Guide to UK’s Digital Markets, Competition and Consumers Act

The Digital Markets, Competition and Consumer Bill aims to regulate the conduct of major digital companies with significant market power in the UK

The legislation gives the Competition and Markets Authority new powers to impose requirements on technology companies with “strategic market positions”, which is reminiscent of “Gatekeeper” organization must be observed EU Digital Markets Act.

However, while the laws have similarities, the new legislation is not one-size-fits-all: under the DMCCA, the CMA can apply bespoke regulations, so-called “behavioral requirements”, providing companies with services to solve their specific problems through SMS.

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DMCCA was created in response to a report The report was released in 2019 by a panel of experts on competition chaired by Jason Furman, a professor of economic policy at Harvard University and former chief economist under President Barack Obama. Contains proposals for opening up the UK digital market

Although the DMCCA was approved in 2020, due to various delays, it was not passed by Parliament until April 2023 and received royal assent in May 2024.

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What is the purpose of this bill?

DMCCA aims to improve competitive conditions in the digital market through interventions that encourage investment, innovation and growth for all UK technology companies, ultimately providing consumers with the technology that is best for them.

The CMA said in a statement Press release The legislation would allow it to “more comprehensively” investigate potential anti-competitive behavior by Google, Apple and other big tech companies. The rules “will build on and leverage experience in areas it has studied, such as the mobile ecosystem including app stores.”

in a Interview in January 2024Sarah Cardell, chief executive of the CMA, said: “The new regime has been specifically designed to keep pace with developments in the rapidly evolving digital market and complements our existing competition and consumer protection powers.

“The DMCC Bill will create a very targeted approach to address the huge and entrenched market power of a small number of companies. It will ensure that challenger companies can come up with truly disruptive and exciting new innovations that create great products for consumers. new products.

Who will this bill affect?

Following a formal investigation, the CMA will designate a “very small number” of companies that have SMS and will therefore be subject to the DMCCA. These companies must have:

• “There is significant and entrenched market power in UK-related digital activity.”
• “Strategic position”.
• Global turnover exceeds £25 billion, or UK turnover exceeds £1 billion.

SMS designations will be reviewed at least every five years. Caddell said there will be three to four rollouts in the first year of the new system.

August, CMA rejects Google’s proposed policy changes This prompted an investigation regarding purchases made within the app listed on its Play Store. This suggests that the company will be one of the first to implement SMS, as the actions that can be taken under the DMCCA will be limited if the CMA accepts the changes.

What will the Bill enable the UK Government to do?

The DMCCA has granted new enforcement powers to a new organization established within the CMA called the Digital Markets Unit. The committee includes existing CMA directors and a former Ofcom executive.

The DMU will draft a unique set of “Conduct Requirements” for each company that has an SMS. Even before exhibiting anti-competitive behavior, they must comply with these behaviors to prevent such behavior from occurring. This approach differs from other competition laws, which provide remedies after an investigation identifies a breach.

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In addition to conduct requirements, the DMU can also adopt “pro-competitive interventions” to proactively address the adverse effects on competition caused by a company’s disproportionate market power.

Examples of how DMU supports healthy competition in digital markets include:

• Prevent bundling or tying of products or services.
• Prevent self-preference of products or services.
• Forcing competitors to access data or functionality.
• Require interoperability of products or services.
• A “choice screen” is needed that allows users to choose their favorite default apps or services, rather than the company’s own.
• Demand transparency around company algorithms.
• Demand fairer trading terms.

In addition, the DMU will require SMS companies to report any merger worth at least £25 million and links to the UK.

What are the penalties for non-compliance?

Under the DMCCA, the CMA has the power to impose penalties for failures such as non-compliance with enforcement or final orders. Businesses and individuals may be required to provide testimony or other documentation to assist the DMU’s work. Caddell said the CMA had a legal obligation to keep information and whistleblowers confidential.

For fixed penalty amounts, businesses could face fines of up to £30,000 or 1% of turnover. For individual penalties calculated at a daily rate, the maximum amount is £15,000, or 5% of the total daily turnover of the breach.

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Caddell said the CMA “hopes that in many cases we will be able to secure timely and beneficial changes without taking formal action” and instead resolve disputes by engaging directly with SMS companies.

What do critics say about the bill?

although Mostly positive feedback At a government consultation in late 2024, the bill was not universally favored. Critics fear that technology companies will not comply with the CMA and simply exclude the UK from the launch of new products.

Exclusion is already happening in Europe. For example, Apple will reportedly not initially make its new suite of generative AI features, Apple Intelligence, available on devices in the EU, citing “regulatory uncertainty arising from the Digital Markets Act.” Bloomberg.

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Regulatory resistance may also be one of the reasons for the delay in the launch of Google products. Gemini Chatbots and Meta Preserve its future artificial intelligence products From Europe.

There are concerns the CMA may abuse its powers Develop customized regulations for different companiesmaking it harder for them to comply. However, Kader said the principles on which the bill is based fit four themes: first, taking a targeted, evidence-based and proportionate approach.

Other themes are ensuring the regime complements the CMA’s existing tools, engages with a variety of stakeholders, including big tech companies, and promotes competition to deliver better user outcomes. However, choice screens, interoperability, and sideloading can actually Deteriorating user experience Through a phenomenon called feature creep.

The bill prevents potentially anti-competitive mergers where either party has a 33% market share in the UK, a turnover of approximately £350 million and the target company is based in the UK. According to the law firm Linklaters”, “In most cases it will be difficult to establish that the acquirer does not have a 33% share in some market share or arrangement of supply, which the CMA could use to establish jurisdiction.

In November 2024, the CMA provisionally determined that there were competition issues in the mobile browser market Originating from the duopoly of Apple and Google. It suggested that mitigation measures could be implemented when the DMCCA comes into force. However, Apple told TechRepublic that such mitigations “would compromise user privacy and security and hinder our ability to develop the technology that differentiates Apple.”