The Digital Markets, Competition and Consumers Act 2024 (DMCCA) came into force at the start of the year after new legislation was passed last May. The Act is part of an effort to protect consumers and smaller businesses from the big tech companies.
What does this mean for businesses?
With this Act, the government is taking bold steps to promote fair competition and strengthen consumer protections. This landmark legislation hands significant new powers to the Competition and Markets Authority (CMA) to regulate major digital firms, crack down on unfair business practices, and ensure that UK consumers are treated fairly. In an era dominated by tech giants, the DMCCA is a direct response to concerns about market dominance, misleading marketing tactics and outdated competition rules.The big changes
Big tech in check
The Act introduces a Strategic Market Status (SMS) designation for large digital firms that have significant power in specific markets linked to the UK. Once designated, these companies will face stricter regulations to ensure they don’t engage in anti-competitive behaviors like favoring their own products in search results or limiting access to their platforms for smaller competitors. The CMA is also empowered to enforce Pro-Competition Interventions (PCIs) which are measures that could require major tech firms to improve data-sharing or even change how their algorithms operate.Tougher scrutiny on mergers and acquisitions
The DMCCA updates UK merger control rules to reflect the realities of the digital economy. Key changes include:- Raising the turnover threshold for merger reviews from £70m to £100m
- Introducing a new test where acquisitions can be reviewed if one party has a 33% share of supply in the UK and a turnover exceeding £350m
- Requiring SMS-designated firms to report mergers and acquisitions before completion, ensuring deals that could harm competition face regulatory scrutiny upfront
Stronger consumer protections
Hidden fees and deceptive marketing tactics could be a thing of the past. The DMCCA introduces new rules to protect consumers from unfair business practices, including:- Fake reviews, which means companies can no longer manipulate ratings or post misleading testimonials
- Crackdown on hidden fees that only appear at checkout. This must be made clear from the outset
- Businesses must make it easier for consumers to cancel unwanted subscriptions
Why was the DMCCA introduced?
There are a number of factors that drove the UK government to introduce this legislation:- Companies like Google, Amazon, and Meta have been accused of stifling competition by favoring their own products, restricting interoperability and acquiring potential rivals before they can grow.
- Subscription traps, fake reviews, and misleading pricing practices have become rampant in digital markets, leading to growing frustration and complaints.
- UK competition rules were designed for traditional markets and struggled to keep up with the fast-moving digital economy.
- The EU’s Digital Markets Act (DMA) and increasing scrutiny in the US show that governments worldwide are clamping down on big tech.
- By preventing monopolistic behavior, the UK aims to create a fairer environment where startups and small businesses can thrive.
What should you do?
If your business operates in the digital space or interacts with UK consumers, the DMCCA will likely impact you. Here’s what to do:- Assess your SMS risk. If your company has significant market power, you may face new compliance obligations under SMS rules.
- Review any M&A plans. Make sure your mergers or acquisitions don’t fall foul of the CMA’s revised thresholds and reporting requirements.
- Audit your consumer practices. Check your advertising, pricing and subscription models to ensure compliance with new consumer protection laws.
- Implement more effective compliance programs. Train your staff, update policies and monitor regulatory changes to stay ahead of enforcement actions.
- Engage with the CMA. This is important. If in doubt, seek guidance from regulators and proactively address compliance concerns before they become legal issues.
