November 30, 2023
The DMCC, first published in April 2023, proposes several provisions to strengthen competition and consumer law in the UK. On the competition side, for example, the DMCC will reform the Competition and Markets Authority’s (“CMA”) market inquiry powers to enable it to better address structural concerns in a particular market. The DMCC will also enable the CMA to designate certain firms as having Strategic Market Status (“SMS”) in the UK where they meet specific market turnover thresholds and certain other conditions (such as having entrenched market power and a position of strategic significance in respect of a digital activity). Designated firms will be subject to specific “conduct requirements” tailored by the CMA to the firm (e.g. preventing tying or self-preferencing) and pro-competition interventions enabling the CMA to implement measures that address the root causes of entrenched market power that stem from factors other than conduct (e.g. harms flowing from network effects). Such interventions could include requiring the undertaking to facilitate interoperability or data mobility or a functional separation. On mergers, the DMCC proposes to introduce a new threshold at which the CMA may intervene in deals where the acquirer has a UK market share of at least 33% and UK turnover of over £350m whereas the other party in the merger need only have a UK nexus.
On the consumer side, the DMCC proposes, amongst other things, to revoke the Consumer Protection from Unfair Trading Regulations 2008 and to restate those Regulations within the DMCC. In September 2023, the Government consulted on whether changes to UK law should be made via the DMCC to address unfair commercial practices associated with drip pricing (where consumers are shown an initial price for a product or service online and additional fees (e.g. booking or delivery fees) are shown only later during the checkout process) and fake online reviews.
To address what are sometimes referred to as “subscription traps”, the DMCC proposes a number of requirements for traders including in relation to pre-contract information, reminder notices, cancellation periods and allowing consumers to exit the subscription contract in a single communication and without having to take any steps which are not reasonably necessary.
The CMA will have the power to impose penalties for breach including fines of up to 10% of global turnover.
On 21 November 2023, the House of Commons passed several amendments to the DMCC during its third reading. These include provisions that enable the CMA to impose conduct requirements and pro-competition interventions only where it is proportionate to do so and, before imposing conduct requirements, requiring the CMA to consider the benefits for consumers. Amendments were also passed in relation to litigation funding for competition class actions. The amendments maintain the Judicial Review standard for appeals of CMA decisions (i.e. challenges can be made on proportionality grounds) except fines, for which a merit-based appeals system will apply. With respect to subscriptions, the amendments remove specific time limits in which traders must remind consumers of renewal payments and replace them with a requirement to provide a reasonable notice period. The amendment which proposed to introduce class actions for breach of the provisions of the DMCC relating to unfair commercial practices and subscription contracts was not accepted by the House of Commons but there may be attempts to re-introduce this amendment as the DMCC passes through the remaining legislative process.
The amended DMCC had its first reading in the House of Lords on 22 November, a formality that signals the start of a Bill’s journey through the Lords. The second reading, during which the Bill will be debated in the Lords, is scheduled for 5 December.
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