The delay could allow UK policymakers to watch and learn how similar rules play out in the EU
It could take two years before the new regime is in place: The UK Government recently published its long-awaited response to the consultation on a new regime for digital competition. In many respects, the Government’s response mirrors the initial plans for the CMA. In it, the Government confirmed a regime in which the Digital Markets Unit (DMU) within the CMA will be able to designate firms with Strategic Market Status (SMS) and impose remedies on them. The problem is we don’t know when this will happen, since the Government has not committed to a clear deadline and will only bring forward legislation to implement these reforms “when parliamentary time allows”. As such, they should be expected in the 2023–24 parliamentary session.
The Government has listened to big tech on some aspects: SMS designated firms will be subject to codes of conduct and pro-competitive interventions (PCIs). The Government has sought a balance between certainty for the firms in scope (which need clarity around the remedies to which they could be subject), and flexibility for the DMU to impose the appropriate remedies and adapt them to the circumstances. The Government will therefore set out categories of conduct requirements in legislation, and allow the DMU to develop specific binding requirements within these categories for each SMS firm where appropriate. With regards to PCIs, the DMU will have broad discretion, but it won’t be able to impose them on activities that generate a net benefit to consumers. Ownership separation would only be a last resort where other remedies are insufficient. On mergers, the Government is not introducing stricter thresholds for Phase II investigations as was proposed in the consultation. This is to avoid the risk of a chilling effect on investment, which some larger tech companies had raised during the consultation.
The EU got its Act together much quicker than the UK: The delay to legislation that implements the new regime is a blow for those policymakers who wanted to reign in big tech and were hoping that Brexit would result in a quicker, more agile legislative process compared to the bureaucratic machine in Brussels. The CMA published its advice on a new pro-competition regime for digital markets in December 2020 – almost at the same time as the EC’s proposal for the Digital Markets Act. Fast-forward 16 months, and the EU has wrapped up the DMA, whereas the UK could take at least another year to legislate, if not longer. On the other hand, the UK could now be in a position to learn from what happens in the EU, where the provisions of the DMA will come into effect in 2023. UK legislators will be able to see how the EU regime plays out initially, and make amendments to the Government’s bill accordingly. In the meantime, the CMA will have to continue to use its existing, but already fairly strong, powers to oversee digital markets.
