Consultation launched on Digital Markets Unit

July 21, 2021

The UK government has published its long-trailed plans for its proposed Digital Markets Unit, which has already been set up in shadow form as part of the CMA.  

The government says that digital technologies are positively transforming the way we work, access information and stay in touch with loved ones. A thriving digital economy is at the heart of the government’s vision for long-term economic growth.

In the consultation, the government sets out its proposals for a new pro-competition regime for digital markets. These include: 

  • the criteria and mechanisms that will identify which firms fall within scope of the regime;
  • the objectives for the DMU and how it will work with other regulators;
  • the approach to a new code of conduct to promote open choices, fair trading and trust and transparency;
  • the approach to ‘pro-competition interventions’ that will address the root causes of market power;
  • the powers that the DMU will need to ensure the regime is effective, including the power to issue fines of up to 10% of an organisation’s turnover; and
  • the changes being considered for a distinct merger regime for firms within scope of the regime.

The DMU could also be given powers to suspend, block and reverse code-breaching behaviour by tech giants – for instance unfair changes in their algorithms or terms and conditions – and require them to take specific actions to comply with the code of conduct.

The consultation will consider whether the DMU will be able to impose a set of measures to tackle the root causes of competition issues in digital markets. This could see the DMU implementing measures to support interoperability – making it easier for digital platforms and services to be compatible with each other and for customers to switch between them. For example, it could require platforms to allow the public to share contacts from one platform to another.

The government will also consider whether to give the CMA greater powers to scrutinise and intervene in harmful mergers involving firms with Strategic Market Status, for example by requiring big tech firms to report on their takeovers.

Accompanying the consultation is the associated Impact Assessment of the government’s proposals. The Department for Business, Energy and Industrial Strategy has also published two research reports related to the consultation.

The consultation comes after the government set out its plans earlier this month “to make Britain a global leader in innovation-focused digital regulation”. Following the consultation, the government aims to legislate to give the DMU its new powers as soon as parliamentary time allows.