CMA's updated Prioritisation Principles: when will the CMA act?

Since the publication of the CMA's Prioritisation Principles in 2014, there have been huge changes to the context in which the CMA operates, most notably the UK's exit from the EU and updates to the CMA's strategic aims. Given these changes, the CMA decided to revise its Prioritisation Principles in July 2023, leading to a period of consultation. Following the consultation, the CMA published its updated Prioritisation Principles on 30 October 2023.

The Principles

In light of the CMA's limited resources, the CMA describes its principles as helping "to guide our choice of work where we have discretion to act".[1] The principles are also to be considered during the life cycle of a project to assess whether continued commitment of CMA resources is warranted.[2] The updated principles that the CMA will have regard to are:

1. Strategic significance;
2. Impact;
3. Is the CMA best placed to act;
4. Resources; and
5. Risk.

Strategic Significance

The most illuminating of the principles is "strategic significance", by which the CMA must consider whether "CMA action in this area fit[s] with the CMA's objectives and strategy".[3] The CMA's Consultation Document explains that the principles have been re-ordered so that "strategic significance" is the first consideration,[4] emphasising the particular importance of this principle. The principle's importance is also highlighted in the Prioritisation Principles, which state that "the CMA will generally prioritise according to the strategic significance and impact of the work".[5]

In terms of defining what the CMA will regard as strategically significant, the Prioritisation Principles explicitly refer to the CMA's Annual Plan, which contains the CMA's priorities and areas of focus for any given year.

Some of the CMA's current areas of focus include:

• Behaviour that prevents public bodies and individuals from making the most of their available budget, such as anti-competitive behaviour in public procurement and competition issues in the labour market;
• Sustainability, including a particular focus on greenwashing; and
• Anti-competitive behaviour in digital markets.

The "Other" Principles

The four other principles provide less indication of the CMA's focus; however, they are worth mentioning:

• 'Impact' considers how substantial the likely positive impact of CMA action will be. The CMA will consider both direct and indirect effects of the proposed action.
• 'Is the CMA best placed to act' asks the CMA to consider whether there is an appropriate alternative to CMA action. Previously subsumed in the "strategic significance" principle,[6] this is now a distinct principle for the CMA to consider. The most likely alternative to CMA action is where other sector-specific regulators are better placed to intervene (such as Trading Standards). However, the CMA also foresees situations where there could be other alternatives, such as "private enforcement, market developments, self-regulation, new regulatory or legislative developments, or changes in government policy".[7]
• 'Resources' requires the CMA to consider whether the expected benefits of taking action are proportionate to the resources required.
• 'Risk' requires the CMA to consider the risks associated with CMA action and their likely significance. In particular, the CMA states that it will consider the likelihood of the action achieving its desired result.[8]

Our Analysis

Whilst the publication of the Prioritisation Principles is a welcome development, and assists with understanding how the CMA will utilise its resources, the CMA does not regard the principles as rigid. The principles are instead to be used as a guide and considered by the CMA on a case-by-case basis. This discretion should be borne in mind by businesses seeking to use the principles to inform risk assessments regarding how interested the CMA may be in potential cases.

In addition, whilst it is useful that the principles require the CMA to consider the strategic significance of CMA action, the CMA's Annual Plans will continue to be a more valuable indicator as to the areas on which the CMA will focus their resources. The CMA's next Annual Plan is due to be published in March 2024, which will be the topic of a further blog post.

If you would like to discuss any of the issues covered in this blog, please get in touch.