The Competition and Markets Authority (CMA) has published its SMS Levy Rules, setting out the process for determining what an undertaking with strategic market status (‘SMS’) will be required to pay by way of a levy to the CMA under Chapter 2 of Part 1 of the Digital Markets, Competition and Consumers Act 2024.

The Rules follow a consultation published earlier this year (which we commented upon here) which considered a range of options for reaching a methodology for how to apportion the levy, which will pay for the operating costs of the CMA in exercising its Digital Markets functions.

Only those firms with SMS status will be liable to pay the levy. These are those that have a UK turnover of more than £1 billion or global turnover of more than £25 billion, and are found by the CMA at the conclusion of a nine month investigation to have both ‘Substantial and Entrenched Market Power’ and a ‘Position of Strategic Significance’ in a particular digital activity.

As anticipated by the consultation, the CMA has concluded that it will calculate the SMS Levy share for a particular firm as follows:

1. The total SMS Levy for the relevant Chargeable Year is divided by 12 to identify an average monthly SMS Levy;
2. SMS Firms that are liable to pay the SMS Levy in each month of the Chargeable Year will be identified; and
3. The average monthly SMS Levy will be divided equally between SMS Firms identified as liable to pay the levy in each given month, having regard to the proportion of the relevant Chargeable Year for which each firm was designated.

The Rules also contain detailed explanations about, for example, what constitutes the Qualifying Costs which the CMA is permitted to recoup via the levy, the invoicing timetable, and the consequences of a firm being de-designated as an SMS firm.

To read the Rules in full, click here.