The Competition and Markets Authority (CMA) has announced a market study into the supply of early years education and childcare services in England. This was widely expected, following the Secretary of State for Education’s request that the CMA carry out a review of how the provision of early years childcare is working, and will sit alongside the government’s review of childcare provision in England.
What is a market study?
A market study is a diagnostic tool in the CMA’s armoury. It involves a detailed review of a market to see if there are adverse effects on consumers. Market studies can vary in scope and complexity, but typically examine issues, such as:
- How effectively businesses compete against each other.
- Whether consumers can make informed choices.
- Whether market structures or behaviours might risk consumer harm.
- Whether regulatory or policy changes might improve outcomes.
In a market study, the CMA does not have powers to impose remedies but can make recommendations to government or other bodies and take consumer-facing actions.
The CMA’s 2026-2029 Strategy emphasises that they are focused improving household prosperity by promoting competition and protecting consumers, particularly in areas of essential spend. Early years childcare aligns with this strategic objective, and the CMA will be very keen through the study to hear from parents and families on their experiences in a sector the CMA says is worth approximately £14bn to the economy annually.
What will the CMA examine?
The study will examine key issues including:
- Access to high-quality childcare, including the availability of places and “cold spots” in certain areas or for particular needs.
- Affordability and funding, including whether government funded hours cover delivery costs, how providers manage costs and use cross-subsidies and the effects on affordability for families.
- Information and consumer choice, including whether families can access and use information at the right time to make effective choices.
- The role of public bodies in delivering good outcomes for the sector.
- The impact of different provider types and ownership models on choice and costs.
The CMA has said that it will deliberately start by looking at a broad number of areas to build up an understanding of how this sector is working. In line with the CMA’s “4Ps framework” (focusing on pace, predictability, proportionality, and process), the CMA has indicated that it then expects to focus in on the specific areas that have the biggest potential for improvement.
Timeline and next steps
The CMA expects to publish its emerging thinking in early 2027 and deliver its final report in May 2027. Market studies are subject to a 12-month statutory timeframe, so an aim to conclude within 10 months is ambitious on the CMA’s part, reflecting their focus on the “pace” element of the 4Ps framework. However, there would still be scope to extend to 30 June 2027, and this may become necessary given their starting place looking at a broad range of issues in a sector where there will likely be a high level of interest.
By way of contrast, the CMA said they needed the full 12 months for their private dentistry market study. The private dentistry study is looking at the whole of the UK, whereas this market study will be limited to looking at the market in England, due to the fact that early year’s education and childcare is a devolved policy area. The geographical limitation may have led the CMA to conclude they could finish their work in 10 months.
What could the study lead to?
A market study is an evidence driven process, and possible outcomes will depend on the data and the CMA’s analysis of this. The CMA has said that it is not assuming at this stage that any particular intervention will be necessary or appropriate. However, subject to the CMA’s findings, the CMA has indicated that potential outcomes could include recommendations to government, providers and policymakers. The CMA also notes that evidence gathering may also identify issues that warrant investigation and enforcement under consumer or competition laws.
Views from providers and other stakeholders
The CMA is seeking views from providers and other stakeholders, with responses to its Statement of Scope and Call for Views due by 26 July 2026. There are two webinars on 15 and 16 July which will explain more about how the market study will run, what it means for the sector, and how to engage with it.
Childcare providers should consider engaging with the study at an early stage. This is an important opportunity to influence the CMA's understanding of the challenges facing the sector and help shape future policy, funding and regulatory developments. Having an early understanding and strategic overview of the risks and opportunities the study may bring will be an important first step in navigating the intense 10 months ahead.
How can we help?
We have extensive experience supporting clients though market studies and investigations. For more information about this development, please talk to our team of competition law, consumer law and regulatory specialists.
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