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The Digital Markets, Competition and Consumers Bill [Bill 294, 2022-23] was introduced in the House of Commons on 25 April 2023. Second reading is scheduled for 17 May 2023.
Alongside the Bill, the Government has published Explanatory Notes, a Delegated Powers Memorandum and Impact Assessments on the Bill’s web page.
A key focus of the Bill is the Competition and Markets Authority (CMA). An independent non-ministerial government department, the CMA is the UK’s principal competition and consumer protection authority.
This is large Bill – consisting of six parts and 26 schedules. Given its size and significance, two separate briefing papers have been published, one focusing on digital markets and proposed competition law reforms (Parts 1 and 2 of the Bill) and a second focusing on proposed reforms of consumer law enforcement and on new consumer rights (Parts 3 and 4 of the Bill).
The proposals in Part 1 of the Bill, dealing with digital markets would seek to:
- Empower the CMA to “designate” businesses (known as “designated undertakings”) that are very powerful in particular digital activities, giving them strategic market status in relation to those activities.
- Ensure that designated undertakings comply with rules (called conduct requirements) on how they treat consumers and other businesses in relation to the activities for which they have “strategic market status”.
- Give the CMA powers to address the root causes of competition issues in digital markets. It could intervene to require designated undertakings to share information that might help new competitors enter the market, for example.
- Require designated undertakings to be more transparent about mergers which pose risks to competition.
- Allow the CMA to enforce obligations on designated undertakings and impose penalties including fines of up to 10% of a firm’s global turnover for breaches.
- Empower the CMA to resolve payment-related breaches of conduct requirements to deal on fair and reasonable terms with third parties, through a ‘Final Offer Mechanism’ as a “backstop” enforcement tool.
Part 2 of the Bill would reform aspects of competition law by amending existing UK law on merger control, market inquiries and the cartel offence. The Bill would also make amendments to enhance the investigative and enforcement powers for the UK’s competition regime.
Part 3 of the Bill would create two separate regimes for the civil enforcement of consumer protection law to protect the “collective interests” of consumers:
- A court-based regime which would simplify and enhance the court enforcement procedure currently provided by Part 8 of the Enterprise Act 2002. Importantly, it would empower the courts to impose monetary penalties on traders who breach consumer laws or do not comply with an undertaking.
- A direct enforcement regime administered by the CMA. The CMA would be given new powers in respect of infringements of certain consumer protection laws, breach of undertakings and non-compliance with CMA directions. The CMA would be empowered (for the first time outside the competition space) to directly enforce consumer law through the imposition of monetary penalties.
Together, the two legal procedures are referred to in the Bill as “the Part 3 enforcement regimes”.
Part 4 of the Bill (and Schedules 18-24) would:
- Revoke the Consumer Protection from Unfair Trading Regulations 2008 (CPR) (retained EU law) and recreate their effect, with minor amendments, prohibiting unfair commercial practices in business to consumer relationships. Broadly, this would encompass misleading actions, omissions or aggressive practices relating to the marketing and sale of products to consumers. The CPR contain a list of specific banned practices, that are automatically considered unfair. The Bill would largely replicate this list and, importantly, create a power to make regulations that could add to it. The Government has said that it would use this power to prohibit fake reviews online and plans to consult on this during the passage of the Bill.
- Tackle “subscription traps” by introducing new rules to impose duties on traders, in particular to give specific pre-contract information to consumers, to send reminders to consumers before a contract rolls over or auto-renews into a new term, and to ensure that consumers have a straight-forward, cost-effective, and timely mechanism to terminate the subscription contract.
- Give new protections to consumers who make advance payments to consumer saving scheme contracts (eg Christmas saving clubs). The Bill would require these businesses to protect payments via a trust arrangement or insurance and give prescribed information to consumers about how their payments are protected.
- Prohibit alternative dispute resolution (ADR) procedures for consumer contracts where the provider is not accredited nor exempt. The Bill makes provision for accreditation and exception, related requirements, and enforcement.
This briefing also considers Parts 5 and 6 of the Bill. Part 5 contains miscellaneous provisions which deal with investigative assistance to overseas regulators, disclosing information overseas, and a duty of expedition on the CMA and sectoral regulators. Part 6 sets out general provisions (eg interpretation, financial provision, power to make consequential provision, extent and commencement).
The Bill’s competition and consumer provisions would extend to the whole of the UK.
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