As the digital landscape continues to evolve, the UK government is taking action to regulate digital markets and change its competition and consumer protection regimes. One example is the proposed Digital Markets, Competition and Consumers Bill (DMCC), which aims to improve consumer protection, enhance the enforcement powers of the UK's Competition and Market Authority (CMA) and introduce substantial penalties for non-compliance. In this article, we will explore the key objectives of the DMCC and its implications for online businesses.
1. Understanding the DMCC: key objectives
The DMCC Bill is built on three key pillars, each addressing crucial aspects of the proposed reforms:
Enhance consumer protection
A primary focus of the DMCC is to bolster consumer protection. This includes acting against unfair practices like deceptive "subscription traps", fake reviews, and high-pressure selling tactics. The DMCC also sets requirements for traders running certain consumer saving schemes, like Christmas saving clubs, to protect consumers, including requiring operators to have insurance to cover consumer deposits.
Moreover, the DMCC grants the CMA more authority to protect consumers' rights. Instead of having to resort to lengthy court cases, the CMA will have the power to determine when consumer law has been violated. This streamlined approach ensures quicker protection for consumers and a level playing field for ethical businesses. In cases of non-compliance, the CMA will wield the power to impose substantial financial penalties, amounting to up to 10% of a business's annual global turnover, with additional daily penalties for continued breaches.
Improve the existing competition regime
The DMCC introduces important changes to competition law, covering areas such as merger control jurisdictional thresholds, market studies, and investigations.
The main objective of the proposed changes is to strengthen the investigative and enforcement powers of the CMA, enabling faster and more adaptable competition investigations to address instances of anti-competitive behaviour.
Establish a new ex-ante regulatory regime focussed on digital markets
To address the challenges of the digital age, the DMCC introduces a targeted regulatory regime supervised by the Digital Markets Unit (DMU) within the CMA. This regime is designed to prevent dominant businesses from leveraging their size and market power to stifle digital innovation or restrict market access. The goal is to maintain the UK as an attractive hub for investment and business growth in the digital sector.
2. Understanding the targets: who is affected?
The DMCC specifically targets businesses designated as 'Strategic Market Status' (SMS firms). These companies possess significant and entrenched market power and are active in at least one digital activity. To qualify, a business must also have a global turnover above £25 billion or a UK turnover above £1 billion.
3. Staying informed: the legislative process
As the DMCC is still in draft form, online businesses must remain vigilant and monitor any changes that may arise during the legislative process. Keeping a close eye on developments before the expected entry into force (around mid-2024) will help businesses prepare for the new rules effectively.
Conclusion
Feel free to get in touch with us to discuss how these changes could impact your business and how we can assist you in preparing for them.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
