The Digital Markets, Competition and Consumers Act Becomes Law

Digital Markets, Competition and Consumers Act Receives Assent Launched to Protect Online Shoppers

Following Royal Assent, the Digital Markets, Competition and Consumers Act (DMCCA) has officially become law in the United Kingdom. This legislation introduces significant reforms to the UK’s competition and consumer protection laws, marking the most substantial overhaul in a decade. The new Act is designed to curb the influence of powerful technology firms, ensure fair competition, and provide enhanced rights and protections for consumers.

Empowering the Competition Regulator

The Act grants the UK’s competition regulator, the Competition and Markets Authority (CMA), new tools to address the challenges posed by digital markets. Specifically, the CMA can designate certain technology companies as having “strategic market status” (SMS). These SMS firms will be subject to enforceable codes of conduct and pro-competitive interventions to prevent market power misuse.

Additionally, the CMA will be able to impose financial penalties of up to 10% of a company’s global turnover for non-compliance, significantly enhancing its enforcement capabilities. This includes the power to impose civil penalties on senior managers and disqualify directors who fail to comply with the new regulations.

Consumer Protection Enhancements

The DMCCA introduces several measures to protect consumers, particularly in the realm of online transactions and subscriptions. Businesses will be required to provide clearer information before consumers enter subscription contracts, remind them when free or low-cost trials are ending, and ensure easy exit options from contracts. Unavoidable hidden fees must be disclosed upfront, providing transparency and preventing unexpected costs for consumers.

The Act also targets deceptive practices such as fake online reviews and “drip-pricing,” where additional fees are added during the purchasing process. By tackling these issues, the DMCCA aims to give consumers greater control and clarity over their online purchases.

Strengthening Market Oversight

The Act empowers the CMA to intervene in various sectors, including digital markets and road fuel prices, ensuring fair competition and protecting consumers from malpractice. The CMA’s new market inquiry-based powers will allow for more efficient and effective market studies and investigations, with the ability to accept binding commitments at any stage. This flexibility is expected to lead to a ramp-up in market inquiries, particularly in concentrated markets prone to complaints.

International and Domestic Cooperation

The DMCCA also expands the CMA’s geographical remit, enabling it to investigate anti-competitive agreements implemented outside the UK. This extraterritorial reach will be complemented by increased cooperation with other UK regulators and international bodies, enhancing the global oversight of competition and consumer protection.

The DMCCA represents a significant shift in the regulatory landscape for businesses and investors. Companies that fail to comply with the new regulations face substantial fines and other penalties. However, the Act also presents opportunities for businesses to thrive in a fairer and more competitive market environment. Enhanced consumer trust and protection can lead to a more robust and dynamic marketplace, benefitting both businesses and consumers.

Conclusion

The Digital Markets, Competition and Consumers Act is a transformative piece of legislation that will have far-reaching effects on the UK’s digital and consumer markets. By empowering the CMA with new tools and enhancing consumer protections, the Act aims to foster a fairer and more competitive environment. The UK continues to be a compelling destination for businesses and investors, offering a balanced regulatory framework that supports innovation and growth while safeguarding consumer interests.