Drawn-out and last-minute investigations performed by the UK’s Competition and Markets Authority (CMA) are stifling the country's up-and-coming tech companies, claims the Coalition for a Digital Economy (Coadec).
The industry body delivered a letter to newly appointed Chancellor Rishi Sunak, asserting the competition watchdog’s “eleventh hour interventions” could jeopardise the country’s otherwise thriving technology sector.
The note expressed a particular concern that UK tech businesses could be left in the dust by foreign competitors, who are not subject to the same level of scrutiny.
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In recent months, the CMA has intervened in high-profile tech deals such as Just Eat’s merger with Takeaway.com and Amazon’s investment in Deliveroo, a decision which drew ire from investors and are both currently pending a final decision.
Antitrust enforcer
According to a report from law firm Allen & Overy, the CMA is the most prolific antitrust enforcer, frustrating the highest proportion of deals over the last five years and increasing the fines it administered.
The CMA, currently seeking an extended post-Brexit mandate, blocked eight UK deals in 2019, three of which it prohibited and five of which were abandoned.
According to Dom Hallas, Coadec’s Executive Director, “the recent actions of the CMA reflect an ignorant one-size-fits-all approach to tech acquisitions, investment and mergers that can only damage the tech ecosystem in the UK.”
“The CMA now risks...killing British companies with lengthy investigations whilst global digital markets move on around them,” he added.
The CMA has dismissed these concerns, insisting it has not adopted interventionist policies but rather that dynamic markets call for a renewed approach to mergers.
“We still believe our merger control regime is largely fit-for-purpose,” said Andrea Coscelli, CEO at the CMA.
“But we are continuing to think about whether there is a case for legislative changes to jurisdictional and/or substantive tests as we review more mergers and gain more experience of digital and dynamic markets.”
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Via City AM
