First, thanks to the British Institute of International and Comparative Law for the opportunity to open today’s event.
Particular thanks also to Linklaters, not just for sponsoring but for being kind enough to train me before I made something of a left-hand turn in my career and moved into politics. Particular thanks for the relentless 6 months I spent on the RBS / ABN AMRO acquisition, working late into the night, photocopying away.
Joking aside, I’m convinced this left a lasting impression, because I have been drawn again and again to competition, and its integral role in our economy, over the course of my career.
I saw, first-hand, the dynamics of an emerging clean tech and renewables industry, battling dominant incumbents to drive disruption and innovation in a complex, shifting policy landscape.
In telecoms, I campaigned for separate legal status for the nation’s main network infrastructure (a decision later taken by Ofcom), on the basis that full ownership by the largest incumbent firm was not the most conducive route to the innovation and investment we desperately need in a 21st century digital economy.
Further down the road, I developed a keen focus on digital, data and AI. Both the unprecedented impact of these extraordinary technologies and new markets and also, the fundamental questions they raise about market power and societal impact.
Now, 18 years after that competition seat at Links, I find myself at the Competition and Markets Authority, doing the most stimulating and fulfilling work of my career, speaking to a room of people whose deep expertise and shared respect for the rule of law are fundamental to the fabric of international legal discourse in this area.
It is a huge privilege.
Today, I want to talk about 3 related topics, all key facets of how competition can drive a more prosperous, stable future for the UK.
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first, the role of competition, and the CMA, in driving economic growth for the UK
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second, how the CMA is approaching the incoming digital markets competition regime
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and finally, our work on artificial intelligence
Firstly, Competition and growth.
Everyone in this room will be more than familiar with the purpose of the CMA, to help people, businesses, and the UK economy by promoting competitive markets and tackling unfair behaviour.
And this reflects our mandate from Parliament: to promote competition, within and outside the UK, for the benefit of consumers.
But in the context of an urgent national growth mission, a shared endeavour in which all arms of government must play an active and committed role, that link between competition and wider benefits across our economy particularly matters. And the role of the CMA in contributing to that mission, matters more than ever.
So, I’d like to explore these benefits, in particular that relationship between competition and growth.
The founding principle at the heart of competition policy is that the power of markets, underpinned by competitive rivalry between firms, can be harnessed to drive progress. And that progress translates into far-reaching benefits for consumers, businesses and ultimately our economy.
I believe it, because I’ve experienced it – from both sides.
Working for startups and challengers I’ve seen first-hand the spark in the entrepreneur’s eye when they spot an opportunity to disrupt the status quo, to build something new, better, than what’s on offer now.
I’ve also seen large global incumbents galvanised into action rediscovering their pioneering spirit, and combining it with deep resources, to meet a competitive challenge. It’s in these moments of healthy tension that progress happens.
Academic evidence and history bear out the proposition that fair, open, effective competition is a proven route to a higher growth economy.
Where competition is stronger productivity and wage growth will be higher, as businesses strive to deliver better value.
Where businesses battle to deliver higher quality products and services consumer confidence is bolstered. Particularly when backed by strong consumer protection that protects people from exploitation and puts money back in people’s pockets to disperse across the economy.
When markets are truly contestable, and start-ups and challengers know they have a fair shot at success, innovation and entrepreneurialism flourish – bringing fresh ideas and better solutions to market.
When investors can have confidence in a level playing field for the companies they back capital flows, creating a virtuous cycle of investment and improvement.
When, through robust enforcement action, we hold to account the small minority of businesses who don’t play by the rules we create the trust and integrity that markets need to thrive.
And when we have diversity and choice, we also have enhanced security of supply and resilience, which underpins a strong, self-reliant economy, bolstered from shocks and uncertainty.
Importantly, all of these scenarios foster an environment where both large established players, and smaller ones can thrive.
Competition is not a zero-sum game. In fact, it can create value for multiple parties.
And all of this is why productive and sustainable growth across the UK economy has been an explicit, core pillar of the CMA’s strategy since early 2023.
Launched under new leadership, this mid to long term strategy made clear that competition itself is not the goal. The goal is the outcomes it can deliver for people, businesses and the UK economy, with growth a central ambition among these.
The positive role of competition for our economy is clear across all our tools. Including targeted work we’ve prioritised because of the impact it has on growth.
I’ll give you just a few examples:
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markets work in cross-economy sectors foundational to growth – like critical infrastructure, where the recommendations of our market study into housebuilding are now being carried forward by government. Or our ongoing investigation into cloud services – a sector that has become the backbone of modern digital economies
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deploying our competition enforcement powers where they can help relieve pressure on public finances, like leveraging our data, AI and bid rigging expertise to root out illegal practices in public sector procurement – with potential taxpayer savings of billions of pounds
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flagship research into competition in UK labour markets by our specialist Microeconomics Unit, with important implications for wage growth, productivity, and innovation – and now a new Growth Programme from that Unit, focused on critical drivers and blockers of growth, as well as the role of competition in industrial strategy
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we engage in proactive, frank conversations with the business community, more than ever in the CMA’s history, to understand the views of these critical stakeholders on the role of competition in driving growth for the UK – particularly investors and startups, with whom we have been strengthening our dialogue and have plans to do much more
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we’ve heard from this community directly about the barriers to the investment the UK needs to drive growth – among these: access to skills and talent, lengthy processes and costs related to critical enablers (like infrastructure and utilities), policy and political stability, access to capital, and the UK’s risk appetite
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we’ve heard that barriers to fair and open competition can deter investment and we’ve also had constructive discussions around the competition regime – including how the CMA can continue to progress and evolve to the best in class offering we strive for
And in this regard, it’s worth touching on our landmark Phase 2 merger reforms, just now coming into effect in the first case. Reforms we’re confident will deliver a step change in experience for stakeholders. In transparency. Efficiency. Open, constructive engagement – including around remedies.
Because the merger regime too, plays a role in delivering some of the key benefits of competition which foster a pro-growth environment.
Maintaining open and competitive markets to incentivise productivity and shore up security of supply. Safeguarding innovation and organic growth, with healthy returns for UK businesses and their backers.
Recognising, as the regime is designed to do, that the vast majority of mergers are unproblematic from a competition perspective. And can yield benefits, like economies of scale or improved resource access.
Allowing the CMA to focus in on a remaining handful of truly problematic cases each year. And there apply an objective, evidence-based approach to protecting consumers and business customers from the harms flowing from reduced competition.
So, we find this golden thread of growth running through the CMA’s portfolio, across our tools, now writ large in our strategy, and translated through to our Annual Report and Accounts, where we assess our performance against that strategy.
It’s inherent in our purpose and foundational to all that we do. And this targeted work I’ve described reflects our appetite and commitment to be even more ambitious, even more determined, in our efforts to identify and support opportunities for growth.
I want to say a brief word here about the role of competition in a successful industrial strategy, which will be laid out more fully later this week in our response to the government’s Industrial Strategy Green Paper.
In essence, competition policy is a key lever for sectoral growth (just as skills, trade, tax or energy policy are). And so, an industrial strategy which creates and captures long-term value for the UK must be one in which competition is a core component. More on this very soon.
Next I want to focus on 2 of the most exciting opportunities we see now.
Firstly, digital markets, which are now a cornerstone of modern economic growth. Providing the essential infrastructure for innovation, efficiency, scalability, and global competition.
We’ve learned a lot about these markets in recent years. The enormous benefits for UK consumers and businesses; and the complexity and novel nature of some of the harms.
From the CMA’s perspective, we know that how we design the rules in these dynamic markets matters, if the UK is to keep pace with the future. And we know that to realise the UK’s ambitions for global leadership in tech and digital, it’s going to take innovation, investment, collaboration and determination, from companies of all shapes and sizes.
So, we’re fully supportive of the important role to be played by the largest firms. They’ve driven remarkable progress and are a major source of investment in the UK.
At the same time, it’s also our job to enhance and protect opportunities for the challengers, start-ups, scale-ups, specialist providers – many of whom are UK-based.
If we achieve this, we have a real chance for a thriving UK tech sector, with success for many and diverse players within that ecosystem. Not only this, UK consumers and businesses will also reap the benefits across the economy. Sustained innovation. Competitive prices. Fair treatment. And greater choice.
And this principle of opportunity for everyone underpins the new digital markets competition regime, expected to come into force in January 2025. A regime uniquely and consciously designed to address harms in a highly targeted way, while keeping innovation-led markets open and contestable to support growth.
In practice, this means only a small number of the very largest firms, with ‘substantial and entrenched market power’ in a particular digital activity, being designated with strategic market status.
Then, rather than blanket rules across all these businesses, we can take a tailored, bespoke approach to identifying and addressing specific harms.
Working with the companies themselves – and broader stakeholders from the digital ecosystem in an iterative, participative process including small businesses, challengers and innovators as well as academics and consumer groups.
To give just one example, we know many UK businesses rely on these large technology firms’ platforms to access customers. If the terms of access are unfair – maybe they’re overpaying, having to share valuable data, not allowed to make certain improvements to their offering, this reduces the ability and incentives of those businesses to innovate and grow here, and their attractiveness to investors.
For consumers, it ultimately leads to less choice and higher prices. Countries around the world are taking their own approaches. In the EU, the Digital Markets Act. In the US, a series of landmark antitrust lawsuits.
With regards to the UK, I agree wholeheartedly with our Chief Executive, Sarah Cardell, who said recently:
the new digital markets competition regime is exactly the sort of proportionate, well-designed regulation you want if you’re looking to be a world-leading destination for business, and to drive growth without chilling innovation and investment.
So, we will have a new toolkit to address issues like this head on. But in a proportionate way. With the regime only applying to the most powerful companies.
We’re yet to take any decisions on which areas to prioritise for investigation. But, as you would expect, a key factor driving early decisions will be the extent of existing evidence on positions of substantial and entrenched market power.
And, as I said at the start, growth is a core pillar of our strategy, so that will be central to our thinking. Where are the greatest gains for innovation? Where could investment be unlocked? Where is the organic growth of UK businesses being stymied? How can we propel the future success of our digital sector, domestically and internationally?
Finally, coming to AI
Here again, we see an opportunity to supercharge the UK tech sector…. To carve out a true global role… And again, if we’re going to achieve it, the CMA is clear eyed about what it’s going to take.
Innovation. Investment. Collaboration and determination from companies large and small.
Global leaders to visionary entrepreneurs just starting out.
Domestic and international players.
Working alongside experts in academia and civil society who do so much to help ensure these technologies develop responsibly, in a way which supports trust.
We believe AI could transform our lives and society for the better. So we’re focused on how the CMA (and competition more broadly) can support a flourishing UK AI ecosystem.
One with real, long-term value creation and capture for UK businesses and consumers.
Where benefits are diffused and multiplied beyond the tech sector, across our economy to drive prosperity for all.
And, as with digital markets, there is a role for everyone here. Yes, the large firms are well positioned to control the critical inputs – data, computing power, technical expertise.
Equally, some of the greatest disruption in this space recently, around foundation models, has come from ingenious smaller players. Models which are increasingly becoming household names, like ChatGPT, Claude, Perplexity and so on.
And we’ve seen how this innovation has ignited a response from the larger players.
So, we would like to see sustained competition supporting this surge of progress over the long term. Helping position the UK as strongly as possible to reap the benefit of it, for our consumers and businesses.
Supporting this goal has been a core focus for the CMA over recent years.
We’ve been continuing to strengthen our own expertise. Our dedicated in-house Data, Technology and Analytics Unit, started in 2019, is now an interdisciplinary, 80 strong, group working in lockstep with our lawyers and economists.
Again, this is an area where we’ve been doing a great deal of engagement with diverse players and organisations across the ecosystem, to better understand this very complex sector, and keep pace with (often very rapid) developments.
And we’ve been carefully considering how we can use our range of capabilities and powers to unlock some of these opportunities for the UK.
What has that meant in practice?
First, we’ve been monitoring and analysing the market, and we’ve published 2 in-depth pieces of analysis on foundation models.
These looked across a broad sweep of opportunities and positive outcomes as well as highlighting 3 potential risks in relation to effective competition:
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At the infrastructure layer for model development: firms controlling critical inputs could restrict access to shield themselves from competition, or further cement their positions.
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At the release and deployment layers: incumbents could exploit their positions in consumer or business facing markets, to distort choice in model services and restrict competition in deployment.
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And across the ecosystem: partnerships involving key players could reinforce or extend existing positions of market power through the value chain.
It’s important to emphasise that we highlighted these as potential risks. And a key reason for our focusing in at an early stage was to work collaboratively with stakeholders to help ensure they don’t materialise. That we maintain those opportunities I spoke about, for a diverse ecosystem of players.
In terms of how this might be best achieved, we know that heavy-handed, sweeping regulation can stymie innovation and stunt growth. That’s the opposite of what the UK needs; and the opposite what the CMA seeks to achieve through our promotion of competition.
So, our approach has been to publish a set of principles to help guide these markets to deliver the potentially profound benefits of AI for how we live and work, as well as growth across our economy.
There are 6:
- ongoing and ready access (to key inputs)
- diversity (of models)
- choice (for businesses and consumers, meaning no lock-in)
- fair dealing (so no anti-competitive self-preferencing, tying, bundling)
- transparency (for users about the risks and limitations)
- accountability (across the supply chain)
We’ve talked to many companies in the UK and abroad, and a huge range of other stakeholders, about these principles. And we’re encouraging companies to embed them in their business practices. We’ve heard – even from some of the largest firms – how helpful they are to the sector.
Second, beyond the principles, we’re considering the competition impacts of AI through various of our other tools.
Our ongoing Cloud Market Investigation includes consideration of the potential impact of foundation models on how competition works in cloud services.
New powers under the incoming digital markets competition regime will allow us to take account of developments in AI-related markets as part of the prioritisation decisions for SMS designations.
Because we know AI-related issues will increasingly be at the heart of digital markets. From cloud (at the development layer) to the mobile ecosystems, search, and productivity software into which AI is already being integrated and deployed.
Lastly, through the lens of merger control, we’ve been taking a look at a handful of the emerging partnerships and other arrangements across the AI ecosystem.
To be clear – we understand the importance and prevalence of the partnership model in the tech ecosystem, providing developers with access to the key inputs they rely on to succeed.
And, we recognise the importance to business and investor confidence of clarity and transparency around the CMA’s approach.
That’s why, back in April as part of our FMs Update Report, we published some criteria about the particular sorts of features of these deals which might give us more cause for concern.
We said we hoped to gain more clarity as we looked at some of these relatively complex and opaque arrangements. Clarity which should also benefit businesses across the ecosystem.
We’ve been systematically working through the evidence in as timely and efficient a manner as possible, with 4 processes concluded so far.
Very briefly, in Microsoft/Mistral and Amazon/Anthropic we concluded the arrangements fell outside the thresholds for UK merger control.
We concluded Microsoft/Inflection was a reviewable deal, but did not raise competition concerns.
Today the CMA announced that we do not believe Google has acquired material influence over Anthropic, so that transaction does not qualify for investigation.
And our consideration of Microsoft/Open AI is ongoing.
Coming back to the importance of clarity, I would say that in each concluded case, we published fully reasoned decisions, as well as extra commentary. And that explanation of clearance decisions, which helps to provide clarity is of course something that doesn’t happen in every jurisdiction.
This, as you will all know, is how the Phase 1 process in the UK is intended to work. As a route to gather, and properly assess all the documentation submitted by the companies, as well as feedback from knowledgeable third parties, before reaching a transparent, evidence-based conclusion.
It’s worth also noting the wider context:
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of the 50,000 merger deals announced last year, the CMA carried out 54 Phase 1 reviews and 9 in-depth Phase 2 investigations
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5 were cleared unconditionally by the independent panel
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a further 2 with remedies
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Only one was subject to a prohibition decision at the end of Phase 2.
These numbers capture the proportionate approach of the CMA, while at the same time, reinforcing our core statutory duty in merger control – to protect consumers from harms flowing from the loss of competition in the handful of truly problematic anti-competitive mergers where they cannot be addressed.
Particularly with this audience, I want to touch on the importance of international dimension, particularly in the context of the borderless nature of digital and AI.
We live in a globalised world of interconnected markets in which international cooperation and communication amongst agencies are more important than ever.
So, as public servants tasked with upholding the interests of citizens, we work increasingly closely with our counterparts around the world. And we actively participate in international fora like the International Competition Network, OECD, G7, and so on.
This is part of the fantastic value that groups like BICCL bring, convening discussion and debate about shared challenges which transcend borders.
Again, different jurisdictions may all be taking somewhat different approaches.
In the US, it’s quite a fragmented picture on AI. Over 400 separate laws and regulations have been introduced, debated or enacted at federal or state level. There are 32 laws in California alone, I believe. In the EU, by contrast, horizontal regulation in the form of AI Act.
And in both jurisdictions, as well as many others we’re seeing authorities opening investigations and looking at certain deals and partnerships using their own tools.
But despite these different approaches there is general, and welcome, consensus on the opportunities and risks.
The joint statement on AI signed in July by the US DoJ, FTC, European Commission and the CMA is a testament to that consensus. As is the recent G7 Joint Communiqué on a shared commitment to safeguard fair competition in digital markets and AI.
Quite rightly, this doesn’t mean we will always align on individual decisions. Those can, and should, remain the jurisdiction of domestic authorities who are all tasked by our own laws to safeguard the interests of our citizens.
That said, we do see a high degree of alignment around issues for investigation, decisions and remedies. And where we can align on process and timing, we try to do this, because we know it’s helpful to businesses navigating complex international regulations and frameworks.
I’ll finish by coming back to my role at the CMA.
Part of the job of a strategist is to navigate uncertainty and anticipate risks. In this increasingly uncertain world, it’s an ever more critical aspect of the role.
But I’m also an optimist.
And what excites me most about strategy is the process of facing into challenges. Finding clarity amid the complexity. Identifying the opportunities that can lead to transformative progress.
At this is undoubtedly one of those moments of transformative potential for the UK.
A national growth mission, built on a foundation of stability in policymaking, and a commitment to long-term prosperity for everyone.
Combined with the chance to take advantage of game-changing innovation, to build a sustainable, resilient and internationally competitive economy.
The CMA stands ready to help the UK grasp this potential.
Bringing the power of competition to bear for people and businesses across the country, today and over the long term.
To ensure growth is underpinned by markets that work for everyone.
Thank you.
