The Digital Markets, Competition and Consumers Act 2024
21st January 2025
The Digital Markets, Competition and Consumers Act (aka DMCC) received Royal Assent in May 2024 and has come into force as of January 1st 2025. This legislation amends the Competition Act 1998 and the Enterprise Act 2002, both of which prohibit anti-competitive actions by businesses. This includes predatory pricing, hidden fees, and other actions that contravene fair trade. This also includes the use of large amounts of customer data that larger businesses could use to gain an unfair advantage.
This is regulated by the Competition and Markets Authority (CMA), who have plans to use this new legislation to take action against large businesses that unfairly dominate the market.
The Digital Markets Unit of the CMA has created a new regime that uses the DMCC Act to level the playing field to protect the rights of individuals, allow for more innovation and growth in UK tech and offer fairer opportunities for businesses and consumers.
What is the CMA?
The Competition and Markets Authority (CMA) is a regulatory authority that replaced the Competition Commission and Office of Fair Trading. They help protect consumer rights, investigate potential breaches of antitrust and anti-competitive agreements and prosecute cartel offences. They work with the European Commission, the US Department of Justice and the Federal Trade Commission on global antitrust cases. The DMCC Act gives them more powers, including the ability to take direct enforcement action against companies found to be engaged in illegal practices.
A summary of the DMCC Act
The DMCC Act aims to “stamp out unfair practices and promote competition in digital markets” – Source: gov.uk as well as promote economic growth by ensuring free competition among businesses, strengthening the CMA’s regulatory powers, and reforming consumer protection laws. Here’s a brief summary of the DMCC’s main points.
Regulation of Competition in Digital Markets
- Increased transparency of app stores, review systems and more
- Tackle the dominance of large tech companies, allowing smaller businesses to access digital markets
- Remove barriers that prevent consumers from using digital products on different devices and systems
CMA Powers
- Enforcing penalties on companies who publish fake reviews, pressure selling and subscription traps
- Set rules for companies with Strategic Market Status to keep them from monopolising the market
- Stronger investigative and enforcement powers, allowing faster investigations and take action against anticompetitive conduct
- Fines can be set at up to 10% of a company’s global turnover
Consumer Rights
- Businesses to provide clear information to consumers before they enter a subscription contract
- ‘Hidden’ fees need to be included in initial costs or consumers should be informed about them at the beginning of the purchasing journey
- Provide reminders when a free or low-cost trial is coming to an end
- Consumers can easily exit a contract or subscription
What is the new digital markets competition regime?
This is a regime devised by the CMA to allow them to effectively administer the DMCC Act. The regime will mostly apply to large businesses and corporations that have been given the designation of Strategic Market Status or SMS. This means the CMA can take action against them if they act in a way that is anti-competitive, non-transparent, or monopolises their industry. This may include preventing large firms from using their access to customer data to give themselves an unfair advantage or make it difficult for consumers to change providers of digital services. This will open up the tech sector to more innovation and level the playing field between smaller companies and larger ones, offering consumers more choice.
What is ‘Strategic Market Status’?
If a company has “substantial and entrenched market power” (Source: gov.uk), a position of strategic significance, i.e. significant scale and influence over other companies and how they operate and a global turnover of £25bn or a UK turnover above £1bn, they could be designated with Strategic Market Status. This means they will be regulated by the new regime.
The CMA will roll out this regime over the next few months and has begun by investigating Google’s activities in search engine operations and search advertising to determine whether they can be designated as an SMS. If the investigation reveals that they can be designated as an SMS, then they will be regulated by the CMA. They may investigate their activities to ensure they are not contravening the DMCC Act and impose rules that may require them to take certain actions or stop engaging in certain activities. They will also need to report any mergers with UK connections or a value of £25 million or more.
The DMCC Act and the CMA’s new powers will only be enforced against large corporations, but it will benefit other businesses of all sizes as well as consumers and will offer an overall benefit to the UK economy by allowing for more competition and innovation.
Author: Mike Martin LLM
Mike is an information governance specialist and one of the founder Directors of the Griffin House Consultancy, a leading specialist data protection and information governance consultancy firm that supports hundreds of clients annually with their training, consulting and auditing requirements.
Sources
https://www.decisionmarketing.co.uk/news/uk-to-rein-in-customer-data-use-in-big-tech-crackdown
https://www.gov.uk/guidance/how-the-uks-digital-markets-competition-regime-works
