Signs by the lifts in the Canary Wharf headquarters of the Competition and Markets Authority (CMA) remind staff not to talk about their work in public, given the billions of pounds resting on its decisions.
But a very public debate is taking place about how the competition watchdog works and is run, with the Labour government determined to make an example of it.
In October the prime minister rebuked regulators in front of global business leaders for “needlessly holding back the investment we need to take our country forward”.
In January they were hauled into 10 to explain how they would support the government’s growth ambitions.
Then days later, the government defenestrated the CMA’s chair, Marcus Bokkerink, replacing him with the former head of Amazon in the UK, Doug Gurr.
Two and a bit years since she became chief executive of the watchdog, Sarah Cardell and her organisation are under the spotlight like never before.
Britain’s chief trustbuster is sitting in a meeting room at the CMA’s head office after a whirlwind morning of broadcast interviews about its latest intervention, this time in the market for baby milk formula.
It demanded changes such as standardised packaging in hospitals and allowing shoppers to use loyalty cards to buy formula milk – changes that it said could help parents save £300 a year by switching to lower-priced brands.
It is an illustration of the breadth of responsibility the watchdog has: from trying to police the tech juggernauts of Silicon Valley, to fining cartels in the asbestos removal industry, to intervening in the price of baby milk.
“This job is for me a particularly unique opportunity to really deliver a tangible impact for people. We can be talking about tech and then we can talk about baby formula,” says Cardell. “It’s a market that really, really matters for parents and where the set of proposals that we have put out can make a real difference.”
But some say that its primary job of ensuring fair competition and keeping powerful vested interests in check, so that households and businesses are not unfairly squeezed by higher prices and reduced choice, has been made significantly harder in recent months.
The government, desperate to prove its pro-growth credentials after a series of mis-steps culminating in a confidence-sapping budget, has demanded the CMA bend to its will. That culminated in the business secretary, Jonathan Reynolds, last week issuing new guidance for the CMA, demanding it focus more on economic growth and not overreach into global deals.
Critics warn that by politicising the competition watchdog the government risks eroding one of the most sacred pillars of the UK: strong, independent regulation.
A former regulator said: “There’s going to be awful aggro from the business community if the CMA blocks deals now because they are going to think the government has given a signal to allow them.
“It seems like the UK now welcomes monopolies provided they have an investment story. There’s something really topsy-turvy about this.”
Cardell, an Oxbridge-educated former competition lawyer at Slaughter and May, insists there was “no conflict of views at all between myself and Marcus” and the reasons for his departure are between him and the government.
Reports claim that several members of the CMA’s board offered to resign in protest at the government’s tactics. For all that, Cardell appears at peace with the bruising approach from Westminster and Gurr’s arrival.
“I am very comfortable with his appointment and genuinely very much benefiting from working with him,” she says. “Doug actually brings really quite a breadth of experience to the chair role.”
Nor does she feel the CMA’s new growth focus is at odds with its core pro-competition mandate.
“I don’t see there being a fundamental tension between the two and we haven’t got a growth duty that’s coming in over and above. Our statutory functions are to promote competition and protect consumers. Those fundamentals haven’t changed.
“It’s about making sure that the way in which we discharge those statutory duties is done in a way that helps to contribute to driving growth, building that business investor confidence.
“We are looking for more pace, for more predictability, proportionality, and making sure our processes work.”
She insists the CMA has not been a brake on economic growth, but admits “where we do need to go further is to make sure that perceptions of the regime haven’t created a chilling effect, haven’t had a detrimental impact on business and investor confidence.”
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“It is a fair challenge to us to say: ‘Are you doing as much as you can do to build that positive?’ And that doesn’t mean that we are going to suddenly start letting through, obviously, anti-competitive mergers.”
It is a marked change of tone from just a couple of years ago. In a speech in November 2022 Cardell explained how the CMA planned to police Silicon Valley’s tech behemoths with forward-looking regulation, to avoid the risk of “winner takes most” outcomes.
She singled out Amazon, citing its “mind-boggling” breadth – from retail and logistics to music, films, home appliances and cloud services. She warned about the “risks that come from significant and entrenched market power – particularly in markets that have become essential for our way of life and commerce”.
“This unprecedented scale and scope afford these firms a strategic position creating a situation of dependency – and potential exploitation – for the people and businesses who rely on them, as well as the risk that they can act to deter innovative competitors.”
In April 2023 those words were put into practice when an independent panel at the CMA blocked the largest gaming deal in history, Microsoft’s $68.7bn (£55bn) purchase of the Call of Duty developer Activision Blizzard, citing concerns about dominance in the cloud gaming market.
The backlash was furious. Microsoft’s UK president, Brad Smith, called it a “bad for Britain” and Microsoft’s “darkest day” in its four decades in the UK. The then chancellor Jeremy Hunt admonished the CMA publicly, saying regulators need to “understand their wider responsibilities for economic growth”.
Despite all that, Cardell maintains that “there was no pressure on me from government throughout the entirety of that Microsoft investigation”.
Eventually the Activision deal was allowed to proceed after the CMA extracted concessions including forcing the sale of cloud gaming rights outside Europe to Activision’s French rival Ubisoft.
But the world today looks very different. Donald Trump has criticised European regulatory action against US tech firms as a “form of taxation” and was flanked at his inauguration by Tesla’s Elon Musk, Meta’s Mark Zuckerberg, Google’s Sundar Pichai, and Amazon’s Jeff Bezos.
Would the CMA intervene now to stop a company based in Redmond, Washington from buying a Santa Monica, California-headquartered one? Especially when the government has demanded that it focuses on “markets and harms that particularly impact UK-based consumers and businesses”, and avoids international overreach?
Cardell says it will take a “proportionate approach when we’re thinking about global deals or issues that are global in nature”.
“If you think about Microsoft Activision, I think it’s the kind of case that we would want to think very carefully about. I can’t say definitely would we or wouldn’t we.
“It’s about a tailored proportionate approach rather than a default approach which says every single time there’s a global deal, we need to have a seat at the table.”
The CMA’s ambitions will soon be tested: it recently launched an investigation into Google’s dominance in internet search and search advertising, and a separate one into Apple and Google’s mobile phone “ecosystems” and app stores. If it finds they have “strategic market status” that they are abusing, it will propose a series of remedies. If they do not comply it could ultimately end up fining the tech firms, up to a maximum of 10% of turnover.
“I would consider the fines very much the kind of last resort,” Cardell adds. “This is a regime which is built on an aspiration of engagement and constructive resolution.”