Posted Thursday 4th July 2024
On 23 May 2024 the Digital Markets Competition and Consumers Act 2024 (DMCCA) was passed by Parliament in the legislative ‘wash up’ period following Rishi Sunak calling a general election on 22 May 2024. The DMCCA made it over the line before Parliament was dissolved and received Royal Assent on 24 May 2024.
The DMCCA puts in place a host of new laws relating not just to digital markets and tech but also competition and consumer protection law. Perhaps most notably, the DMCCA creates a new regulatory regime and regulatory body within the Competition and Markets Authority (CMA) called the Digital Markets Unit (DMU). The DMU is tasked with promoting competition and policing the largest digital technology firms.
Consumer law enforcement
One of the biggest changes brought about by the DMCCA is that the CMA will be able to investigate and enforce certain areas of consumer protection law within the UK including the Unfair Contract Terms Act 1977, parts of the Consumer Rights Act, the Consumer Credit Act 1974 and the Estate Agents Act 1979. One eye-catching new sanction (which is probably also the most worrying for consumer facing businesses) is that the CMA will be able to impose fines of up to 10% of global turnover for breaches of consumer protection law. By way of comparison, the much publicised and debated maximum fines payable under the GDPR are up to 4% of global turnover. The DMCCA also introduces additional powers to allow the CMA to investigate and enforce consumer issues without having to first obtain a court order.
Commercial practices
The DMCCA also introduces a number of changes to consumer law which are intended to tackle recent developments and changes to business practices and pricing models. Certain commercial practices have been blacklisted and are now automatically unlawful, including fake reviews (which is backed up with a requirement for businesses to take steps to prevent fake reviews) and drip pricing (where an initial price is given upon which further costs are imposed as the consumer goes through the transaction process).
Substantial changes have also been made to subscription businesses selling to consumers, including the mandatory provision of pre-contractual material, a 14 day ‘cooling off’ period, renewal reminders and termination rights.
Digital markets
Under the DMCCA, the CMA will have the ability to designate and regulate undertakings as having ‘strategic market status’ (SMS), being an entity with substantial and entrenched power in digital markets, a position of strategic significance and a turnover in the billions (either £1bn in the UK alone or £25bn globally). The international tech giants, such as Google, Amazon and Spotify, are all likely to be designated as having an SMS and are regulated under this chapter of the DMCCA.
The DMU has the power to set bespoke rules for each designated SMS undertaking for the purpose of improving trust, transparency, consumer choice and fair dealing.
Competition law changes
The DMCCA includes new merger control notification procedures for SMS undertakings and tweaks to the existing merger and antitrust framework, including an increase in the notification threshold from £70m to £100m to reflect inflation.
The Act grants additional powers to the CMA, including the ability to investigate in domestic premises which reflects the increase in homeworking following the pandemic.
This article is for reference purposes only. It does not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking or deciding not to take any action.
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