The eagerly awaited Digital Markets Competition and Consumer Bill (DMCCB) has finally made its entrance into the House of Commons.
With the completion of its first reading, the text of the Bill has been unveiled, marking a significant step toward addressing the complex challenges posed by digital markets. This pivotal legislation aims to foster fair competition, safeguard consumer interests, and shape the future of the digital landscape.
In this article, we will delve into the key provisions and implications of the DMCCB, shedding light on its potential impact on businesses, consumers, and the wider market.
What is the Digital Markets Competition and Consumer Bill?
The DMCCB aims to ‘encourage new challenger firms, spur innovation, and provide consumers with higher quality products and greater choice.’
The Bill provides significant new powers to be assigned to the Competition and Markets Authority (CMA). Notably, the watchdog will be able to:
- Intervene in the tech sector with a view to promoting competition
- Impose fines of up to 10% of turnover for breach of consumer protection law
The new Bill also imposes tougher laws on online fake reviews and subscription contracts and introduces several changes to streamline and enhance the effectiveness of existing competition law and merger control regulations.
The DMCCB is similar to the EU Digital Markets Act (DMA). The DMA focuses on ‘gatekeepers,’ defined as “large digital platforms providing so called core platform services, such as for example, online search engines, app stores, messenger services.”
Instead of gatekeepers, the DMCCB will empower the Digital Markets Unit (DMU) to designate firms with 'strategic market status' (SMS), overseeing a mandatory code of conduct for those firms and implementing pro-competitive interventions.
Who will be impacted by the Digital Markets Competition and Consumer Bill?
To be considered an SMS, a company must either:
- A global turnover (or global group turnover) of more than £25 billion, or
- A UK turnover (individual company or group) of £1 billion.
The turnover amounts mean that only large companies such as Google, Microsoft, and Apple will be considered SMSs.
Indirectly, however, the Bill’s aim to break down the barriers to effective competition in the technology sector will mean small to medium tech companies will have the space and confidence to gain a more significant portion of market share and offer consumers a wider range of products and services.
The CMA is expected to create a Code of Conduct for SMS firms after the DMCCB is enacted.
How will the DMCCB affect consumers?
One of the key aims of the DMCCB is to strengthen consumer protection. Part three of the Bill sets out two separate regimes to enforce consumer protection law:
- A court-based regime where enforcement authorities, including the CMA, Trading Standards, the Financial Conduct Authority, the Information Commissioner and Ofcom, among others, can apply to court for action to be taken against a trader.
- A direct enforcement regime operated by the CMA.
This means that the CMA will, in many cases, be empowered to decide whether consumer law has been breached rather than have to take each case to court, which is the present situation.
Regarding subscription contracts, a business must send out reminders before a subscription is due to auto-renew. Customers must also be able to cancel their subscriptions in a straightforward manner. And if a subscription contract is entered into online, they must be able to cancel it online.
What are the merger controls provided for by the Digital Markets Competition and Consumer Bill?
Controlling the ability of SMS companies to swallow up smaller businesses that have developed a popular digital product will help promote innovation and competition within the tech sector.
The DMCCB provides that the CMA will have jurisdiction over merger control if one party to the transaction has:
- a share of supply of at least 33% in the UK or a substantial part of the UK
- UK turnover exceeding £350 million
- a UK nexus
The CMS will also have jurisdiction if the turnover of a target company exceeds £100 million.
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The Digital Markets, Competition and Consumers (DMCC) Bill holds great potential to foster growth in the UK economy by enabling robust competition among online and the high street businesses. With strengthened powers for the Competition and Market Authority (CMA), the bill aims to tackle unfair practices effectively.
However, given the dynamic nature of technology and the extensive reach of the proposed law, significant amendments will likely be made to the bill as it progresses through Parliament.
We’ll continue to provide updates on these developments. If you’ve any inquiries regarding competition law, we offer a free 15 consultation with our expert lawyers to address your concerns and help you navigate the evolving landscape. Book a free 15 minute consultation or call us on 020 3808 8314 to learn more about how we can support your business.
