Digital Markets, Competition and Consumers Bill: what businesses need to know

First introduced in April 2023, the Digital Markets, Competition and Consumers Bill (“the Bill”) is finally making its way through parliament. This groundbreaking Bill is set to revolutionise digital markets and consumer rights, creating a harmonious and agile environment for businesses and their online users. It is expected to come into force next year.

The Competition and Markets Authority (“CMA”) will have new enforcement powers to directly govern businesses and issue fines of up 10% of global turnover. Until now, only the courts have had the authority to implement these powers. The changes have been proposed in recognition that the CMA’s current role to promote competition does not go far enough to protect consumers in fast-changing digital marketplaces. We are all aware of the extent of misinformation online and the extensive power this has to mislead consumers.

This article will provide a snapshot of the key changes of which your business will need to be aware to adapt to the changing regime.

Strategic Market Status

The Digital Markets Unit (“DMU”) can designate businesses which it considers to have a substantial and entrenched market power with a ‘Strategic Market Status’ (“SMS”). Business with an SMS will need to meet more onerous standards and may be subject to pro-competitive intervention.

There will also be new reporting requirements relating to mergers and acquisitions. Transactions relating to over 33% of the market share or turnover of over £350m will be subject to review by the CMA. This goes much further than current requirements.

A new era of consumer provisions

It is hoped that with this Bill we can bid goodbye to the current weaknesses of the digital markets: weak sanctions, poor uptake of alternative dispute resolution services and extensive enforcement procedures.

The Bill, if enacted, will revoke the Consumer Protection from Unfair Trading Regulations 2008 – as retained EU law – replacing it with legislation that no only upholds the same principles but also introduces necessary modifications. Below is an example of just some of the proposed enhancements.

Dynamic legislation

• Under the current regime, a list of automatically unfair practices is entrenched. The new Bill will empower the Secretary of State to expand this list, allowing legislation to be more adaptive and responsive to emerging risks
• The intention is to create an online world where businesses are able to appropriately deal with ‘fake reviews’, which are an ever-growing concern
• Another concern for consumers will be addressed by granting a power to impose fines on companies who ‘greenwash’ their business by exaggerating their sustainability efforts.

Tougher enforcement

• The Bill will establish two new systems for the civil enforcement of consumer law to bolster the existing regime and improve efficiency
• The court based system will remain but will undergo a makeover, introducing financial sanctions for non-compliance of undertakings
• A new direct enforcement system administered by the CMA – a substantial enhancement on its previous role. The CMA will no longer need to rely on court proceedings to enforce a breach of consumer law. The new system will allow the CMA to take action directly without the need to go to court. New, potential fines on companies may be issued reaching up to £300,000 or 10% of annual global turnover; whichever is higher.

Navigating the new landscape

This snapshot is just the tip of the iceberg of the changes promised with the new legislation, but one thing is clear – the Bill signals the start of a new age for consumer protection law.

For businesses, the stakes have never been higher. Breaching consumer law could lead to significant consequences, with the CMA taking centre stage, armed with the ability to take direct action, issue hefty fines and enforce the enhanced regulatory regime.

To effectively navigate this changing landscape, businesses must ensure their internal strategies are not only reviewed but remain cutting edge. Consider the CMA’s expanding reach, the looming threat of fines and ensure your business can avoid the pitfalls.