The Digital Markets, Competition and Consumers Act has officially become law following Royal Assent. This landmark legislation is set to reshape the landscape for technology businesses and consumer protection in the United Kingdom.
The Act equips the UK’s Competition and Markets Authority (CMA) with robust tools to prevent technology giants from exploiting their strategic positions to the detriment of competitors and consumers.
It introduces stringent penalties for traders violating consumer protection laws and grants the CMA authority to enforce these laws directly.
A major focus of the Act is enhancing consumer rights and transparency in online transactions. The new rules mandate businesses to provide clear information before consumers enter subscription contracts, including reminders about the end of free or low-cost trial periods.
Additionally, consumers must be able to exit contracts easily, ensuring they are not trapped in unwanted subscriptions.
Hidden fees, a frequent consumer complaint, must now be disclosed upfront or clearly illustrated at the start of the purchasing process. This provision aims to provide consumers with a comprehensive understanding of their spending from the outset.
The Act also empowers the CMA to tackle competitive challenges in digital markets by setting tailored ‘conduct requirements’ for dominant tech companies.
These requirements could compel firms to alter their operations if they are found to be treating users unfairly, thus fostering an environment where consumers can make informed choices without undue influence from powerful entities.
The CMA’s new powers extend to intervening in cases where a firm’s behavior stifles competition, impacting sectors such as smartphone usage and cloud services. This proactive stance is designed to benefit both individual consumers and businesses reliant on digital infrastructure.
The legislation mandates the CMA to closely monitor road fuel prices, reporting any malpractice to the government, thereby extending its oversight to critical consumer areas beyond digital markets.
Only the most powerful global technology companies, identified through CMA investigations as holding ‘strategic market status,’ will be subject to these new rules. Non-compliance with CMA decisions could result in substantial fines, potentially amounting to tens of billions of pounds. These punitive measures are balanced by rigorous checks and balances to ensure fairness.
The impact of the DMCC on consumer protection
Emma Cochrane, an Antitrust and Foreign Investment Counsel notes in her article that alongside the changes to the Digital Markets and existing competition regime, the DMCC will also transform the consumer protection enforcement landscape in the UK.
The final version of the DMCC has seen changes to a number of specific areas, especially the rules on subscription contracts, online reviews, pricing and secondary ticketing, but the essence of the consumer reforms remains unchanged: direct enforcement, the potential for big fines, and expansive rules (see here and here).
The CMA will be given the power to directly enforce consumer protection laws in the UK and sanction breaches – meaning that cases will no longer need to go through the courts.
These new enforcement powers will apply across the economy to all businesses that sell to UK consumers and give the CMA powers on a par with its competition powers.
The CMA will be able to make findings that businesses have breached consumer laws and impose significant fines (of up to 10% of global turnover) for the first time.
The CMA will be able to directly enforce an extensive suite of consumer rules, including the (existing) broad prohibitions on unfair contract terms in consumer contracts and unfair commercial practices which includes misleading consumers, acting aggressively, or contravening the requirements of professional diligence.