The UK Parliament passed the Digital Markets, Competition and Consumer (DMCC) Bill on 23 May 2024, marking a significant milestone in the evolution of competition and consumer protection laws. This comprehensive legislation, which has taken more than a year to make its way through Parliament, is expected to come into effect in autumn 2024. It brings the most substantial reforms since the introduction of the current merger control regime under the Enterprise Act over 20 years ago, impacting digital markets, merger control, antitrust rules, and consumer law.
This article focuses on the significant reforms that have been made to digital markets and competition law. You can read about the changes to consumer protection law here. We’ve also covered DMCCB developments in previous articles, for which see here and here.
A key feature of the DMCC Act is the introduction of the Strategic Market Status (SMS) regime. The Competition and Markets Authority’s (CMA) Digital Markets Unit (DMU) will be empowered to designate firms as having SMS if they possess “substantial and entrenched market power” and hold “a position of strategic significance” in digital activities linked to the UK. This will, in practice, only apply to a few of the largest tech firms.
Designated SMS firms will have obligations they must comply with, including:
The DMCC Bill navigated through an extended period of legislative deliberation between the two Houses. Discussions revolved around key issues such as the legal criterion for enforcing conduct requirements, which has now been agreed upon as a proportionality test. The debate also covered the standard to be used for DMU decision appeals, which has been settled as being based on the merits. Additionally, the period for government approval of CMA guidance was a significant talking point, with a consensus now reached on a 30-day timeframe.
The Government also made modifications to the countervailing benefits exemption. Initially, this exemption mandated that the conduct breaches must be 'indispensable' for the realisation of outweighing benefits. However, the amendment proposed by the Government simplified this requirement, in that the benefits ‘could not be realised without the conduct’. Despite initial resistance from the Lords, the amendment was ultimately accepted.
The DMCC Act will also introduce changes to the UK’s existing competition regime, including merger control and antitrust investigations. These include:
Merger Control
Antitrust
Merger Control and Antitrust
The CMA is now consulting on its draft guidance on the Digital Markets Competition Regime. It is inviting the views of interested parties on the proposed guidance accompanying the new competition regime and the merger reporting requirement for SMS firms. The consultation closes on 12 July 2024.
We will continue to keep you posted on any new developments.
The passing of the DMCC Bill is a substantial shift in the UK's competition landscape, particularly in relation to digital markets. The bill introduces sweeping amendments designed to tackle the unique challenges posed by the digital economy, with an emphasis on bolstering the CMA's investigative capabilities and increasing the scope of merger control. The broadening of jurisdiction and the introduction of new evidence-gathering powers, coupled with sterner penalties for procedural infringements, suggests a more rigorous regulatory environment for businesses. Companies, particularly those with a significant UK presence or nexus, should closely monitor these changes and consider their potential impact. Moving forward, the DMCC Act could set a precedent for other jurisdictions, reshaping competition law frameworks globally and underscoring the need for businesses to adapt to an increasingly stringent regulatory landscape.
For more information, please contact Dr Saskia King, Ariane Le Strat, and Aimee Guzinska-Bowley.