On 12 May 2023, the UK government published its draft "strategic steer" for the Competition and Markets Authority (CMA) for 2023 – a high-level statement of government priorities which will influence the CMA in setting its enforcement priorities for the year ahead.

The government expects the CMA to focus on:

• addressing cost of living challenges;
• maximising the opportunities for the UK from the growth of the digital economy;
• promoting competition, investment, innovation and economic growth;
• thought leadership; and
• serving as a strong and independent voice, to promote understanding of competition and consumer law and to support the government in making pro-competitive policy choices.

We look further at some of the main themes in the government's stated priorities, and what this may mean for UK businesses.

Addressing the cost of living 

The government has made it clear that the CMA should prioritise work which will help address the cost of living crisis regarding increased household bills and costs, while also promoting competition, investment and innovation, and boosting economic growth. In particular, the CMA is to prioritise:

• Action in markets affecting household budgets, such as food, transport and other household bills, across all levels of the supply chain. Consumer protection powers will be marshalled to crack down on what the CMA perceives as "rip-off" practices, such as misleading price reductions and urgency claims (it has published compliance advice on these - click here). Firms which may (alone or collectively) hold market power amounting to a dominant position should be particularly cautious, as these will also be prioritised for enforcement action where there are perceived abuses of such dominant market positions. 
• Work on understanding why competition is not working well in key markets, and to intervene where necessary. This would appear to mean an increase in CMA market studies and investigations can be expected. The focus is likely to be on key economic sectors for everyday living, such as the food supply chain, transport and utilities, and other essential forms of consumer spending, with examples potentially including the likes of insurance and financial products. 

The CMA's ongoing market study into road fuel pricing may set the tone for further action. The issue of whether cost reductions are being adequately passed on to consumer prices remains live, following calls from mainstream UK political parties for the CMA to investigate whether supermarkets have sufficiently reflected wholesale cost reductions in prices to UK customers.

Against this backdrop, on 15 May 2023, the CMA also published an update into its ongoing work to help contain cost of living pressures (click here), which refers to its road fuel market study, as well as informal work by the CMA in the grocery sector and its ongoing review into grocery unit pricing. The CMA states it will be "stepping up" its grocery work, with the aim of understanding how competition is working in the sector and whether any product categories may "merit closer examination".

Innovation and the digital economy

Following the recent publication of the proposed Digital Markets, Competition and Consumers Bill (click here), the draft strategic steer also reflects the continued focus of the UK authorities on the digital economy.

• The CMA should be alert to address any abuses of dominance or other breaches of competition laws by the major digital firms which may have a negative impact on smaller UK businesses, as well as consumers. In this environment, would-be complainants may find the CMA is keen to hear about potential breaches of competition law.
• Emphasis is placed on promoting innovation. However, the government also refers to the risk that certain innovations may make markets less competitive. For example, on 4 May 2023, the CMA announced a review of foundation models used in artificial intelligence. We can expect to see a continued focus on the digital economy and related technologies.

Sustainability and net zero

The government emphasises the promotion and development of competition in the markets for sustainable products and services. Emphasis is also placed on the need to secure UK energy supplies during the transition to net zero (unsurprising, following the threat to energy supplies across Europe arising from the Russian invasion of Ukraine).

The CMA has already completed a market study into electric vehicle charging, followed by a competition investigation into the supply of electric vehicle charge points on/near motorways. Industries relevant for the government net zero project, including the energy sector (including new and traditional energy sources such as wind, solar and fossil fuels), should be alert to an increased focus from the CMA.

Further market investigations remain likely and there is the potential for increased scrutiny of the potential impacts on competition of M&A transactions within these sectors. In some cases, this may tip the balance towards precautionary notification of proposed transactions in relevant sectors under the UK's merger control regime.