CMA EV Market Study: no Market Investigation Reference but future remedies package to be proposed

On 26 May 2021, the Competition and Markets Authority (the “CMA”) published a second progress update in the electric vehicle (“EV”) charging market study and notice of its decision not to make a Market Investigation Reference.

Background

In December 2020, the CMA launched a market study into the EV charging sector in the UK and invited comments from stakeholders. The market study was a proactive step by the CMA to investigate an emerging market in its infancy and identify potential areas of concern regarding competition. Unlike most other CMA market studies, which examine well established markets with emerging concerns, this study was unique in investigating a nascent sector.

For a more in-depth exploration into the purpose and scope of the market study, see our previous Law-Now article here.

Status of market study

On 1 March 2021, the CMA published the responses to its Invitation to Comment (“ITC”) and provided its first progress update. The update outlined the themes and issues that had emerged in the ITC responses and identified two key segments that it wanted to focus on in more detail:

• en-route rapid/ultra-rapid charging, in particular on motorways; and
• on-street slow/fast local charging i.e. on the kerbside or in local hubs.

Since this first update, the CMA has been continuing to collate information, undertake analysis and engage with stakeholders. Of note, it held a series of roundtable sessions in April 2021 where key issues were discussed and potential measures were explored.

The second progress update builds on the segments previously identified and notes emerging issues in the following settings:

• en-route rapid/ultra-rapid charging, in particular on motorways – where concerns about investment and competition exist, given the requirements for suitable, accessible charging locations ;
• on-street slow/fast local charging i.e. on the kerbside or in local hubs – where emerging issues about limited investment to date and the role of local authorities exist; and
• how consumers interact with both off-street home charging and public charging.

The CMA’s exploration of these emerging issues and potential remedies to address them is set to continue for the next few months.

Market Investigation Reference (“MIR”)

Within six months of launching a market study, the CMA has a statutory obligation to either (i) consult on whether to make a MIR; or (ii) publish notice of its decision not to make a MIR. A MIR is a more in-depth investigation into a market, which can last up to 18 months (24 months in exceptional circumstances).

The CMA noted that the nature of some of the identified emerging issues in the UK EV market are such that it is likely the statutory test for making a MIR is satisfied. However, it decided not to make a MIR as it believes that the issues could be effectively and proportionately addressed through alternative outcomes. Separately, it did not receive any representations from stakeholders that a MIR was necessary.

Instead of a MIR, the CMA commits to “develop a package of remedies within the market study” that it considers will effectively address the issues identified. Whilst the CMA did not disclose the form this package of remedies may take, there are a broad range of remedies it could adopt, including:

• recommendations to Government if it considers that a change in law, government policy or the regulatory framework is required;
• publishing guidance and/or recommendations to businesses if it deems certain issues can be addressed by stakeholders changing their behaviour, this may address issues such as the information provided to consumers during the sales process, avenues for customer redress and poor terms and conditions; and
• customer-focussed action – for example, organising information campaigns to empower consumers to make more informed purchases.

The CMA has left the door open to revisit the case for a MIR should there be features of the UK EV charging market meriting further consideration in the future – but this would be a separate project.

Next steps

The CMA anticipates publishing its market study report, setting out its full findings alongside a package of remedies, in summer 2021 - significantly ahead of the statutory deadline (being 1 December 2021).

The detail, flexibility and extent of the CMA’s remedies will be keenly awaited by the fast-paced and growing UK EV charging sector. In its first progress update, the CMA noted it was working closely with the Office for Zero Emission Vehicles so the sector will be hoping for a joined-up approach to any regulation and practical solutions to emerging issues.