Digital Markets, Competition and Consumers Bill receives its first reading in parliament

April 26, 2023

The long-awaited Digital Markets, Competition and Consumers Bill has received its first reading in the House of Commons. The publication of the Bill follows the UK government’s responses to the “reforming competition and consumer policy” and “a new pro-competition regime for digital markets” consultations. It has three key areas of focus:

Consumer protection

The consumer protection rules in the Bill will provide the CMA with new powers to determine when consumer law has been broken, rather than having to take each case to court. As well as enforcement powers, the Bill introduces some substantive changes to consumer law.

The Bill will deal with fake reviews. There will be rules against:

  • Commissioning someone to write or submit a fake review;
  • Posting consumer reviews without taking reasonable steps to check they are genuine; and
  • Offering or advertising to submit, commission or facilitate fake reviews.

The Bill also aims to stop so-called “subscription traps” in which businesses make it difficult for consumers to exit a contract. Under the Bill, which also inserts new provisions into the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013, businesses must:

  • Provide clearer information to consumers before they enter a subscription contract;
  • Issue a reminder to consumers that a free trial or a low-cost introductory offer is coming to an end, and a reminder before a contract auto-renews onto a new term; and
  • Ensure consumers can exit a contract in a straightforward, cost-effective and timely way.

The Bill also gives protections to consumers regarding payment to consumer saving scheme contracts and prohibits alternative dispute resolution procedures for consumer contracts where the provider is not accredited nor exempt. It also makes provision for accreditation and exemption and enforcement.

In terms of consumer enforcement, the CMA will be able to award compensation to consumers and directly impose financial penalties for:

  • Breaching consumer protection laws, of up to 10% of global annual turnover for businesses or up to £300,000 in the case of an individual;
  • Breaching undertakings given to the CMA, with penalties worth up to 5% of a business’ annual global turnover or up to £150,000 for an individual, and additional daily penalties for continued non-compliance; and
  • Non-compliance with an information notice, concealing evidence or providing false information, with penalties worth up to 1% of a business’ annual global turnover or up to £30,000 for an individual, and additional daily penalties for continued non-compliance.

The Bill also restates the provisions about unfair commercial practices, replacing the Consumer Protection from Unfair Trading Regulations 2008.

Digital Markets

The Bill establishes a new, targeted regime to regulate digital markets which will be overseen by the Digital Markets Unit (DMU) in the CMA. 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 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.

The Bill gives the CMA powers to impose conduct requirements on a designated undertaking and to take steps to promote competition where it considers that activities of a designated undertaking are having an adverse effect on competition through pro-competition interventions. It also introduces a duty to report possible mergers involving a designated undertaking and a series of investigatory powers and requirements to produce compliance reports in respect of a designated activity. Finally, in this section, it provides for enforcement, appeals and administrative matters relating to the CMA’s powers and duties under the digital markets regime.

Competition law

The CMA will also have an enhanced investigative and enforcement powers in the competition law arena. This should help the CMA to conduct faster and more flexible competition investigations, which identify and stop unlawful anticompetitive conduct more quickly.

It amends the competition framework, including updated merger and fine thresholds, and aims to make it easier for the CMA to take action against mergers which could harm UK consumers and businesses. It also amends powers to investigate and enforce against (suspected) infringements of the Competition Act 1998 Chapter 1 and 2 prohibitions.

The Bill also makes changes to the Enterprise Act 2002 merger jurisdictional thresholds, as well as providing for some procedural changes to merger reviews. In addition, it makes changes to the procedures for market studies and investigations under the Enterprise Act 2002, including provision for a new power to conduct trials of certain remedies to determine their final format.

It also amends the CMA’s powers to require the production of information held electronically and accessible from a premises when acting under a warrant during an investigation under section 192 of the Enterprise Act 2002. Finally, it sets out miscellaneous provisions, including with regards to civil penalties and the extra-territorial reach of information notices in connection with competition matters.

The CMA has welcomed the news, saying “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.”

A date for the second reading has yet to be set.