Shortly after approving a $69 billion deal between Microsoft and Activision Blizzard, the UK competition regulator has hit back at reports the prime minister wants to water down its powers.
So what? The Competition and Markets Authority is fast earning a reputation as the world’s toughest antitrust watchdog.
- Business leaders including Sir Jim Ratcliffe have accused it of taking a “hostile” approach to enterprise.
- At the same time, MPs are being lobbied to ditch incoming legislation that would give the CMA more powers to bust big tech.
The regulator claims it’s “pro-business and pro-growth” and that in the past three years its policies have left consumers £2 billion better off.
Is it really out of line?
Game on. In April the CMA drew heavy flak for its initial plan to block the gaming merger – a decision that set it apart from counterparts in the EU and US. Brad Smith, Microsoft’s President, described the block as “bad for Britain” and denounced the CMA as “unelected and unaccountable”.
Not biddable either. Last week the deal was greenlit after Microsoft agreed to sell the online streaming rights for newly acquired games. Sarah Cardell, the CMA’s chief executive, has since felt the need to stress it “won’t be swayed by corporate lobbying”.
“That’s quite an unusual thing for the head of a competition authority to say,” says Gavin Robert, senior consultant at Euclid Law and a former CMA panel member. “I think the CMA is worried that people think it’s lobbying that allowed [Microsoft] to get the case through.”
Cardell worked closely with her predecessor Andrea Coscelli, who says he regrets not taking a stronger stance while in post. Together they’ve shaped the blueprint for a new set of antitrust tools in the UK.
Influencers. This week the chair of the Lords’ Communications and Digital Committee sent a letter to Rishi Sunak urging him to resist the “undermining” of proposed CMA powers.
The Digital Markets, Competition and Consumers Bill now before parliament would let the regulator swiftly hand out billions in fines, but tech firms want broader powers to appeal.
Matthew Sinclair, former chief economist for Liz Truss and senior director at CCIA, told Tortoise the bill, combined with the “perception that the CMA is taking more of an activist approach”, risks the UK’s attractiveness as a place to build a tech business. Other voices saying the CMA is flawed include:
- Will Shu, founder of Deliveroo, who claimed it treated him “like a criminal” for taking $500 million from Amazon.
- Sir Jim Ratcliffe, who said it was “driving business out of the UK” after it halted his attempts to buy a cement maker.
- David Wadhwani, the executive leading Adobe’s $20 billion acquisition of design startup Figma, who’s complained about the slow pace of regulatory approval.
Too tough? The CMA’s initial blocking of the Microsoft deal came at an inopportune moment: the UK is currently suffering from a dearth of tech listings. But it wasn’t an edge case.
“I think the CMA is taking a hard line, but it’s not on its own,” Robert says. “It took the same view that the US agency took, it just didn’t have to go to court to try and get an injunction”.
Cardell’s counterpart in the US, Lina Khan, has been criticised for picking battles she can’t win, including with Microsoft – although the FTC is appealing the US court decision that allowed the merger. Khan’s biggest test is yet to come in the form of a landmark lawsuit against Amazon in 17 states. But experts say losing isn’t always bad for consumers as long as it broadens precedent.
Giving the CMA more teeth may increase divergence. But it’s also widely agreed that global antitrust enforcement has been too light-touch for too long. The CMA’s boldness secured a key concession from Microsoft that will undoubtedly benefit consumers. Perhaps, on this occasion, it was right to lead the way.
