CMA release timely discussion paper on scale-ups and competition policy

The Competition and Markets Authority (CMA) published a discussion paper examining how competition policy can support the UK's scale-up ecosystem as part of the government's industrial strategy. The paper is particularly relevant for high-growth sectors identified in the Industrial Strategy (IS-8), including the digital and technologies sector.

Why do scale-ups matter in the UK economy?

The CMA recognises that supporting scale-ups delivers key benefits to the UK. These include driving economic growth and value-capture in the UK; building strategic resilience in critical sectors; and establishing global influence through internationally competitive firms. techUK continue to recognise the importance that scaling tech businesses play to support market dynamism and innovation. However, the paper recognises barriers including limited capital access, regulatory burdens, and inflexible procurement processes continue to hinder the 'scale-up opportunity'.

A core theme within the paper is that competition policy should complement broader industrial policies, for instance, support for innovation, data access, and the right procurement practices.

Three key areas for competition policy:

The CMA highlights how pro-competitive reforms can remove obstacles to scaling. This includes reforming public procurement practices (£385bn spent annually) to give scale-ups fairer access to opportunities, particularly in infrastructure and defence sectors. The CMA is conducting market studies in civil engineering and has provided advice on defence procurement. Smarter regulation that avoids disproportionately burdening smaller firms is identified as essential.

Cross-economy enablers like data access and interoperability are critical for tech scale-ups. The CMA points to Open Banking as a successful example, creating a £4bn fintech sector. There is also a nod to the potential in helping the UK government to optimise access to public data assets, including NHS data through the National Data Library, while supporting smart data schemes under the Data (Use and Access) Act 2025.

The CMA acknowledges that whilst competition typically supports scaling, there may be instances requiring more nuanced approaches. The paper explores how beneficial collaborations (similar to 'Green Agreements') could support scale-ups whilst maintaining compliance. On mergers, it raises complex questions about foreign acquisitions of UK firms, domestic consolidation for resilience, and whether UK firms need 'critical mass' to compete globally - acknowledging potential tensions between domestic competition and global competitiveness.

Next steps from the CMA

The CMA is seeking evidence and views through extensive stakeholder engagement until 21 November 2025, with further findings expected in early 2026. We note that they are particularly interested in hearing from IS-8 businesses and investors about procurement barriers, regulatory blockers, data access opportunities, and the impact of competition law on beneficial collaborations.

techUK, on behalf of our members, will continue to feed in and shape how the CMA can work to better support technology scale-ups over the coming years - contributing to the ambition for economic growth.

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