New bill to stamp out unfair practices and promote competition in digital markets

25 Apr 2023 10:59 AM

The CMA welcomes draft legislation enhancing its ability to promote competition and protect consumers, including new powers for its Digital Markets Unit.

The Digital Markets, Competition and Consumers (DMCC) Bill will promote growth in the UK economy by ensuring free and vigorous competition amongst businesses – both online and on the high street. It will also strengthen the Competition and Market Authority’s (CMA) powers to crack down on unfair practices.

The bill reinforces the key principles that underpin the CMA’s work, which are about helping people, businesses and the economy. The bill has 3 areas of focus:

• Consumer protection: People need to be able to shop without fear of being ripped off and fair-dealing businesses should be able to compete without being disadvantaged by those who break the rules. The CMA has taken enforcement action against those who use unfair practices to dupe people into handing over their money – taking action on fake reviews, subscription traps and pressure selling. The new rules in this bill will allow the CMA to be even more effective. They will empower the CMA 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 firms are not disadvantaged. The bill will also allow the CMA to fine businesses which do break the law up to 10% of their global turnover.
• Digital markets: People and businesses benefit from vibrant, competitive digital markets which offer the latest products and services. The bill establishes a new, targeted regime built for the digital age, overseen by the Digital Markets Unit (DMU) in the CMA – that will use a proportionate approach to hold digital firms accountable for their actions – enabling all innovating businesses to compete fairly. It will set rules that will prevent firms with Strategic Market Status from using their size and power to limit digital innovation or market access – ensuring the UK remains a highly attractive place to invest and do business for all.
• Competition: Bolstered investigative and enforcement powers will mean the CMA can conduct faster and more flexible competition investigations, which identify and stop unlawful anticompetitive conduct more quickly. Changes to the competition framework – including updated merger and fine thresholds – will make it easier for the CMA to take action against mergers which harm UK consumers and businesses. Such changes will allow the CMA to continue to protect and promote open and free markets, spurring companies to innovate and bring more products to market, providing more choice for customers and creating a strong foundation for economic growth.

Sarah Cardell, Chief Executive of the CMA, said:

We welcome this flagship bill which provides the CMA with new powers to do even more to protect people, businesses and support the economy. This has the potential to be a watershed moment in the way we protect consumers in the UK and the way we ensure digital markets work for the UK economy, supporting economic growth, investment and innovation.

People rely on free and fair markets to get the best deal possible, but also expect that rules are in place to protect them when things go wrong. Proposals to give the CMA stronger enforcement powers when firms break consumer law – including the ability to directly impose fines for the first time – are crucial to ensure we can continue cracking down on rip-offs and underhand deals, helping to deter firms from taking advantage of people.

Digital markets offer huge benefits, but only if competition enables businesses of all shapes and sizes the opportunity to succeed. This bill is a legal framework fit for the digital age. It will establish a tailored, evidenced-based and proportionate approach to regulating the largest and most powerful digital firms to ensure effective competition that benefits everyone.

We look forward to supporting this bill as it passes through the legislative process and stand ready to use these new powers once approved by Parliament.

Notes to Editors

1. The bill will be introduced to the House of Commons by Kevin Hollinrake MP, Minister for Enterprise, Markets and Small Business at the Department of Business and Trade.
2. Firms with substantial and entrenched market power, in at least one digital activity, providing them with a strategic position will be designated with Strategic Market Status (SMS) by the DMU and will be subject to the new regime. A threshold will apply meaning that only firms with a global turnover above £25bn, or UK turnover above £1bn, will be in scope.
3. The CMA established the DMU in shadow form in 2021 in the anticipation it would be granted statutory powers to oversee digital markets – since then it has been recruiting the necessary staff and advised government as it prepares the bill introduced today.
4. More information on the Digital Markets Competition and Consumers Bill can be found via the Department of Business and Trade website. Journalists should contact the DBT press office for more information on the bill, timing, and the parliamentary process.
5. For media enquiries about the DMU and the proposed new regulatory regime that it will oversee, journalists can email press@cma.gov.uk