The 10 Days of Christmas… Or What’s in Store for the UK’s Competition & Markets Authority in 2025?

Back in October, we considered what the European Union Court’s judgment in Illumina v. Inc and the Competition and Markets Authority’s (CMA) approach to recent AI partnerships might foretell about 2025 and beyond. Since then, the CMA has made a plethora of further announcements, decisions and publications. In this hybrid 10 days of Christmas, we will identify 10 recent developments, make five predictions about the CMA’s future approach and priorities, and share three (modest) Christmas wishes for 2025.

10 Recent Developments in Q4 2024 – a quick digest

In markets and mergers:

• the CMA published its decision not to investigate Amazon / Anthropic (October 17): despite calling in the transaction, it found that neither the share of supply nor the turnover test were met;
• the CMA published its decision to clear Microsoft / Inflection AI (October 24): it had established jurisdiction on the basis of a mere transfer of employees and associated know-how (which, as our previous post discussed, was a stretch). The CMA ultimately found no competition concerns with what was, at worst, a 14 to 13 merger (with Inflection being somewhere around No. 10 (see paragraphs 189 et seq.);
• the CMA published its remedies paper in the Three / Vodafone merger (November 5): in an approach that has left many people floored, the CMA is preparing to conditionally clear a 4:3 telecoms merger between two mobile-only players in the UK, in return for a commitment by the merged entity to make investments in its network (essentially, a pure manifestation of what Draghi could only have dreamed of). Putting aside the seemingly two-tier approach to tech versus everything else, this clearance will signify a complete break with the past substantive approach in telecoms cases and indeed any major infrastructure merger;
• the CMA announced its decision not to investigate Google / Anthropic (November 19), again, like Amazon / Anthropic, on the basis that neither the share of supply nor the turnover test were met; and
• the CMA published its provisional findings in the mobile browsers and cloud gaming market investigation (November 22), in which it provisionally identified concerns and recommended that the Digital Markets Unit begin work to designate Apple and/or Google as having ‘Strategic Market Status’ (SMS) in relation to mobile browsers, browser engines and in-app browsing technology and, potentially, impose appropriate interventions. The CMA found no concerns in cloud gaming.

In policy:

• the CMA’s CEO gave a speech in relation to AI (November 6): which confirmed that the CMA was focused on closely monitoring AI while recognizing that “heavy-handed, sweeping regulation can stymie innovation and stunt growth”;
• the CMA sent a revised version of its DMCCA Guidance to the Secretary of State for approval (November 7): it did not publish the draft guidance or any of the responses it received to the consultation on the original draft, many of which raised very serious concerns with the wide discretion that the CMA will have, the lack of parliamentary oversight, and the minimal right of defense via judicial review to the Competition Appeals Tribunal;
• the CMA published its response to the Government’s Industrial Strategy Green Paper (November 21): this emphasized the CMA’s willingness to look at its procedural and substantive approach to mergers and telegraphed a softening of its stance on behavioral remedies; and
• the CMA’s CEO gave another speech on changes to its approach to remedies (November 21): this echoed the response on Industrial Strategy, making clear that the CMA was focused on clearing unproblematic mergers and committing to consult on changes to its remedies guidance (i.e., to make it easier to accept behavioral remedies).

In antitrust:

• the CMA’s approach in the Phenytoin excessive pricing case was heavily criticized by the Competition Appeals Tribunal (CAT), which set aside the CMA’s decision but ultimately replaced it with its own infringement decision and fines.

And finally, with an honorable (unranked) mention, the recent call in of Nvidia / Run: ai by the Italian Competition Authority and reference to the Commission shows that Article 22 TFEU is still alive after all (with a decision in that case now due December 20).

Five Predictions for 2025 – Calmer Seas Ahead, Unless You’re in Tech or Deal Directly with Consumers (Thanks to the DMCCA)

1. Any activity in the digital and tech sectors will continue to be closely scrutinized: the CMA will continue to apply a low threshold for investigation and intervention in merger activity (including partnerships and employee transfers) in the Digital and Tech sector (and, in particular, ‘big tech’ companies). Any activity in AI will be closely scrutinized. As recent merger work shows (including the three AI mergers listed above, in addition to Microsoft / OpenAI and Microsoft / Mistral), the CMA is ultra-sensitive to any whiff of consolidation in AI, despite not having found any issues to date. The CMA repeatedly discusses the potential negative impacts of AI and frequently fields speakers at relevant legal and economic roundtables to flag these concerns and possible steps for intervention. 
2. This scrutiny will only intensify once the Digital Markets and Competition and Consumer Act (DMCCA) commences. The CMA has been explicit, most recently in its Provisional Findings in the Mobile Browsers and Cloud Gaming market investigation, that it will use the DMCCA (and its new ‘Digital Markets Unit’ (DMU) to investigate and begin to remedy perceived issues in the digital and tech sectors, including in regard to opening access, interoperability. As a reminder, the DMCCA gives the CMA far broader powers than the equivalent EU Digital Markets Act to designate firms with strategic market status, and once it has done so, impose conduct requirements and pro-competitive interventions that can range from behavioral remedies to full divestiture (akin to the CMA’s existing powers under the Market Investigation regime and what the Department of Justice is attempting in US v. Google). Some commentators have warned of the risk of opportunistic complaints to the DMU by motivated individuals and pressure groups, so the CMA will be under pressure to show that it can sort the wheat from the chaff.
3. The CMA’s jurisdiction to call in mergers will remain expansive: The recent AI ‘mergers’ were only the latest in a long line of more expansive views by the CMA of its own jurisdiction (in particular, since the Competition Appeal Tribunal green-lighted the CMA’s approach to its share of supply test in Sabre / Farelogix in 2021. In that case, the target didn’t have any customers in the UK nor did it generate any relevant turnover in the UK. The merger was cleared unconditionally. Then there was Facebook / Giphy. Of course, the DMCCA also brings in an additional one-party turnover and share of supply threshold (of £350 million and 33%, respectively). There will also mandatory filing requirements for any firm designated as having SMS. 
4. Consumer enforcement will increase. In another cost-of-living crisis with a Government growing more unpopular by the day, the CMA will once again be under the spotlight to show how it delivers for consumers. The DMCCA gives the CMA unprecedented powers to levy penalties for consumer law breaches which are on a par with competition fines (ie 10% of worldwide turnover). Consumer protection will be the poor cousin of competition no more!  The CMA has made clear in the past few months that it is concerned about pricing approaches (including dynamic pricing) and that it expects the DMU to investigate this. We can expect some potentially weighty fines in this space (and noting that it is more straightforward for the CMA to prove consumer law breaches than competition law breaches). Relatedly, expect more market studies in traditional consumer-facing markets (in particular, given that the DMU will be expected to take the lead on most tech-related issues).
5. The CMA will continue to look out for opportunities to show it is pragmatic and pro-growth: in sectors other than AI, Digital and Tech, the CMA has already shown a greater willingness to be flexible in accepting non-standard, non-structural remedies, for example, most recently in the Three / Vodafone The CMA previously lobbied the European Commission extensively to block 3/O2 UK and, barely seven years later, is preparing to approve a 4:3 merger in the telecoms sector with a very unusual remedy package. It is clear that in more traditional sectors, the CMA intends to show more leniency, particularly in B2B markets.

Three Christmas Wishes – if you’re serious about being pro-business, then it must be ‘proportionality, proportionality, proportionality’!

1. Reform the approach to Initial Enforcement Orders (IEOs) in Phase 1: In the last five years, the CMA has rapidly and relentlessly ramped up its use of IEOs (ie, ‘hold separate’ orders) at Phase 1, putting a significant cost on businesses to comply (including via the derogations process, the provision of compliance statements, the appointment of hold-separate managers and monitoring trustees and even hefty fines for often technical breaches). In what is still ultimately a voluntary merger regime, the CMA should fundamentally rethink its use of IEOs and reassess the cost / benefit of a regime that is very often applied to mergers that are cleared at Phase 1 (ie that do not raise even prima facie competition concerns). The CMA does not consistently issue IEOs (for example, it is noteworthy that they did not issue IEOs in the recent AI partnership cases, notwithstanding that these were, ultimately, the equivalent of completed mergers). The CMA should consult on new guidance that restricts the use of IEOs to the bare minimum, if at all.
2. Fundamentally reconsider the scope of information requests at Phase 1: The CMA has also rapidly expanded its information requests at Phase 1 but the volume of documentation required is not proportionate and much cannot be, and is not, meaningfully reviewed. The CMA should spend more time engaging with the parties to develop tailored information requests (including where possible sharing information requests in draft and encouraging reasonable amendments). The CMA should, relatedly, consider more significant use of AI and automated document review at Phases 1 and 2 (using methodology agreed with the parties) to streamline information request responses.
3. Expand the use of the Mergers Intelligence Committee: the CMA has hitherto drawn a relatively arbitrary line in the level of information gathering it undertakes in cases brought before the MIC (stopping short of issuing invitations to comment (ITC)) compared to Phase 1 investigations. This self-imposed restriction arises from a conservative reading of the disclosure requirements of section 107 of the Enterprise Act. The CMA should consider a new approach to MIC, which would allow the issuance of an ITC informally without the need to then publish a fully reasoned decision (or to follow a hybrid or streamed approach in Phase 1 clearance cases that involves a short-form clearance decision, with the written consent of the Parties to do so). This could help provide the CMA with assurances that a merger does not give rise to material competition concerns while avoiding the need for a full Phase 1 investigation in borderline cases (for example, the recent AI partnership investigations). It may also lead to greater uniformity in approach.