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

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.

This very large Bill – consisting of six parts and 26 schedules – reflects proposals outlined in two separate government consultation papers both published in July 2021, A new pro-competition regime for digital markets and Reforming Competition and Consumer Policy.

The Government has described the Bill as using “the opportunity presented by Brexit” to enhance competition and consumer regulations so they “work better” for the UK and move “in a more agile way” to deliver growth and innovation and protect consumers. 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.

Given the size and significance of the Bill, and the complexity of its provisions, 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 this briefing which focuses on proposed reforms of consumer law enforcement and on new consumer rights (Parts 3 and 4 of the Bill).

The Government has identified consumer law enforcement as a key weakness in the consumer protection regime. In particular, procedural difficulties for enforcers, weak sanctions for breaching the law, and low uptake of alternative dispute resolution services. Currently, where the CMA concludes that consumer law has been breached, it has no powers to order the cessation of illegal practices – it must go through the courts. Even if an order is made, no fines are available. The CMA can accept undertakings from a trader, as an alternative to taking it to court, but the CMA cannot fine the business if it does not comply with the undertaking.

In addition, the Government believes UK consumer law is failing to keep pace with market developments. The Government has identified “subscription traps” (where subscriptions automatically renew) and the proliferation of fake reviews as practices which erode consumer choice. Unregulated consumer saving schemes (such as Christmas saving clubs) are also of concern.

If enacted, Part 3 of the Bill (and Schedules 3-17) 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 imposing new duties on traders. In particular, to give specific pre-contract information to consumers, send reminders to consumers before a contract rolls over or auto-renews into a new term, provide rights for consumers to cancel subscription contracts during cooling-off periods, and ensure that consumers have a straight-forward mechanism to terminate the subscription contract. Consumers would have new rights under Part 4 if traders breached these requirements.

• 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 consumer provisions would extend to the whole of the UK.

 Further reading

Library briefing on Digital Markets, Competition and Consumers Bill: Digital markets and competitions provisions (Parts 1 and 2 and Schedules 1 to 12 of the Bill ).