The CMA is the Competition and Markets Authority. It is the regulator that regulates the marketplace for consumers in the vast majority of sectors. In short, it is the job of the CMA to stop and to punish anti-competitive behaviour.
It will be lost on no one that the UK, with the rest of the world, is gearing up to reduce production of CO2. Recent events in the Ukraine, with Russia’s re-invasion of Ukraine, has placed further emphasis on this as global energy prices based on hydrocarbons increase.
Part of this push towards greener ways of living are a series of policies aimed at increasing the use of electric and hybrid cars.
Electric cars, it needs hardly be said, require charge points.
Throughout 2020, the CMA was becoming increasingly concerned at how the market for charging points for electric cars was working, especially in or near motorway service stations. On 22 July 2021, the CMA launched a formal investigation into the sector.
The investigation looked at the increasingly exclusive arrangements entered into by The Electric Highway Company Limited and Ecotricity Group Limited. The CMA also concentrated its investigation on three operators of motorway service area: Moto Hospitality Limited, Roadchef Limited and Extra MSA Holdings (UK) Limited.
The Competition Act 1998 divides into two chapters. Chapter 1 deals with concerted practices between enterprises, the object or effect of which distorts the market. Chapter 2 deals with big monopolies and the use of their power in the market to distort competition.
This investigation was under Chapter I. The Electric Highway Company Limited and Ecotricity Group Limited were also investigated under Chapter 2.
When the CMA investigates, it normally adopts its formal procedure. The CMA has ‘dawn raid’ powers but it usually prefers a more consensual approach with those being investigated.
The investigation found that there existed long-term exclusivity agreements between the Electric Highway and Roadchef, MOTO and Extra. The CMA also found that these three providers together accounted for around two-thirds of service stations. The deals with chargepoint providers at these stations typically lasted between 10 to 15 years.
The CMA found that these arrangements prevented new entrants to the market.
But the CMA tend to be quite sensible. They recognise that in new sectors, entrants will require long term contracts to make investment look attractive to their boards. But as time wears on and the sector matures, the need for long term contracts may die away. The CMA found that the future of electric cars looks increasingly certain. They also found that competitors were deterred from entry by long term ‘sitting’ on chargepoint contracts.
Having reached this conclusion, the CMA has a number of enforcement options. These range from informal advice to the imposition of fines of up to 10% of global turnover.
In this instance, the CMA opted to accept commitments from Gridserve and MOTO, Roadchef, Extra MSA Property (UK) Limited and some of their associated subsidiary companies.
These commitments are published on the CMA website.
What this case demonstrates is that the CMA is not afraid to investigate and intervene in new and emerging markets but that it is aware of the economics in markets as they develop and mature. What the CMA is prepared to tolerate in a brand new market will change over time.
Jonathan Compton is a specialist in Competition and Anti Trust Law, holding honours and Master’s degrees as well as qualifications as a barrister and solicitor, and a Member of the Chartered Institute of Arbitrators.