Recommendation 2

HM Government Accepted

The CMA has a significant role to play in supporting innovation, productivity and growth across the UK economy. In its new draft Annual Plan, two of the three proposed medium-term priorities are about stimulating economic growth—enabling competitive, fair-dealing businesses to innovate and thrive; and enabling the whole UK economy to grow productively and sustainably. The CMA has said it will prioritise action over the next three years that will, among other things, help enable open access to markets for innovating businesses and help emergent sectors to develop into high growth, innovative and competitive markets. The CMA will identify and act in areas where it can have the most positive impact on innovation and productivity and influence the pro-competitive development of markets. It will act in existing and emergent markets for sustainable products and services, and it will work with businesses on how they can collaborate to accelerate game-changing technologies while complying with competition law. The CMA will also identify economic risks the CMA is well-placed to address to support the resilience of the UK economy. The CMA expects to deliver on these priorities through a range of interventions and tools, including not only market studies, but also informal and formal research and advocacy projects, and other tools. This work will be further supported through the development of the CMA’s digital, AI and technology capabilities, and through the strengthening of Post pandemic economic growth: State aid and post-Brexit competition policy: Government Response 13 its research and horizon-scanning work. In particular, its Microeconomics Unit, to be based in Darlington, will be at the heart of the CMA’s ongoing and planned research into the role competition plays in driving productivity and innovation. This research will culminate in the third edition of the CMA’s state of competition report and help inform public debate and policy around such core issues impacting the UK’s economic growth. The CMA will also work with external partners where this is likely to best deliver positive outcomes for people, businesses and the UK economy. For example, the Digital Regulation Co-operation Forum (DRCF) workplan sets out the CMA’s and other regulators’ plans to work collaboratively on areas of common interest and jointly address complex problems in the digital economy. Market studies allow the CMA to examine, holistically and flexibly, markets that appear not to be working well for consumers and/or businesses seeking to compete fairly. They explore these areas and by improving competitive conditions they can help to increase productivity. The CMA generates a pipeline of potential market studies from a range of sources: issues can be brought to its attention by complaints from industry stakeholders, members of Parliaments across the UK, governments across the UK, other regulators, businesses (including small businesses), consumer organisations or individual consumers, as well as generated by internal research. When deciding which market studies to launch, the CMA uses its prioritisation principles. In addition to legal risk, resourcing and the likelihood of a positive impact, the CMA considers the fit with its strategic priorities as set out in the Annual Plan. Market studies are large projects which demand considerable resource. When deciding which areas to pursue, the CMA the takes into account (i) if it fits the strategic priorities that are laid out in the annual plan; (ii) if it is likely to result in tangible, demonstrable outcomes for people, businesses and or the economy and (iii) if it is the most effective and rapid way to achieve those outcomes. The CMA has already carried out market studies which improve growth in emerging markets, such as the Electric Vehicle charging study.