. The CMA has continued discussions with the OGA
since it was established. These have illustrated that the OGA remains
alert to the competition issues and risks associated with its powers and
duties.
The Bus Services Act 2017 provides a framework to allow local trans-
port authorities to develop franchising and partnership schemes to grow
bus passenger numbers, improve services and improve air quality and
regional economic growth. Local elected politicians and transport plan-
ners across the UK are keen to secure benefits from integration and co-
ordination of local bus services (for example, by providing multi-oper-
ator tickets and timetabling information, as well as limiting operators’
incentives and ability to compete in ways that do not serve customers’
interests20). The CMA recognizes that passengers can benefit from effec-
tive partnerships between bus operators and local transport authorities
(LTAs). However, a market investigation into local bus services
outside London conducted by the Competition Commission (one of
the CMA’s predecessor bodies) and completed in 2012 found that on-
road competition between bus operators in deregulated markets could
bring benefits for passengers in the form of incentives for private oper-
ators to offer a high quality of service, low fares and efficient services
operation.21 The CMA was therefore keen to ensure that schemes that
limit such competition are only introduced where they offer a better
prospect of improving services for passengers than competition does,
and that, where possible, they are designed in such a way as not to sacri-
fice the benefits competition can bring. Following extensive engagement
with officials responsible for the drafting of the Bill, the CMA sent a
letter to the Minister responsible for the legislation (Andrew Jones
MP) in June 2016,22 making nine recommendations. These were
designed to ensure that the case for restricting on-road competition in

20
For example, by temporarily flooding routes with buses or timetabling service just ahead of their
competitors’.
21
<http://webarchive.nationalarchives.gov.uk/+/http:/www.competition-commission.org.uk/inquiries/
ref2010/localbus/pdf/00_sections_1_15.pdf>.
22
cma-recommendations-on-bus-services-bill.pdf.
 EUROPEAN COMPETITION JOURNAL 11

favour of franchising in each case was well made, and the risks under-
stood and mitigated, that where partnership schemes are introduced,
competitive mechanisms are used where possible (such as for allocation
of routes), smaller operators are not excluded, and that partnerships do
not degenerate into anticompetitive information exchanges or restrict
independent fare setting.
Of the three uses of the SBEEA15 power to date, this is arguably the
most far reaching, in that it called for a specific change to the legislation
before Parliament, which the Government accepted and effected by
means of an amendment made to the Bill in the House of Lords.23
The Government agreed that statutory guidance would oblige local
transport authorities to consider the potential effects of franchising or
partnership schemes on competition in local bus markets before imple-
menting them, and the amendment to the Bill made the CMA a statu-
tory consultee on such schemes, ensuring that it can assess their likely
impact and recommend ways in which the proposed schemes can be
implemented in the most pro-competitive way consistent with their
objectives.
The third use of the SBEEA15 power relates to the Higher Education
and Research Act 2017 (HERA17), which gives effect to the reform to
the university sector originally proposed in the Government’s green
paper Higher education: teaching excellence, social mobility and student
choice published in November 2015. The OFT call for information on
undergraduate higher education published in 2014 and the CMA’s
Policy paper published in 2015 had already established an evidence base
and a public position for the CMA. This supported a regulatory regime
with low barriers to entry and universal quality standards based on risk
to the interests of students or the public purse rather than the identity
of the institution, clear information and signals to students to enable
them to make good choices and drive improvement, and protection of stu-
dents in the event of provider failure. These formed the basis of public
comment on the green paper and the white paper that followed it, and
lengthy discussion with officials preparing the legislation. Given that
prior engagement and the fact that the legislation itself reflected the Gov-
ernment’s pro-competition aims, in this instance the CMA’s use of the
power to recommend was not to seek to change the Bill but to encourage
Government to:

23
Hansard, 23 November 2016 <https://hansard.parliament.uk/Lords/2016-11-23/debates/40F5931E-
E4B9-47C9-A644-9D7DDFD24CE1/BusServicesBill(HL)>.
12 J. KIRKPATRICK

. pursue aspects of policy to their logical conclusion (for example,

encouraging the Government to apply its proposed new teaching
quality regime – the Teaching Excellence Framework – to disciplines
rather than institutions, in order to avoid sending misleading signals
to potential students about teaching quality) and
. maintain pressure for further reform which Government had rejected
for the time being but not ruled out (for example, encouraging the Gov-
ernment to relax fee restrictions which, by restricting the annual as well
as the overall fee were inhibiting the development of accelerated degree
courses).

The letter24 the CMA sent to the Universities Minister was

accompanied by a blog25 which was broadly supportive of the direction
of the Government’s reforms.
The Government response accepted the CMA’s recommendations. It
has also subsequently announced that it intends to proceed with the
changes the CMA proposed to the fee arrangements to facilitate acceler-
ated degrees. This was one of the CMA’s main recommendations, and
an issue on which the CMA was one of few voices encouraging reform.
The CMA has continued to be represented on the programme board for
the regulatory changes and has supported Parliamentary scrutiny of the
Bill by advising and meeting the Government and interested Parliamen-
tarians as necessary.
Since the passage of HERA17, the CMA has continued to advise the
Government and the new regulator created by the Act (the Office for Stu-
dents) on the design of the new regime. That advice has sought to ensure
that the new regime gives effect to the recommendations of the CMA’s
policy paper. In response to consultation on the regulatory framework
for higher education, the regulator has changed its plans in ways consist-
ent with the CMA’s advice, including removing a category of registered
provider which the CMA considered risked sending an unjustifiably posi-
tive signal about the nature of the regulatory endorsement of the insti-
tutions in the category.
The CMA’s engagement with the DfE on higher education reform was
adjudged the winner of the 2018 World Bank/International Competition
Network advocacy competition under Theme 1: Prompting structural
reforms in key sectors. It provides an excellent example of how effective
24
<cma-recommendations-on-the-higher-education-and-research-bill.pdf>.
25
<competitionandmarkets.blog.gov.uk/competition-in-higher-education-is-in-the-interests-of-students/>.
 EUROPEAN COMPETITION JOURNAL 13

engagement with a Department implementing a long-term reform can

help shape that reform in ways that ensure that competition can work
in the interests of consumers – in this case students. Though the intentions
of the reform were broadly pro-competition and the Department was con-
sistently open to CMA intervention, it seems likely that without CMA
advocacy not all of these reforms would have taken the shape they did.
The CMA will continue to review the development and implemen-
tation of policy to ensure that the potential gains for students from policies
that encourage competition in the sector are not eroded.
Two further public interventions on policies not implemented through
legislation have been of sufficient profile and impact to merit reference.
In May 2016, the Government consulted on a proposal to privatize
the public Land Registry as a vertically integrated collector, owner and
monopoly supplier of information on the ownership of land. The
CMA’s response26 to the consultation drew on the findings of the
OFT report on the Commercial Use of Public Information published
in 200727 and the evaluation of the impact of that report published in
2014.28 The CMA response objected not to privatization per se but to
the proposed vertically integrated structure which, even with regulated
prices, would create commercial incentives not to make data available
to companies who might develop products that used the data innova-
tively and well but might compete with the Land Registry’s own com-
mercial products. That was likely to give rise to harm in the form of
poor quality and service to customers and therefore a lack of innovation
in downstream markets. The ultimate consumers of products using geos-
patial information as an input would lose out, even if the sale of a mon-
opoly provider might be expected to maximize the proceeds of sale to the
Government. This concern may appear quite technical, but may be sig-
nificant as geospatial information is vital to the development of mobile
apps.
The Government’s proposal was controversial for other reasons. Some
opponents challenged the notion of privatization of this public asset. The
CMA’s critique was unusual, but the point that privatizing as a monopoly
could both give rise to harm and would be very hard to undo at a later date
(a lesson learned from the CMA’s predecessors’ inquiries into the post-
privatization common ownership of airports around London and in

26
<cma-response-to-BIS-land-registry-consultation.pdf>.
27
>http://webarchive.nationalarchives.gov.uk/20140402142426/http://www.oft.gov.uk/shared_oft/
reports/consumer_protection/oft861.pdf>.
28
<Evaluation_of_CUPI_study.pdf>.
14 J. KIRKPATRICK

Scotland29) was understood by Government. In September 2016 the Gov-

ernment announced that it had shelved the privatization proposal. While
the Government’s announcement made no reference to any specific con-
sultation response, the CMA had been one of few prominent independent
voices opposing the proposals, and its position was cited in parliamentary
debates and in media reporting.
Taxi and private hire vehicle licensing, like bus transport, is a local
responsibility. There is an economic and public interest case for regu-
lation of these services: authorities are keen to ensure the safety of pas-
sengers and other road users and that passengers are not exploited by
unscrupulous operators. Structures of regulation governing these
markets have grown up as a result. But the markets for taxis and
private hire vehicles have been disrupted in recent years by mobile
app-based entrants in the UK and around the world. Proposals for
changes to regulation have arisen in a variety of geographies. While
some regulatory change may be desirable to ensure that the interests
of passengers are protected as business models evolve, not all the propo-
sals for regulation of private hire companies in the UK have met that
criterion. Many have been proposed by incumbent operators or their
representatives, and appear to have the intention or the effect of elimi-
nating some of the competitive advantages new entrants have used to
attract customers.
The CMA has commented publicly on proposals for change to licen-
sing arrangements in London, Liverpool and Sheffield. In all these
cases, some of the proposals could have seriously harmed the interests
of passengers by limiting the ability of competitors to introduce services
passengers value. The issues on which the CMA expressed a view varied
from the relatively straightforward (it opposed the imposition of require-
ments that operators offer an advance booking service or that there be a
five minute wait between booking the vehicle and it picking up the pas-
senger) to more technical (it also opposed restrictions on drivers
working for more than one operator, which risks creating a harmful
network effect as drivers are encouraged to work only for the largest oper-
ator alone, harming the ability of rivals and entrants to compete). The
CMA’s interventions in these cases were informed by an OFT market

29
The CC’s original market investigation is documented here: https://www.gov.uk/cma-cases/baa-airports-
market-investigation-cc and the more recent evaluation of the impact of the remedies conducted by the
CMA is here: <https://www.gov.uk/cma-cases/baa-airports-evaluation-of-remedies>.
 EUROPEAN COMPETITION JOURNAL 15

study from 200330 and the evaluation of its impact published in 2007.31
There is also considerable literature on the experience of regulation in
taxi markets, and we are aware of interventions by several other compe-
tition authorities in debates in different countries.32 The CMA sub-
mission to Transport for London was accompanied by an article
published in the Financial Times drawing broader lessons about regu-
lation in evolving markets.33
In all cases the proposals on which the CMA commented changed for
the better. The Sheffield case is particularly interesting as the CMA’s
knowledge of the local market was drawn from a recent merger case.34
In that case, the merger had been cleared by the CMA, in part because
of an expectation that competition from app-based providers would con-
tinue to intensify and would constrain the merged companies, which
together would have a market share of over 50%, from raising prices or
reducing quality. The CMA’s advocacy effort helped avoid the risk that
regulation served to prevent that development and make harm more
likely. The CMA has since built on this success by providing general
advice to licensing authorities on how to avoid anti-competitive effects
when licensing these services.
This case provides a good example of the value, and the challenge, of
advocacy in developing markets. It is widely argued that regulators and
competition authorities have to tread carefully when considering interven-
tion in fast moving e-enabled markets.35 Preventing regulation from
entrenching incumbent business models and depriving consumers of
the benefits of innovation is arguably less controversial. But striking the
right balance between regulation in consumers’ interests and restricting
competition is not straightforward, and competition authorities can play
a valuable role in advising regulatory authorities in this area. Professor
Gavil’s article cites numerous examples of FTC opposition to regulations
which might serve to favour incumbents rather than consumers.

30
<http://webarchive.nationalarchives.gov.uk/20140402181227/http://www.oft.gov.uk/shared_oft/
reports/comp_policy/oft676.pdf>.
31
<http://webarchive.nationalarchives.gov.uk/20111108152748/http://oft.gov.uk/OFTwork/publications/
publication-categories/reports/Evaluating/oft9561>.
32
Both are referred to in the evaluation report (footnote 31).
33
Financial Times 2 December 2015.
34
The published decision in the relevant case is here: <https://assets.publishing.service.gov.uk/media/
56322eaa40f0b674d3000012/Sheffield_City_Taxis-Mercury_Taxis_-_Non-Confidential_full_text.pdf>.
35
The CMA’s view is expressed by Alex Chisholm, its first Chief Executive, for example, in speeches
<https://www.gov.uk/government/speeches/alex-chisholm-speaks-about-preparing-for-the-digital-
economy> and <https://www.gov.uk/government/speeches/alex-chisholm-speaks-about-online-
platform-regulation>.
16 J. KIRKPATRICK

These five case examples do not comprise a comprehensive list of the

CMA’s advocacy interventions. The CMA has responded to Government
consultations in recent months on the Groceries Code Adjudicator, on
industrial and housing strategies and on district heating based on its
work in these areas. In keeping with the approach described above, the
CMA does not always make its interventions public. But it has provided
private advice on the implications for competition in markets of Govern-
ment policy proposals in fields as diverse as education (from early years to
adult education), healthcare (from public health and community phar-
macy to medical supplies), defence procurement, land use planning and
transport.
Importantly, the CMA has not challenged the objective of Government
policy in any of these cases. It has neither legitimacy nor expertise to
comment on the merits of acting to protect taxi passengers from harm,
integrate local public transport services or privatize public assets.
Rather, its expertise lies in advising Government on how to achieve
these objectives in ways that do not harm the interests of present or
future consumers by creating undesirable distortions of competition,
and explaining what might be lost by pursuing certain courses of action.
It is for elected politicians to decide on these objectives and be held to
account by the public for those decisions, including the trade-offs they
make between different objectives.

Lessons
From these experiences it is possible to draw some lessons about how the
advocacy function can be best exercised.36 The most important decisions
for an advocacy function are on which policy proposals to seek to influ-
ence and how to do so. In the CMA, the former are governed by the organ-
ization’s published prioritization principles.37 Applying the first principle
(impact) requires an assessment of the scale of that impact and of the like-
lihood of achieving it. We return to the assessment of scale of impact
below, but five lessons emerge from the experiences described above for
assessing the likelihood.
First, the CMA’s intervention is strongest where it is based in detailed
knowledge of the market in question drawn from its own work. While

36
Some of these echo the findings of the evaluation of OFT advocacy activity conducted in 2010 (see foot-
note 11).
37
<https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/299784/CMA16.
pdf>.
 EUROPEAN COMPETITION JOURNAL 17

providing insights from competition law and economics to policymakers

may be a helpful input to their thinking, it is seldom enough for an influ-
ential advocacy intervention. A competition authority is not a think tank
or lobby group. And it needs to know enough about the specific policy
arena or market to bring its distinctive competition expertise and perspec-
tive to bear in a way that reflects the characteristics of the markets in ques-
tion. That is why the CMA has chosen to focus its attention in markets
where it has previously conducted a market study, investigation or
other relevant work. All five interventions discussed above follow that
pattern. Markets work, however, is not the only source of useful insight
– merger control or enforcement work can also contribute to the evidence
base (as described in the Sheffield taxis example above).
Second, it is important to understand in detail the considerations
bearing on policymakers in order to be able to shape interventions so as
to secure impact. In all the cases described above, the CMA discussed
the issues and its proposed interventions with the relevant officials, some-
times at considerable length, before submitting its views. Importantly, this
does not have to be at the expense of independence. The recommendation
in the Land Registry case was directly opposed to the Government’s pro-
posal, and was in no way weakened by discussion with Government offi-
cials. They in their turn recognized the CMA’s entitlement to comment
and made no attempt to prevent or influence it.
Third, the scale and nature of interventions can be matched to the
importance of the issue and what is practicable. An intervention on the
scale of the CMA’s input into higher education reform needs to be
planned and sustained. It is founded in the knowledge and expertise
drawn from a Call for Information and a Policy project, and has been
implemented by the CMA team who have experience in dealing with pol-
icymakers. Both are the result of decisions to invest in that knowledge and
human capital.38 But it can sit alongside smaller scale interventions. A
short meeting or seminar with officials early in the policy process can
be enough to head off proposals which might inadvertently harm compe-
tition or undesirably distort markets in ways that risk harming consumer
interests, or at least to ensure that competition considerations feature
appropriately in their thinking. Examples of the latter are seldom in the
public domain, but in recent years the CMA has engaged in this way
with public health, transport and education policy development.

See WE Kovacic and DA Hyman, ‘Consume or Invest: What Do/Should Agency Leaders Maximize?’ (Forth-
38

coming) Washington Law Review; GWU Law School Public Law Research Paper No. 2015-60; GWU Legal
Studies Research Paper No. 2015-60 <http://ssrn.com/abstract=2705919> accessed 19 December 2015.
18 J. KIRKPATRICK

Fourth, effective advocacy is both a matter of timing and requires a long-

term commitment. Several of these interventions were founded in work orig-
inally done a decade or more ago. An authority therefore needs to maintain
an institutional memory of its past work and be in a position to pick up and
pursue an issue after a period of dormancy when an opportunity arises, for
example, when a relevant proposal is brought forward. Moreover, the policy
development process is a long one. The CMA’s work on higher education,
begun only in 2012, has required continuous engagement since then, first
through Government policy development and then through the recently
concluded legislative process. And there is more to do to ensure that the
goals the CMA sought to promote are not forgotten in the implementation
process. While the device of making recommendations to Ministers not on
the substance of the legislation but on how it is implemented (which was also
adopted in relation to the Energy Act) can serve as a conscience for the Gov-
ernment, it is not a substitute for regular engagement with policy officials
who are continuously subject to lobbying from vested interests.
Fifth, considered choices need to be made on the merits of public and
private advice to government. Recommendations on legislation made
under the SBEEA15 have to be published, so Government can be held
to account for whether or how it implements them. But private advice
can be more candid. Moreover, the CMA has been keen not to risk dis-
couraging officials from seeking its help because of the risk of public criti-
cism or embarrassment, so it frequently gives informal advice privately.
The CMA is likeliest to make advice public where:

. it is obliged to do so by law,
. it seeks to focus public debate on competition issues, whether its own
position is opposed to or supportive of the Government’s agenda,
. it fears that private advice is likely to be ignored and wants to encourage
a response or
. it sees little prospect of near term influence but wants to place its pos-
ition and its arguments on the record – perhaps as a basis for returning
to the issue at a later date when market circumstances or the political
environment have changed.

Impact
The CMA and its predecessor bodies have long been tasked by Govern-
ment with achieving consumer benefits worth a multiple of their costs.
 EUROPEAN COMPETITION JOURNAL 19

That multiple was raised to 10 in the performance framework agreed with

the Government when the CMA was first established.39 The CMA has a
well-established approach to assessing the impact of its work.40 In particu-
lar, it assesses the likely direct impact on consumers41 of every significant
intervention it makes under its merger control, consumer and competition
law enforcement and market study powers. This exercise is conducted
every year using a methodology consistent with international good prac-
tice.42 It is reviewed by an independent external academic43 and the results
are published44 alongside the CMA’s annual report.45
This target has been controversial among some commentators. There is
a risk that it could distort the CMA’s incentives by encouraging it to focus
on the use of tools with the greatest direct effect on this metric (generally
the markets tools), and could be capable of influencing the CMA’s deci-
sionmaking in inappropriate ways.46 The CMA guards against that risk
by assessing proposals against its prioritization principles,47 which
include strategic significance, risk and resource as well as impact.
The CMA also acknowledges that this one metric is an imperfect
measure of its impact; notably because it understates the importance of
deterrence and other indirect impacts of its work.48 Nevertheless, it recog-
nizes the value in conducting the assessment, and has recently sought to
apply the approach to its advocacy activity. Given the scale of Government
activity, it is likely that the potential harm to consumers from deficiencies
in competition in public markets or distortions of competition in private
markets deriving from Government activity49 is considerable. But

39
<https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/274146/bis-14-559-
competition-and-markets-authority-performance-management-framework.pdf>.
40
This includes conducting formal ex post evaluations of two pieces of work each year. The evaluations of
the Commercial Use of Public Information and taxi licensing market studies are cited earlier in this
article.
41
Indirect or dynamic impacts are not taken into account in this assessment, so we would expect the direct
impact to understate the overall effect of our work on the economy and consumer welfare.
42
See, for example, <http://www.oecd.org/daf/competition/reference-guide-on-ex-post-evaluation-of-
enforcement-decisions.htm>.
43
Recently Professors Steve Davies and Chris Decker.
44
The most recent version is at <https://www.gov.uk/government/uploads/system/uploads/attachment_
data/file/627060/cma-impact-assessment-2017.pdf>.
45
<https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/628984/cma-annual-
report-accounts-16-17-web-accessible.pdf>.
46
See, for example, <https://competitionpolicy.wordpress.com/2016/08/05/the-dangerously-distorted-
incentives-created-by-the-cmas-performance-target/>.
47
<https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/299784/CMA16.
pdf>.
48
The CA has recently published a summary of literature on the indirect effects of competition interven-
tions. <https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/642801/
deterrent-effect-of-competition-authorities-work-lit-review.pdf>.
49
There are several examples in the OFT paper Competition and Growth OFT 1390, November 2011.
20 J. KIRKPATRICK

systematic attempts to measure the impact of advocacy activity in this way

are not common.
The assessment of the impact of advocacy work relies on assumptions
about what policy would have been followed in the absence of the CMA’s
intervention and what the effects of that policy might have been (the coun-
terfactual). Where there is a difference between the policy approach
implemented and the consequences that followed from it and that coun-
terfactual, the assessment also requires an assumption about the extent to
which it is attributable to the CMA’s intervention. These are not easy jud-
gements, so the CMA’s estimates of the impact of its advocacy activity are,
of necessity, imprecise. But the results from the first assessment of CMA
advocacy activity conducted in 2017 show that, even on relatively conser-
vative assumptions, the impact on consumer welfare of the CMA’s inter-
ventions set out in this article may be in excess of £75 m. This is derived
from estimates of the benefits resulting in part from the CMA’s interven-
tion, which took the form of

. prices kept low as entrants maintain keen price competition in taxi

markets,
. Land Registry data disseminated quickly to users,
. students entering the labour market early having taken up accelerated
degrees and
. bus services offered in response to local competitive pressure.50

These estimates need to be handled with care. While there is good reason
to believe that these benefits will be realized and would not have been rea-
lized without the CMA’s intervention, it is not possible to be sure (nor is it
assumed) that they are wholly attributable to CMA advocacy.
Nevertheless, given that the bulk of this work has been conducted by a
small permanent team, drawing on support from the rest of the office
where needed and, of course, resting on the body of the agency’s past
work, this reinforces the view that advocacy can be a very efficient comp-
lement to a competition authority’s other tools.51 As the CMA develops a
50
In the initial phase of this work we were selective in choosing cases to assess. So there is no quantitative
assessment of the impact of the Energy Act recommendations, as identifying a suitable counterfactual
and quantifying the difference and the extent to which it was attributable to the CMA’s intervention
would have been essentially speculative. That does not mean that we consider the risks of, say,
harmful information exchange to be trivial nor the CMA’s actions to mitigate that risk ineffective;
merely that we cannot quantify the benefit.
51
See, for example, WE Kovacic, ‘The Federal Trade Commission as Convenor: Developing Regulatory Policy
Norms Without Litigation or Rulemaking’ (2015) 13 Colorado Technology Law Journal 17.
 EUROPEAN COMPETITION JOURNAL 21

track record of impact assessment it will be able further to enrich its

understanding of where and how the advocacy powers can best be
deployed in the interest of consumers.

Conclusion
A competition authority can be expected to highlight the benefits of
healthy competition in markets for consumers, businesses and the
economy. But competition authorities are also expert in understanding
the limits of markets, the conditions that need to be in place for them
to operate well and the harm that can be caused when competition is inef-
fective, distorted or is not focused on issues that matter to consumers. The
CMA’s enforcement and analysis work provide insights into all these
issues and its advocacy focuses not necessarily on more competition
but, as its primary duty requires, on competition in the interests of
consumers.
Moreover, the benefits that competition can bring sometimes have to
be weighed against other public policy concerns, including concerns
about equity and fairness. These often give rise to calls for direct interven-
tion in markets. These may come from politicians or officials who are keen
to secure outcomes more quickly or reliably than might occur through a
process of market competition, or who are sceptical of the potential of
competition to achieve the outcomes they seek. In these cases there are dif-
ficult trade-offs to be made:

. between the interests of different groups of consumers (for example,

those who are more or less able or prone to engage with markets),
. between the interests of consumers today and of consumers in future
(who might be expected to benefit from the innovation stimulated by
dynamic competition),
. between the interests of consumers and producers (both would-be
entrants and market incumbents keen to promote their own interests
often argue for regulation to ensure that competition is fair) and
. between different public policy objectives (of which well-functioning
markets is only one).

The choices of which public policy goals and which stakeholder inter-
ests to prioritize and of policy instruments to achieve them are for demo-
cratically accountable politicians to make. Governments will not always
prioritize the effective functioning of markets over other ambitions. But
22 J. KIRKPATRICK

as the CMA’s advocacy record shows, it is important that the impact on

markets of Governments’ actions and of alternative policy approaches
on consumers is assessed. How a policy is implemented can make as
much difference to the effect on consumers as the choice of policy itself.
The CMA’s impact assessment shows that the potential benefits are con-
siderable and can accrue to consumers, to efficient businesses and to the
economy as a whole. The CMA will continue to advise on and advocate
for policy approaches that secure those benefits using a combination of
the powers it has been given, its expertise in the functioning of markets
and its experience of advocacy to date.

Disclosure statement
No potential conflict of interest was reported by the author.