New legislation, known as the Digital Markets, Competition and Consumers (DMCC) Bill has been introduced with the goal of ensuring businesses and consumers are protected from scams and rip-offs and can reap the full benefits of the digital economy with confidence.
In this article, we’ll take you through the ins and outs of the new Bill and what it means for your business.
What is the Digital Markets Competition and Consumer Bill?
Effectively aimed at levelling the playing field, the new Digital Markets, Competition and Consumers Bill should improve consumer protection measures and limit the dominance of a small number of the biggest tech companies. Notably, it should help prevent fake reviews that cheat customers, put a stop to subscription traps and ban companies from colluding to bump-up prices at the expense of UK consumers.
How does the CMA Bill protect consumers?
Intended to stamp out unfair practices, the CMA Bill is targeting scams and rip-offs by regulating the industry and introducing new rights which will enhance consumer protection.
Firstly, it will tackle fake reviews by prohibiting digital platforms, such as social media pages from posting unauthorised reviews and by obliging companies to take steps to ensure all their reviews and feedback are genuine and from legitimate customers.
The DMCC will also address subscription traps, which are estimated to cost consumers £1.6 billion per year. The DMCC will enforce a rule that businesses must send reminders and alerts to consumers that their subscription is going to be renewed with options to cancel their free trial.
Consumers will also be given clear information about the subscription contract they’re entering into and provided with clear instructions on how to end the agreement. For example, information, such as the minimum duration of a subscription, should be clearly given to consumers in the form of easy-to-understand terms and conditions. Customers should also be able to end their subscription contracts online by following simple, easy-to-find instructions.
If you are a subscription-based company, you will have to ensure you comply with these new regulations when the Bill comes to force. The rules of the DMCC mean that the CMA has the right to intervene with consumer protection laws, so that cases do not have to go to court. This means, the CMA can impose fines on companies that violate these rules – and this could be as much as 10% of your company’s turnover.
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How will DMCC affect competition in the technology industry?
Comparable to the EU Digital Markets Act, although purportedly “more targeted and pro-innovation” in approach, the DMCC aims to regulate digital markets by preventing companies with largest market shares from using their size to heighten barriers to entry for smaller digital firms.
Digital firms that have a global turnover that exceeds £25 billion – or a UK turnover over £1 billion – will be considered firms with significant market power and “strategic market status”. This means that the CMC has the discretion to impose regulations surrounding the conduct, particularly around acquisitions. Specifically, the CMA will have the power to enforce “pro-competition interventions”. This will involve carrying out investigations to see if large firms are acting in such a way as to impede market competition. If that is found to be the case, the CMA can impose restrictions.
If you operate a smaller tech company, you, therefore, stand to benefit significantly from the new Bill.
New control on mergers and acquisitions
The DMCC additionally sets out to introduce new thresholds for mergers. This is a targeted response to so-called “killer acquisitions” whereby large firms buy up smaller, emerging ones which in turn stifles innovation within the market. This occurs most predominantly in the tech sector. The most significant amendment with regard to these mergers is that the CMA will have jurisdiction to review acquisitions where one party has a market share of at least 33% and a UK turnover of over £350 million.
When will the DMCC Bill come into effect?
The DMCC is currently in the fledgling stages of the legislative process. It must be approved by both Houses of Parliament before it will become law. This will involve members of both Houses of Parliament debating the Bill’s merits, potentially making changes and amendments and being looked over by an appointed expert body. It is currently still passing through the House of Commons and will soon move on to the House of Lords. However, even if some changes are made, the basic principles and outline of the Bill will not be significantly altered and we can expect the law to be passed by the end of 2023.
Does the CMA have power?
Currently, the CMA has powers to investigate and collect information on activities that may go against competition law. When the DMCC is passed, the CMA will have significantly more power and influence. Notably, they will be able to intervene directly with consumer protection laws.
What is predatory pricing CMA?
The CMA also aims to eliminate predatory pricing (the practice of dropping prices so low that comparative companies can no longer compete in the market). The DMCC aims to prohibit “abusive conduct by one or more undertakings that singly or collectively hold a dominant position in a market and may affect trade in the UK”, including predatory pricing. It will therefore introduce legislation and penalties to control the practice of predatory pricing.
What is the new bill to stamp out unfair practices and promote competition in digital markets?
The new bill aimed at tackling unfair business practices, improving business continuity for companies and protecting consumers is called the Digital Markets, Competition and Consumers (DMCC) Bill.
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