On 11 March 2021, Mishcon The Leap alongside The Entrepreneurs Network, co-hosted a virtual roundtable with John Penrose MP, for founders and entrepreneurs of fast-growth businesses from a variety of sectors.The theme for the event was centred around the competition regime and how this affected entrepreneurs and their businesses.
Competition Partner at Mishcon de Reya, Neil Baylis introduced John Penrose MP, who has recently authored a report on reform to the competition regime – Power to the People.
John opened the discussion by identifying three key areas from his report where he wanted to see changed in the current competition regime:
- •Speeding up decision making;
- •Reducing the cost for business of regulatory compliance;
- •Making sure new powers for the CMA in the context of digital markets were tightly ring-fenced.
In the context of the COVID-19 pandemic and the scale of support that had been provided by the UK Government, consideration needed to be given as to how micro-economic reforms could encourage entrepreneurs. It was clear from the discussion that entrepreneurs faced a range of competition related concerns which were directly relevant to the three key areas of priority.
The handling of the Amazon/Deliveroo merger inquiry was cited as a major cause for concern given the minority shareholding that Amazon was taking in Deliveroo and the fact that the decision went all the way to phase II, taking several months before the CMA made its conclusion. The transaction was ultimately approved but only following a failing firm defence. Decisions like this made investors nervous and impacted on the ability of fast-growth businesses to secure funding.
Discussion was also given to the way the CMA and other economic regulators try to future gaze and will take decisions on the basis of what might happen to a market. These decisions were perceived as being not always being grounded in reality. Particularly in the context of fast-moving digital markets where it’s difficult to predict entry and expansion.
A one size fits all approach to compliance was also discussed, with concerns that large tech companies were able to ‘game the system’ to their advantage, particularly when it came to things like GDPR compliance, often with the result that UK based firms were left at a competitive disadvantage. Access to data and overcoming incumbent network effects, was also a concern for start-ups/entrepreneurs. There were also calls for more being done to allow sand-boxing to take place using UK Government data sources.
A general theme of the discussion was removing/reducing the ability for politicians to be involved in competition decisions, though it was thought that a balance needed to be struck to ensure that any new powers in the context of digital markets regulation could only be used in very specific Parliament mandated settings.