It has called on the government to help deliver universal broadband services at greater speeds, to tackle "broadband blight" in rural areas and to make the UK attractive for inward investment.
The CMA warned that unless the government takes action - whether through direct investment, industry subsidies or regulatory action - multinational companies will see the UK as a less attractive investment option. A lack of action would make it harder for them to expand their existing operations, and jobs could suffer, the CMA said.
Speaking to the meeting of the Parliamentary Information Technology Committee (Pitcom), CMA head of regulatory affairs David Harrington said, "In Japan you can have fibre to your home running at 100mbps for £33 a month and, moreover, fibre in the incumbent's backhaul network is open to its competitors.
"In the US, Verizon has invested $55bn [£30bn] in networks and services over the past three years, and it aims to link one million homes with fibre. The UK government and the regulator have to do more to ensure that the UK does not get left behind in the broadband market."
In Japan, said Harrington, standard ADSL runs at 45mbps, falling to 26mbps when 1.5km from the switch, and 2mbps at 4km from the switch - this is still eight times faster than the standard 512kbps offering from BT.
In South Korea, he added, users can get 8mbps for only £15 a month, and China and India are rapidly expanding their broadband communications networks, which will make them more attractive to investors.
Harrington said the UK's current broadband take-up figures were artificially inflated by the inclusion of 128kbps services provided by cable companies, even though this speed is not regarded by most as broadband.
Also speaking at the Pitcom meeting, e-commerce minister Stephen Timms said, "I agree that there is an economic imperative to put in a communications infrastructure to allow our economy to be the best in the world, but how do we articulate that goal?"
Timms said the UK was still the third best nation out of the G7 countries when it came to measuring broadband competitiveness and coverage - behind Japan and Canada, but ahead of the US.
The government's aim, said Timms, was still to be the best among the G7 nations, and he called on the industry to provide him with suggestions on the best way to go forward.