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Competition and Markets Authority wins over doubters as City nerves subside

After longstanding debate followed by a consultation launched by the Department for Business, Innovation & Skills (BIS) in March 2011, the new umbrella Competition and Markets Authority (CMA) has been brought in to reduce duplication of costs, increase confidence in the system, and, so goes the theory, create a more robust system.

Bringing together the Competition Commission and certain consumer functions of the Office of Fair Trading (OFT), the CMA, which will be established as a non-ministerial department governed by an independent board but accountable to Parliament, has been broadly welcomed by the legal profession.

Speaking to Legal Business, Allen & Overy antitrust partner Mark Friend says: ‘Ostensibly, the merging of both the CC and the OFT was about cutting the number of quangos and creating efficiencies from a merger.

‘Maybe it was partly driven by a feeling that the OFT hadn’t had a brilliant track record in pursuing antitrust infringements. The cases had taken a long time to come to fruition and the OFT had suffered a number of high profile defeats on appeal. I sense there was a feeling that something needed to be done to shake up the whole system.’

The new body will come into force on 1 October 2013 and will become fully operational on 1 April 2014. Former Slaughter and May partner Sarah Cardell has taken on the role of general counsel as the CMA completes its leadership team: Cardell most recently occupied the role of partner for legal markets at energy watchdog Ofgem, having left her position as competition partner at Slaughters in March 2011.

As announced last week, Cardell joins new CMA executive director Sonya Branch, who moved from her role as executive director at the OFT, where she had been working since her departure from fellow Magic Circle firm Clifford Chance.

The CMA has been well received by many in the City, largely off the back of the quality of these hires and others.

Friend says there is a ‘huge change management process to be implemented but they have a very strong leadership team,’ adding, ‘also the newly announced executive team are highly regarded figures in the field of antitrust. I’m sure they’ll make a significant contribution.’

Doubters of the CMA have been increasingly being turned around, and Christopher Hutton, of counsel at Hogan Lovells, says: ‘A lot of people including me didn’t think it was completely necessary. Now it’s going to happen, it’s a great opportunity to strengthen the competition regime in the UK.

‘They’re a very strong team. It’s a good signal that the CMA is going to take things forward in a positive way. The new organisation is going to be better than the former two parts.’

There are still questions over the finer details of how merger and market investigations are carried out and the CMA completed a major consultation exercise last week on how it will run that system in practice. Again, initial doubters appear to have been largely reassured. There is also some residual nervousness surrounding the loss of the two-tier appeal system from the OFT to the CMA, now the two have been brought under one roof.

‘There’s nerves that the benefit of the two authority systems will be lost,’ explains Hutton. ‘That said, the CMA’s [chief executive] Alex Chisholm and [chair] David Currie have been at pains to explain the benefits of the two tier system. It’s pretty much still an open question as to whether that will be lost. But the nerves are ebbing. The signs are that it will be strong going forward.’