Digital Markets, Competition and Consumers Act

Sarah Cardell, the Chief Executive of the Competition and Markets Authority (“CMA”) has heralded the new Digital Markets, Competition and Consumers Act (“DMCC”) as “a watershed moment in the way we protect consumers in the UK and the way we ensure digital markets work for the UK economy.”  The DMCC became law on 24 May 2024, enacting the most significant reform of domestic competition and consumer protection legislation in the UK for decades.

The primary goals of the Act are to ensure “free and vigorous competition amongst businesses—both online and on the high street” and to empower the CMA to “crack down on unfair practices.”  

To achieve these aims, the DMCC introduces new regulatory tools to manage digital markets, promote competition, and protect consumers.  The digital markets regime is probably of least significance to our members, as it is expected to focus only on a handful of very large technology companies.  The adjustments to competition law are also unlikely to regularly impact our members, though there are some changes that could be relevant.

The most important changes are to consumer protection.  In addition to a handful of new substantive protections, the CMA will now have the power to take direct enforcement action against businesses that have breached consumer protection rules, without having to go to court.  This change in enforcement could have significant impact on our members.

In brief, The CMA will have wide-ranging information-gathering powers. If a business fails to comply with an information notice, the CMA has the power to access (without a warrant) the business’ premises, equipment, services, information, or employees.  The CMA can also issue fines of up to 1% of a business’ global annual turnover or £30,000 (whichever is higher) for providing materially false or misleading information to the CMA in the course of an investigation or failing to respond to an information notice.

If the CMA determines that consumer protection laws have been broken, it may give directions, and impose fines, mirroring its competition powers. Companies shown to be in breach of consumer protection legislation could face fines of up to 10% of their annual turnover or £300,000, whichever is higher.  Appeal of the CMA’s decisions will be considered by the High Court.

Most of the substantive provisions of the Act are expected to come into force in the autumn.  The CMA is currently consulting with interested parties and will likely issue supporting guidance on the Act’s implementation and intended effects soon.  We will, of course, be watching closely, and we will be writing a series of articles exploring in more detail the both the enforcement mechanisms and new consumer protections ushered in by the DMCC.  

We anticipate an uptick in enforcement actions and the imposition of fines, particularly with respect to hidden fees and fake reviews, so we urge our members to carefully assess their practices and policies to assure compliance with consumer protection laws.  Of course, as always, we stand ready to help steer you through the changes that will come so that you understand new regime and remain compliant with the law. 

As always, please remember that this advice is general in nature and provided for guidance and information only. Should you find yourself in the situation above, we strongly advise that you seek legal advice. If you are interested in the advice and assistance MILS can offer, please contact us on 01647 252 175.