April 25, 2023
The Bill reinforces the key principles that underpin the Competition and Markets Authority (CMA)’s work and has two key focus areas – consumer protection (stamping out unfair practices) and the promotion of competition in digital markets.
Whilst the full text of the Bill hasn’t yet been published (we expect it later today), the new measures to promote competition in digital markets will include the following:
The practice of businesses making it difficult to exit a rolling contract will be stopped, and greater transparency will be required. Under the new laws, businesses must:
- provide clearer information to consumers before they enter into a subscription contract;
- issue a reminder to consumers that a free trial or low-cost introductory offer is coming to an end, and a reminder before a contract auto-renews onto a new term; and
- ensure that consumers can exit a contract in a straightforward, cost-effective and timely way.
The enforcement of consumer protection law is being significantly strengthened. The CMA will be able to directly enforce consumer law rather than go through lengthy court processes, and will be able to award compensation to consumers and directly impose financial penalties for:
- breaching consumer protection laws: up to 10% of global annual turnover for businesses or up to £300,000 in the case of an individual;
- breaching undertakings given to the CMA: up to 5% of a business’ annual global turnover or up to £150,000 for an individual, and additional daily penalties for continued non-compliance; and
- non-compliance with an information notice, concealing evidence, or providing false information: up to 1% of a business’ annual global turnover or up to £30,000 for an individual, and additional daily penalties for continued non-compliance.
The Bill will enable the Government to ban the practice of facilitating fake reviews or advertising consumer reviews without taking reasonable steps to check they are genuine.
A new Digital Markets regime
This would be overseen by the Digital Markets Unit (DMU) in the CMA to hold digital firms accountable for their actions and enable businesses to compete fairly. In particular it would set rules preventing so-called “Strategic Market Status” firms from using their size and power to limit digital innovation or market access.
Stronger Competition Investigation & Enforcement powers
The CMA would be granted stronger powers to investigate and enforce, enabling them to carry out faster, more flexible competition law investigations (to help them identify and stop anti-competitive conduct). Changes are also proposed to the CMA’s merger and enforcement powers, including updates to merger and fine thresholds to improve the CMA’s ability to act against mergers harming UK businesses and consumers.
Today’s Bill is designed to put in place a legal framework for a digital age.
We will be posting a series of summaries and commentary on the Bill over the coming days – you can bookmark our tracker page for updates.