The UK, like other jurisdictions, has been grappling with how to regulate digital markets, not least in terms of addressing the dominance of 'big tech'. At the same time, it was felt that consumer protection law was time consuming to enforce and did not allow for sufficiently high sanctions to act as a meaningful deterrent. As a result, in the March 2022 Queen's Speech, the government announced a proposed Digital Markets, Competition and Consumer Bill to regulate the market power of digital service providers with "strategic market status". The Bill would also introduce new consumer protections to tackle subscription traps and fake online reviews, while updating the law more widely on competition and consumer protection issues, not least, by increasing the CMA's enforcement powers and sanctions for non-compliance. Over a year later in April 2023, the government published the Digital Markets, Competition and Consumers Bill (DMCC).
What's the development?
The DMCC sets out a regulatory framework for tackling competition issues in big tech, including by:
- placing the Digital Markets Unit on a statutory footing with new powers to regulate digital businesses with "strategic market status" and impose a wide range of "conduct requirements". These may include requiring them to provide greater choice and transparency to customers, particularly about their review systems, or to share data with consumers or competitors
- giving the DMU new enforcement powers. The DMU will be able to fine businesses up to 10% of their annual global turnover for non-compliance, and make senior managers personally responsible for ensuring compliance with the DMU's instructions
- reforming the UK's competition regime more widely.
Provides powers to introduce secondary legislation, particularly with the aim of introducing protections against fake online reviews by prohibiting:
- the commissioning or writing of a fake online review
- posting consumer reviews without taking reasonable steps to ensure they are genuine
- offering or advertising to submit, commission or facilitate fake reviews.
Introduces measures to protect consumers from subscription traps by requiring businesses to:
- provide clearer information to consumers before they enter into a subscription contract
- issue a reminder to consumers that a free trial or introductory offer is coming to an end, as well as a reminder before a contract auto-renews
- ensure consumers can exit a subscription contract in a straightforward cost-effective and timely way.
Reforms protections for consumers from unfair commercial practices (revoking the CPUT Regulations), including by:
- prohibiting use and promotion of unfair commercial practices which are defined in the Bill
- conferring rights on consumers relating to unfair commercial practices – right of redress
- exempting consumers from having to pay for products supplied by inertia selling and allowing them to treat the products as a gift
- introducing offences and sanctions where a trader engages in unfair commercial practices.
Enhances the CMA's enforcement powers, including by allowing it to enforce consumer rights directly and impose penalties for:
- breaching consumer protection laws – fines of up to 10% of annual global turnover for businesses or up to £300,000 for an individual
- breaching undertakings given to the CMA – penalties of up to 5% of annual global turnover or £150,000 for an individual, plus additional daily penalties for ongoing non-compliance
- non-compliance with an information notice, concealing evidence or providing false information, with penalties of up to 1% of annual global turnover or up to £30,000 for ongoing non-compliance.
What does this mean for you?
The first part of this Bill which deals with competition in digital markets, is the UK's answer to the EU's Digital Markets Act – the concept of a business with "strategic market status" is similar to that of a "Gatekeeper" under the DMA and is likely to catch largely the same businesses.
Businesses deemed to have "strategic market status" will be the most impacted by this legislation. However, there are also more wide ranging reforms to the UK's competition regime.
Relevant consumer-facing online businesses, particularly those which operate subscription models and/or which allow online reviews, will need to review their terms and conditions and processes to ensure they comply with the incoming rules, in the knowledge that the DMCC Bill enhances the CMA's enforcement powers and will bring in significant penalties for non-compliance.
Clearly the Bill is at the start of the legislative process and may change before enactment but we do not anticipate it will change substantively in terms of its overarching aims.
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