The CMA ‘s latest investigation into the competitiveness in the banking sector has been called out for not going far enough ñ a criticism that has haunted the CMA since its inception.
The Competition and Markets Authority began operating in April 2014 and since then has made various attempts to try and clean up both the banking and energy sectors. While some of the changes that have come out of their investigations have been welcomed as praiseworthy, there is a general consensus that their probes have generally not been as effective as they could have been.
The raison d ‘etre of the CMA is to eliminate monopoly and price-fixing in various sectors and uses both civil regulation and (attempted) criminal prosecution in order to do so. The problem has been that over the course of its 18 month life so far, little meaningful change has been implemented. Two attempts at prosecution for criminal cartel offences failed when they reached the courts, and other investigations have yielded little more than a regulatory slap on the wrist for those essentially guilty of forming effective monopolies.
The CMA ‘s most recent investigation into the banking sector has been roundly criticised for not going far enough in its attempt to decrease the effective stranglehold that the ëBig Four ‘ banks (Barclays, Lloyds, HSBC and RBS) have over the market. The CMA announced that, following their investigation, they will now be forcing UK banks to encourage customers to switch current accounts when problems such as technology glitches occur, but stopped short of implementing any further regulations that could further improve competition in the sector. Following these “disappointing” findings, Andrew Tyrie of the Treasury select committee has now announced that the CMA will be formally cross-examined and forced to justify its decisions, or lack thereof.
The CMA came about as an operational merger between the Competition Commission and the Office of Fair Trading after a perceived lack of effectiveness in both. The irony, given the current situation, has not been missed. Antitrust lawyer Christopher Bright said on the subject: “the OFT had not performed to expectations, that was shown in numerous ways, and the CMA in many ways was a chance to start again. However there hasn ‘t been any real sign in the past 18 months that they have moved on from where the OFT was.”
Indeed the failure to uphold the criminal cartel convictions are very reminiscent of a particular failure of the OFT to prosecute multiple executives at British Airways back in 2010.
The Treasury ‘s economic secretary, Harriet Baldwin, has come out in defence of the CMA ‘s banking report.
She said: “we created the CMA to take strong action where required to ensure competition is working as effectively as it can be for the benefit of consumers. The CMA ‘s work complements the work the government has already undertaken, and continues to take, to increase competition in banking and create a fiercely competitive market which delivers for consumers and the wider economy.”