Today, we’re publishing new research and recommendations on the delivery of digital competition policy in the UK. You can read the paper in full here.
Startups thrive in competitive markets. At Coadec, we have always said that startup friendly competition policy is the only way to do competition policy. And Competition reform is coming, the Government’s new Digital Markets Unit is going to fundamentally change the way competition policy is handled in the UK. To help understand the sentiment around the Government’s current proposals we went and asked a load of startup investors their views on the state of the UK’s competitor ecosystem. The data was striking.
- There was clear support for tackling anti-competitive behaviour – with 80% of investors surveyed either concerned or very concerned about incumbent companies making it harder for new entrants to break into markets. But critically, this wasn’t just tech incumbents – most investors said that their companies were more likely to be competing with analogue incumbents, so it’s important that competition changes address challenges across the whole economy.
- On acquisitions and exits, an overwhelming majority of surveyed investors felt regulators didn’t understand the importance of M&A to the startup ecosystem. 90% of investors agreed that the ability to be acquired was very important to the health of the startup ecosystem. 50% of investors said they would significantly reduce the amount they invested in UK startups if the ability to exit was restricted, a further 22.5% said they would stop investing in UK startups completely.
- And frankly, there wasn’t a lot of trust in regulators. 60% of investors felt UK regulators only had a basic understanding of the startup market, 22.2% felt they didn’t understand at all. 80% of investors felt the Government has only a basic understanding of the startup market.
- And even more importantly, 70% of investors felt UK regulators only thought about large incumbent firms when designing competition rules, rather than startups or future innovation.
There’s a huge debate on the future of competition coming (not just in the UK) and we’re keen to make sure we get the best of the system for the benefit of the startup ecosystem here in the UK – both tackling bad behaviour and protecting key priorities for the ecosystem like the ability to exit. If you have any questions on the data or want more information on the work please reach out to our team.