A Market Investigation Reference (MIR) is made to the Competition Commission (CC) under the Enterprise Act 2002 when the Office of Fair Trading (or sector regulator, or in particular circumstances a minister) has reasonable grounds for suspecting that features of a market are preventing, restricting or distorting competition. In short, the CC must then decide whether there are, actually, such competition problems and, if there are, what remedies would solve them.

The MIR regime has a rather different philosophy to traditional competition investigations under the Competition Act 1998. It aims to solve competition problems rather than deter future bad behaviour by punishing past infringements, so MIRs don’t result in either punitive fines or executives going to jail. Even so, MIRs can lead to very significant market interventions, such as the CC’s decision to break up the British Airports Authority (BAA).

A significant impact on day-to-day business

An inevitable reality of an MIR is that main parties will experience a significant burden from the investigation - both in terms of direct costs for advisors and, more generally, in the opportunity cost of management time. Seriously engaging with an MIR will require a specialist external team of lawyers and economists and also significant input from the highest levels of the business, supported by a suitable in-house team. The CC does try to mitigate the burdens imposed via information requests, but MIRs are ultimately high-effort activities.

A practical minimum will involve responding to significant information requests, reviewing a wide range of documents such as working papers, summaries of evidence submitted by other parties, the CC’s provisional findings and subsequent final decision. Along the way, there are potentially several CC hearings to prepare for and attend. The formal hearings which involve direct engagement with the panel of independent decision-makers (‘members’) hearing the case are the CC’s trademark activity. Engaging seriously will involve developing both expert economic and legal submissions on the substantive issues. At present, the CC is actively re-writing its formal guidance for market investigations. This is a welcome development, but it does mean there is currently an additional potential source of uncertainty facing parties to an investigation.

Positive early engagement

Where possible, the best way to engage with the CC is positively. There are a variety of reasons to do so, including: first, a CC investigation may shine a light on a market and largely clear it, reducing the risk of intervention from other places. Moreover, as in the rolling-stock leasing MIR, the main output may be a CC recommendation to government. In that case, it was recommended that the Department for Transport (DfT) should change its practices around franchising the right to operate train services by (i) introducing longer franchise terms and (ii) ensuring that DfT’s Invitations to Tender (ITTs) were specified in such a way that rail passenger franchise bidders were allowed an actual choice of rolling stock.

Second, some MIRs involve competition issues that lead to consumers getting a raw deal but shareholders not gaining either. Markets can, on occasion, reach a stable but not particularly high performance outcome and may need a jolt to move them on.

Thirdly, the CC has a difficult job on its hands and there is often considerable room for a productive discussion about the proper way to frame questions of complex economic analysis - given the widely accepted framework of competition economics available to structure a reasoned debate. The CC will, deservedly, have enough confidence to be willing and able to handle such discussions intelligently within a proper process.

Fourthly, some evidence development needs early engagement with the CC or else it may receive little evidential weight. For example, before running a customer survey, it would probably make sense to consult the CC on methodology and the questions and then to use an independent survey company to run it. Otherwise evidence developed specifically for the investigation risks receiving little evidential weight. In the PPI investigation for example, the CC decided that a major retail bank’s internal documentation made it clear that the objective of a pilot study was, in effect, to demonstrate that the CC’s remedies wouldn’t work.

The best time to engage is early. John Adams was certainly right to say that 'facts are stubborn things'. Fortunate they are, because it may naturally take time for evidence establishing the facts to be developed, refined and to subsequently find its place properly incorporated into the decision document.


For at least some parties at the centre of some MIRs the process will, by design, represent a major strategic threat to the status quo. For others, the possible problems identified by the OFT will be entirely unrecognisable while a third group will both accept there is a problem and want to deal sensibly with it - on a market-wide ‘level playing field’ basis. A final group may consider it represents an opportunity - for example to get rid of unwarranted regulatory barriers. Whichever camp the client is in, an MIR is not a process to go into lightly.

Peter Davis, FTI Consulting