Competition policy developments in Scotland

The Scotland Act 2016 devolves powers to the Scottish Parliament and the Scottish Government in respect of competition and consumer policy. These powers include consumer advocacy and advice, and to act with the UK Secretary of State to refer in certain circumstances a market for investigation by the Competition and Markets Authority (CMA). The Scotland Act also devolves the management and operation of all reserved tribunals, including the Competition Appeal Tribunal, which may lead to a distinctive Scottish approach in competition litigation.

Last month, the Scottish Government published a Strategic Assessment of Markets in Scotland. The purpose of the assessment was to provide an overview of the efficient functioning of markets in Scotland and to highlight the areas of potential concern which may merit further investigation. The assessment was carried out in consultation with stakeholders, including the CMA which supported the review and welcomed the report.

For businesses active in Scotland, key areas to highlight include Scottish Government proposals:

• to work with business organisations to carry out research into Scottish businesses’ attitudes to competition and competition issues and to engage more with businesses in competition matters (estimating that business awareness of competition law, whilst higher than the UK average, is still low at 27%);
• to carry out research to consider how to ensure Scottish businesses are able to make the most of disruptive technologies (such as Uber, Airbnb and Skype), including ensuring market structures and regulations do not unnecessarily restrict innovation and new entry;
• to encourage switching in regulated sectors, particularly in the banking, telecoms and energy sectors (working with sector regulators and taking account of the CMA retail banking and energy market investigations);
• to consider initiatives to ensure consumers are better informed, in particular in property, legal services and health and social care, which are identified as areas of concern; and
• to carry out research into the provision of public transport services, including tendering of franchises and lifeline services, though to focus initially on whether there is adequate provision of consumer advocacy and redress.

Comment

Further devolution of competition powers was proposed by the Smith Commission and taken up in the Scotland Act 2016. The powers to be devolved relate largely to consumer protection and less to competition. This means that the CMA remains the principal competition authority exercising enforcement powers in Scotland (alongside those sector regulators having concurrent competition powers, which in Scotland means the Financial Conduct Authority (FCA), Ofcom, Ofgem, Office of Rail and Road (ORR), and the Civil Aviation Authority (CAA)). The Scottish Government is however working closely with stakeholders, including the CMA, to develop a Consumer and Competition Strategy for Scotland and sees effective competition in markets as a key driver for economic growth.