UK Government launches consultation on reforms to competition regime

Introduction

The UK government has published a consultation document “Refining Our Competition Regime”, outlining a package of proposed reforms to the competition regime. Published on 20 January 2026 the proposed reforms arrive against a backdrop of ongoing change. Since the Digital Markets, Competition and Consumer Act 2024 (“DMCCA”) came into force last year, the CMA has been working to improve the pace, predictability, proportionality and process of decision-making, in line with the Government’s 2025 ‘strategic steer’. 

The latest proposals go further, tackling both structural and procedural aspects of the competition regime. Four reforms, summarised below, stand out as particularly significant.
 

Restructuring Phase 2 Decision-Making

The Government is proposing to abolish the current panel system for Phase 2 investigations. At present, phase 2 mergers are reviewed by independent panel members operating separately from the CMA Board and from the staff who conducted the initial Phase 1 review. This structure means that Phase 2 decisions are made by people with no previous involvement in the earlier assessment. The proposed change would replace the panel-led inquiry groups with committees drawn from the CMA board itself. This mirrors the approach already used for digital markets regulation under the DMCCA. 

The consultation paper explains that this proposed change is intended to increase accountability: because the CMA Board answers to Parliament, while panel members don’t, it is claimed that involving the Board in major decisions should strengthen democratic oversight. Such a shift would likely, however, spark debate. The proposal arguably consolidates the CMA executive’s decision-making authority at the expense of the checks and balances provided by the existing independent panel regime. 

The consultation asks whether the reform would improve predictability and consistency, but stops short of exploring whether alternative external accountability mechanisms might be needed to compensate for reduced internal separation.   

Tightening Jurisdictional Tests

The proposals also include changes to impose legislative boundaries on the criteria that the CMA may consider when determining ‘material influence’ and the share of supply test. This would have the effect of narrowing the circumstances in which the CMA can establish jurisdiction. 

Under the share of supply test, the CMA can assert jurisdiction if merging parties together supply 25% or more of goods or services of a particular description in the UK (or a substantial part of it), which is created or enhanced. The legislation currently allows the CMA’s assessment of the shares of supply to have regard to value, cost, price, quantity, capacity, number of workers or “any other criterion, or combination of criteria.” The non-exhaustive nature of this provision provides the CMA with great flexibility to assert jurisdiction.

The Government proposes to remove the ability for the CMA to consider “any other criterion, or combination of criteria”, limiting the assessment of shares of supply to a defined set of criteria (being the established criteria listed above). 

Similarly, the CMA currently has broad discretion to consider any relevant factors when determining whether a transaction would confer “material influence” on an acquirer. The Government is proposing to replace this with the following closed list of factors: 

• Shareholding or voting rights thresholds, or any shareholding or voting rights in combination with other factors
• Board representation or appointment rights
• Special voting rights or veto rights over strategic decisions
• Access to confidential strategic information
• Commercial, financial, or consultancy arrangements

These changes would provide merger parties with greater certainty on when a transaction will fall within the CMA’s jurisdiction.

Simplifying the Markets Regime

The markets regime would also see significant changes. The Government proposes to replace the existing two-step market study and market investigation system with a new, more flexible, single-step review tool. 

This change would truncate the timetable for the markets regime which, under the current model can take over three years for a market study and market investigation to conclude. Under the proposed one-step regime, the end-to-end process would typically take 18-24 months: the CMA would conduct an initial investigation for up to six months, then publish either a final report or a provisional adverse effect decision, with less intrusive remedies finalised by 18 months and more intrusive remedies by 24 months. This reduction in the timeline would be welcomed by many.

The Government also proposes changing from separate tests (i.e. “adverse effect on consumers” for market studies, and “adverse effect on competition” for market investigations) to a single "adverse effect on consumers" test at all stages of a market review. This should be particularly helpful in cases where the causal link between the consumer harm and the harm to competition is open to dispute. 

More Time for Phase 2 Remedies

Upon finding competition concerns at phase 1, the CMA provides parties with a tight window to propose remedies. Under the current rules, proposals must be submitted by day 5 of a 10-working-day period. This compressed timeline has led to “near miss” situations where remedies almost resolve concerns but cannot be fully developed and agreed before the deadline expires, forcing cases into Phase 2. 

The Government proposes extending the remedy consideration period from 10 to 20 working days. Parties would still need to submit initial proposals by day 5, but the CMA could grant a 5 working day extension if there appears to be a reasonable prospect of resolving concerns at Phase 1. 

This change responds to the reality that Phase 1 remedies are becoming more sophisticated. Extra time should help parties and the CMA find workable solutions without unnecessary references to Phase 2. 

Other Proposed Reforms

The consultation also proposes several other reforms.

The first of these is to pause the statutory deadlines during the Christmas period, recognising that requiring responses to information requests over the holiday period strains relationships and productivity. 

Another change would see the Secretary of State gaining a formal role in approving a wider range of CMA guidance documents. The Government frames this as a way of ensuring guidance serves businesses effectively, although it raises important questions about how political input can be balanced with regulatory independence. 

Conclusion

The proposals signal a deliberate shift towards embedding the Government’s growth considerations more firmly within the UK's competition framework. Whilst the CMA has already adopted some of these measures through policy guidance, their elevation into statute is intended to provide greater legal certainty and durability. Nevertheless, questions remain about whether legislative change alone can deliver the pace and predictability that businesses seek, particularly given the inherent complexity of merger and market investigations. The changes have naturally raised significant debate, not least around the appropriateness of certain elements outlined above and the desirability of stronger Government involvement.

The consultation closes on 31 March 2026, and the Government has indicated that it will move to legislate as soon as Parliamentary time allows, acknowledging that prolonged uncertainty of potential legislative change does not complement the predictability that the proposed changes aim to deliver.

If you would like to discuss how these reforms might affect your transactions or if you are considering submitting a consultation response, please contact Saskia King or Patrick Cordwell.

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