Guide to the UK Digital Markets, Competition and Consumer Act

The Digital Markets, Competition and Consumer Act is designed to regulate the behavior of major digital firms with significant market power in the UK.

The law gives the Competition and Markets Authority new powers to impose requirements on tech companies with a “strategic market position”, reminiscent of “gatekeeper” organizations that must comply with the EU’s Digital Markets Act.

However, although there are similarities between these laws, the new law is not one-size-fits-all: under the DMCCA, the CMA can impose special rules, so-called “conduct requirements“With SMS to companies to address their specific issues.

Issues may be related to:

DMCCA was created in response to this a report Published in 2019 by the Digital Competitiveness Expert Panel, chaired by Jason Furman, professor of economic policy at Harvard University and former chief economist to US President Barack Obama. This included recommendations for opening up digital markets in the UK

While the DMCCA was given the green signal in 2020, due to various delays, it was only passed by Parliament in April 2023 and given royal assent in May 2024. It is expected to come into effect in January 2025.

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What is the purpose of the Act?

The DMCCA aims to improve competitive conditions in digital markets by enabling interventions that encourage investment, innovation and growth in all UK technology companies, ultimately providing consumers access to the best possible technologies for them.

CMA said in a Press release The law would enable Google, Apple and other big tech companies to be investigated “more holistically” for potential anti-competitive practices. The rules will “build on and leverage their experience in areas such as the mobile ecosystem, including app stores.”

one in January 2024 InterviewCMA CEO Sarah Cardell said: “The new arrangements have been specifically designed to keep pace with developments in rapidly growing digital markets, complementing our existing competition and consumer protection powers.

“The DMCC Bill will set out a very targeted approach to address the substantial and strong market power of a small number of companies. “This will ensure that challenger companies are able to bring truly disruptive and exciting new innovations that will create great new products for consumers.”

Who will be affected by this Act?

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

• A “substantial and strong market power in digital activity that is linked to the UK.”
• A “position of strategic importance.”
• Global turnover of more than £25 billion or UK turnover of more than £1 billion.

SMS designations will be reviewed a minimum of every five years. According to Cardell, between three and four will be launched in the first year of the new system.

In August, the CMA rejected Google’s proposed policy changes regarding purchases made within apps listed on its Play Store, prompting an investigation. This revealed that the company would be one of the first to acquire SMS, as if the CMA accepted the changes, it would limit what action it could take under the DMCCA.

What will this Act enable the UK Government to do?

The DMCCA gives new enforcement powers to a new group called the Digital Markets Unit, set up inside the CMA. It counts current CMA directors and a former Ofcom executive as members.

The DMU will create a unique set of “conduct requirements” for each company with SMS. They must address these behaviors before they exhibit anti-competitive practices to prevent them from ever occurring. This approach differs from other competition laws, where remedies are awarded after an investigation reveals a violation.

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As well as conduct requirements, the DMU can undertake “pro-competition interventions” that would proactively address a company’s adverse effects on competition that arise from its disproportionate market power.

Examples of how DMU can support healthy competition in digital markets include:

• Prohibit bundling or tying of products or services.
• Preventing self-preference of products or services.
• Mandating access to data or functionality to a competitor.
• The need for interoperability of products or services.
• Requires a “preference screen” that allows users to select their preferred default apps or services instead of the company’s.
• There is a need for transparency regarding aspects of companies’ algorithms.
• Fair trade terms are needed.

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

What are the penalties for non-compliance?

Under the DMCCA, the CMA is empowered to impose penalties for failures such as non-compliance with enforcement or final orders. Businesses and individuals may be required to submit testimony or other documentation to assist the DMU in its work. Cardell said the CMA has a legal obligation to maintain confidentiality in relation to information and whistleblowers.

For fixed penalty amounts, businesses can face fines up to £30,000 or 1% of their turnover. For penalties calculated at a daily rate by individuals, the maximum is £15,000 or 5% of turnover per day of non-compliance.

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Cardell said the CMA was “hopeful that in many cases we will be able to secure timely and beneficial changes without resorting to formal action” and instead engage directly with SMS firms to resolve disputes.

What are critics saying about the act?

despite this mostly positive feedback In a government consultation in late 2024, the Act did not receive universal praise. Critics worry that, rather than comply with the CMA, tech companies will leave the UK out of the rollout of new products.

There is already evidence of a boycott in Europe. For example, Apple will not initially make its new suite of generic AI capabilities, Apple Intelligence, available on devices in the EU, citing “regulatory uncertainties brought about by the Digital Markets Act.” bloomberg,

SEE: Apple Intelligence EU: Possible Mac release amid DMA rules

Regulatory pushback may also have contributed to the delayed arrival of Google’s Gemini chatbot and Meta Holding back its future AI products from Europe.

There are concerns that the CMA could use its power arbitrarily Create special rules for different companiesWhich makes it more difficult for them to comply. But, Cardell said that the principles on which the Act is based fit under four themes; First, adopting a targeted, evidence-based and proportionate approach.

Other themes are to ensure that the arrangement complements the CMA’s existing tools, engage with various stakeholders including Big Tech, and promote competition to deliver better user outcomes. However, choice screens, interoperability, and sideloading may actually User experience deteriorates Through a phenomenon called feature creep.

The Act could prevent any potentially anti-competitive mergers where one party has a 33% market share in the UK and a turnover of around £350 million, and the target company is UK-based. According to the law firm linklaters“In most cases it will be difficult to establish that an acquirer does not have a 33% market share based on some cut or permutation of supply that the CMA could use to establish jurisdiction.”

In November 2024, the CMA temporarily detected competition concerns arising from Apple and Google’s monopoly in the mobile browser market. It recommended mitigations that could be imposed under the DMCCA once it comes into force. However, Apple told TechRepublic that such mitigations “would undermine user privacy and security and hinder our ability to create the kind of technology that differentiates Apple.”