Martin Coleman’s speech to the Law Society’s Competition Section on 21 June 2022

The CMA’s Panel Chair, Martin Coleman, delivered a speech to The Law Society’s Competition Section.

Here is the transcript of the speech as it was delivered:

The Competition and Markets Authority’s (CMA) panel of independent members make decisions in the most complex mergers, markets and economic regulation cases. This gives the panel a critical function in the competition policy firmament and protecting the interests of UK consumers. The effective and efficient working of the panel is therefore key to ensuring good outcomes and reaching robust, objective and well-reasoned decisions. My aim today is to give those who appear before the panel, their advisers and the wider public some insight into how the panel goes about its business.

This is a particularly opportune time for such a discussion because merger control constitutes the largest element of the panel’s workload and, since the beginning of 2021, the CMA’s role in the mergers regime, and therefore that of the panel, has been greatly expanded to give us jurisdiction over the largest mergers which were previously reviewed exclusively by the European Commission.

It is also appropriate because the recent review of the UK competition system has culminated in a government commitment to legislate to further adapt the regime to recognise the new demands of markets in the 21st century. The proposed legislation will preserve the current structure of the competition regime including the role of the panel. The government’s consultation, which preceded its legislative plans, involved significant contributions from a broad range of stakeholders including those most familiar with the UK system. It indicated a broad consensus around the benefits of the CMA panel model. Its independence and wide range of experience was generally considered to be a key contributor to trust in the wider competition regime.

This is very pleasing but, as the government consultation also made clear, there is no room for complacency. In a time of considerable debate about the scope for competition policy to remain relevant and effective in the face of huge changes brought about by technology and economic and social developments, the phase 2 system is not immune from scrutiny and challenge. We must ensure that the system continues to efficiently serve its purpose of ensuring that markets deliver lower prices, better quality and innovation to consumers of all kinds while guaranteeing fair process for parties under investigation.

Role of the panel within CMA structure

There are 33 panel members, including 6 inquiry chairs, who serve as members of groups deciding phase 2 mergers, market investigation references and appeals from and / or rehearings of the decisions of economic regulators. They may also serve, along with senior CMA staff, as members of case decision groups for Competition Act 1998 cases. Some members, as well as having general responsibilities, have specialist roles, for example in relation to utilities, communications or newspapers.

To give an indication of the relative volume of work, for the period from 2019 to date there were 31 phase 2 mergers, 2 Market Investigation References (MIRs), 4 regulatory appeals and 14 Case Decision Groups (CDGs).

I shall focus in this talk on merger inquiries and market investigations. This is not to understate the importance of economic regulation cases and CDGs but the policy drivers and procedures in those areas are very different.

While the panel is part of the CMA it is not a subsidiary body under the supervision of the CMA Board. The panel is an integral part of the CMA of equivalent status to the Board. Schedule 4 of Enterprise and Regulatory Reform Act 2013 describes the composition of the CMA as being members of the Board and the panel. Each have their own functions and are components of the institutional CMA. Members of the panel and members of the Board, are appointed by the Secretary of State following a competitive public appointment process, once appointed the members assume responsibility, as either panel or Board members, within their constituent part of the regime. The Competition and Tribunals Appeal (CAT), in Meta Platforms, Inc v CMA, described the position as follows: ‘The ‘CMA panel’ is distinct from the CMA Board, and with a very specific (statutorily laid down) composition’.

The CMA panel exercises its functions through the appointment of its members to groups that conduct investigations and make decisions in individual cases. This organisational model was designed to ensure that one could have the benefits of a coherent joined-up and relatively speedy process while ensuring that investigation and decision-making, in cases which could result in significant remedial action, is in the hands of independent decision makers.

So how do we safeguard the independence of groups, which is core to the system, while ensuring that the system as a whole operates in an efficient, coherent and predictable manner? We do this in part through formal processes and structures built into the statutory system and in part through the adoption of a number of operational practices and norms.

Independence

Groups are required by statute to act independently of the CMA Board. This is more than a formal statutory requirement. The importance of being independent, and the need for challenge (including challenge to the phase one decision and the views of members of the staff team), is hard-wired into the culture of the Panel from the initial induction that members receive, through the regular seminars that members attend and the working methods of individual inquiry groups. But independence is not just assured through the statutory regime and the procedures that we adopt. There are a number of features of the system that give rise to behavioural checks and balances that reinforce independent thinking and help avoid confirmation bias. These include the fact that the panel sits outside of the CMA management hierarchy; the fact that membership of groups changes from inquiry-to-inquiry, the same set of members rarely sit together in more than one inquiry and the diversity of background of panel members.

Membership of the Panel

It is unquestionably the case that competition policy draws strength from a coherent community of practice. There is real benefit in drawing on a recognised body of knowledge and analysis and being able to learn from the literature and broader experience in the UK and beyond. But, like any community, there is always a risk of groupthink and failure to question established thinking. The independent panel system is able to draw on expertise and experience, and benefit from a diversity of background and thought, that goes beyond the narrow confines of the established UK community of competition lawyers and economists. This is incredibly important. It keeps groups grounded, minimises the risk of blind-spots and ensures that a range of skills and experience is brought to bear on the evaluation of evidence.

Panel members are selected through a competitive process in which rigorous criteria are applied. We have members, such as myself, who have come to the role after a career as a competition specialist but the majority of the panel come from a broader background, the characteristics they have in common being that they have made a mark in their earlier careers and have the ability to absorb complex information and effectively probe and challenge. If they do not have good knowledge of competition policy and practice on appointment, they must have the ability to acquire this rapidly.

So we have individuals who have been leaders in investment banking, accountancy, private equity, Financial Times Stock Exchange (FTSE) 100 businesses and smaller businesses. We have people who have been leading consumer advocates. The panel includes business school and economic faculty academics and those who have served in senior roles with other regulators including a former Director General of the Takeover Panel. Among our lawyer members, apart from competition lawyers, we have former partners in leading firms who have specialised in corporate law and intellectual property and the former General Counsels (GCs) of 2 major British companies as well as a former High Court judge. This diversity of background means that, in addition to knowledge of competition policy, members bring skills that are highly relevant to modern merger investigations, for example understanding of corporate or consumer decision-making, business transfer arrangements and transaction valuation.

While we benefit from the range of thought that comes from a varied professional background we need to do better on some other aspects of diversity. We do reasonably on geographic diversity with members from the across the 4 nations of the UK and a number of English regions. We improved our gender diversity after the last panel appointment round though there is more progress to be made as there is with representation of people from ethnic minority backgrounds.

Part of my role as Panel Chair is to appoint members of the panel to serve on a particular inquiry group. In making such appointments we look for a range of professional expertise – legal, economics, business and consumer, depending on the inquiry. While knowledge of the relevant business sector can be helpful it can also be beneficial to have people who are new to the sector and are able to challenge without any preconceptions about how the sector operates. Inquiries absorb a significant amount of time of members, and members are appointed to a group at relatively short notice, so ensuring proper availability during the period of the inquiry is important as, of course, is the avoidance of potential conflicts.

Groups are fortunate to be able to draw on the specialist advice available from CMA staff with considerable knowledge and experience, not just in competition law and economics, but areas including data analytics, technology, accountancy and business and finance analysis. Groups are able to apply that advice in the context of their own judgement and expertise.

The number of staff serving a group will depend on the size of the inquiry, to give an indication, on the Cargotec / Konecranes merger inquiry that I recently chaired and which was a fairly substantial case we had in phase 2 a group of 4 (including me as the chair) being supported by around 12 full time equivalent staff drawn from a list of 23 individuals from across different disciplines including legal, economic and financial analysis.

As well as the assigned staff project team, there is scope for the group to draw on additional senior members of the CMA staff (for example, the chief economist or the general counsel) to assist in considering specific issues or questions, or because that advice is sought by the group as part of peer review or in testing specific concerns or hypotheses.

Effective operation

At the more formal level ERRA requires that at least one member of the Board is also a member of the panel. The practice has been to have 2 such panel Board members. This ensures that the Board, in its policy making and allocation of resources, is aware of the needs and perspective of the panel and that the perspective of the panel is continuously reflected in Board discussions and decision-making processes.

The practice has also been to appoint a Chair of the panel to whom is delegated certain powers formally vested in the Chair of the CMA including, as mentioned earlier, the power to appoint members of the Panel to groups. The Chair of the Panel also serves a wider function of ensuring the cohesive operation of the system.

The other formal linkage between the Board and the panel is that the Board makes rules of procedure for groups and issues guidance to which groups must have regard. This includes the Merger Assessment Guidelines and Market Investigation Guidelines. It is through the application of the statutory tests and consideration of these Guidelines and policies that there is coherence of approach between the phase one and phase 2 processes and coherence across phase 2 decisions. The role of guidance in achieving consistency was recognised by the CAT in the Ecolab / the Holchem case. Individual groups must, and do, consider the relevance of the Guidelines for each case and apply them as they consider appropriate. In markets cases it is also open to the Board to give an advisory steer to the Group when it refers a market for an in-depth review.

All members of the panel are provided with support and training to help them perform their role. Although the panel members collectively (that is outside their participation in groups) have no formal responsibilities, all the panel members meet about every 6 weeks. We call these sessions panel seminars. They are not decision-making occasions and we do not discuss live cases other than to receive updates on administrative progress. The sessions serve the purpose of ensuring that all panel members have a common understanding of competition law and policy (especially in new or rapidly changing areas), are kept abreast of the work of the CMA and can exchange ideas and experiences.

To give some examples of topics at recent seminars: we considered a presentation on research that the CMA had commissioned on innovation and competition; we had a discussion on how the counterfactual had been assessed in some recent cases and the challenges that had presented; we reviewed a completed merger investigation with observations from the group and staff team on what went well and what they felt could have been handled better. We sometimes have speakers from other jurisdictions, for example we recently had a session on the likely policy approach of the new leadership of the Federal Trade Commission (FTC) and the Department of Justice (DoJ) and the implications for merger control. Panel members are free to, and do, participate in the wider training available to members of CMA staff including Professor Richard Whish’s annual updates on developments in EU and UK competition law. Members receive a tailored monthly bulletin with links to important developments in competition law including selected academic articles, law firm and consultancy publications and the like.

Each panel member has an annual review with the Pan

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