The Government’s ‘world-leading’ approach to regulating large tech firms has been three years in the making, allowing the EC to take the lead
Clamping down on rip-offs and protecting consumers online: The UK Government has introduced in the House of Commons the Digital Markets, Competition and Consumers (DMCC) Bill, which seeks to stamp out unfair practices and promote ‘free and vigorous’ competition in digital markets, as well as between online and high street businesses. The far-reaching bill is based on three core pillars, the first being consumer protection. It will enable the CMA to better tackle practices such fake reviews, pressure selling and subscription traps (the latter costs consumers £1.6bn a year), empowering it to decide when consumer law has been broken, rather than having to take each case to court. This will help ensure people are protected more quickly and ‘fair-dealing’ businesses are not disadvantaged – and will also allow the CMA to fine firms up to 10% of their global turnover if they break the law. At first glance, there appears to be overlap with existing requirements (such as Ofcom’s End-of-Contract Notifications), with the DMCC Bill perhaps giving them more teeth.
Ensuring effective regulation and competition: The second area of focus is digital markets, with the bill establishing a regime to address the ‘substantial and entrenched’ market power of a small number of large tech firms (global turnover above £25bn, or UK turnover above £1bn). The regulatory framework will be overseen and enforced by the Digital Markets Unit (DMU) in the CMA, which will have the powers – but will use a ‘proportionate approach’ – to prevent firms with Strategic Market Status (SMS) from using their size to limit innovation or market access. Appeals to DMU decisions would be made to the Competition Appeal Tribunal (CAT) on procedural grounds – i.e. a judicial review – instead of on the merits as tech companies would have likely hoped. The third dimension to the bill is competition. Bolstered powers will mean the CMA can conduct faster and more flexible investigations to identify and stop unlawful anti-competitive conduct more quickly. Changes to the competition framework will make it easier for the CMA to take action against mergers which harm UK consumers and businesses.
A year after adoption of the DMA, the UK is playing catch up to the EU: Prime Minister Rishi Sunak had stated that he would take forward the draft legislation during last year, promising to create a new regulator with “real teeth”. Though the bill has been welcomed by the CMA as a “legal framework fit for the digital age”, it comes around three years after the UK first pledged to develop a ‘world-leading’ regime to address the growing power of large online platforms. The bill will put the DMU on a much-needed statutory footing; however, the time taken to legislate means its introduction in Parliament comes over a year after the EC adopted the Digital Markets Act (DMA). Conversely, this may be an opportunity to learn from the EU’s early experience with the DMA (for example, on challenges relating to resourcing and practical implementation) as the bill makes its way through the legislative process.
