Digital Markets, Competition and Consumers Bill 2022-23: Digital markets and competition provisions

The Digital Markets, Competition and Consumers Bill (Bill 294 of 2022-23) is a Government Bill introduced in the House of Commons on 25 April 2023. Second reading was scheduled for 17 May 2023. The Bill’s provisions would extend to the whole of the UK.

The May 2022 Queen’s Speech noted that a Digital Markets, Competition and Consumers Bill would be published in draft only in the upcoming session, focusing on reform of digital markets, competition and consumer protection. However, the November 2022 Autumn Statement confirmed that the Bill would be brought forward in the 2022-23 session of Parliament.

Alongside the Bill, the Government has published Explanatory Notes, a Delegated Powers Memorandum and Impact Assessments on the Bill’s web page.

This briefing focuses on Parts 1 and 2 (and Schedules 1 to 12) of the Bill, on reform of competition law. A separate briefing focuses on the Bill’s consumer protection and other measures (Parts 3 to 6 and Schedules 13 to 26 of the Bill).

Following second reading and committee stage, the Library published two additional briefings on the digital markets and competition measures, and the consumer protection measures. 

Part 1: Digital markets

Digital markets (PDF) are defined in the Bill’s Explanatory Notes as:

markets where businesses develop and apply new technologies for the benefit of other businesses and consumers, or create brand new products and services using digital capabilities, connecting groups of users in new and innovative ways.

Examples of businesses operating in digital markets are social media platforms like Meta (Facebook) and Twitter, online marketplaces like eBay and Amazon, and other tech-driven firms like Alphabet (Google) and Apple. According to a Government impact assessment (PDF), the UK’s digital sector The UK’s digital sector accounted for 1.8 million jobs in 2021, and contributed over £150 billion to the UK economy in 2019.

Path to the Bill

In March 2019, the Government-commissioned Furman Report concluded that competition in digital markets required a “new approach”. It made six strategic recommendations including for a specialist Digital Markets Unit to regulate digital markets. In 2020, the Government asked the Competition and Markets Authority (the UK’s main competition regulator) to lead a taskforce advising on protecting and promoting competition and innovation in digital markets.

The taskforce reported in December 2020 and advised focusing on the establishment of a new Digital Markets Unit within the CMA (PDF). The unit  would be responsible for a new regime for regulating digital firms with ‘strategic market status’.

In April 2021, the Government established the Digital Markets Unit within the CMA, on a non-statutory basis, with a focus on preparing for a new regulatory regime for digital firms.

On 20 July 2021, the Government launched a consultation on its proposals for a new pro-competition regime for digital markets, seeking views on the scope and design of the regime and the role and objectives of the Digital Markets Unit. The Government published its response in May 2022, in which it confirmed its intention to proceed with its proposals.

The Bill

The proposals in Part 1 of the Bill 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; and
• 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.

The Government says that the Digital Markets Regime would enable “all innovating businesses to compete fairly” and ensure “the UK remains a highly attractive place to invest and do business for all.” Its impact assessment estimates that the net benefits of the regime would be £5.167 billion over 10 years (PDF), while total costs would be £1.022 billion.

Reaction to the Digital Markets Regime proposals

Trade association techUK said it welcomed the regime, with law firms Travers Smith and Pinsent Masons noting it could provide greater certainty for the sector.

The news website Politico described the Bill as Britain saying “no to Big Tech” and online newspaper CapX, owned by the Centre for Policy Studies said the Bill was “innocent-sounding legislation” but it “could do significant damage to the British economy”.

This legislation complements action being taken by several jurisdictions around the world to regulate digital markets. The European Union’s Digital Markets Act imposed new requirements on powerful digital firms (designated as “gatekeepers”) from May 2023.

Part 2: Competition

In the UK the independent Competition and Markets Authority is primarily responsible for enforcing competition law. The legislative framework is established by the Competition Act 1998 and the Enterprise Act 2002, as amended by the Enterprise and Regulatory Reform Act 2013.

The Competition and Markets Authority has a duty to promote competition for the benefit of consumers. Its functions include:

• investigating markets and mergers between organisations;
• taking action against businesses and individuals involved in cartels or anti-competitive behaviour; and
• protecting consumers from unfair trading practices.

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.

Further reading

Library briefing paper on Digital Markets, Competition and Consumers Bill: Consumer provisions (Parts 3 to 6 and Schedules 13 to 26 of the Bill )