Following a protracted build-up, the Digital Markets, Competition and Consumer Bill (the Bill) is working its way through parliament. One of the most significant developments in competition and consumer law in over a decade, it heralds a new legislative era empowering the Competition and Markets Authority (CMA) to act against businesses who abuse their strategic position in the digital world and other unfair commercial practices more generally.

With its unwieldy title and gargantuan size, external focus seems to be on the digital market restrictions – an enhanced toolkit to take wind out of the sails of the tech giants and help smaller businesses float in the same seas. However, this ambitious Bill covers a much wider range of issues. With toughened consumer protections, enhanced investigatory and enforcement powers, and changes to the UK antitrust and mergers regime to boot, the Bill takes some reading.

From tackling the tech giants, misleading information, trade mark confusion, unfair burdens on consumers, to subscription traps, it’s fair to say that this Bill has relevance for us all.

The Digital Markets, Competition and Consumer Bill – big tech and ‘strategic market status’

External focus on the Bill is, rather inevitably, largely taken up with the radical proposal to curtail market power of ‘big tech’ companies. Even with likely revisions, it seems inevitable that the Bill will create a new legal framework to open up digital markets and ensure big business plays fair(er) towards smaller businesses.

The changed regulatory environment will only apply to companies with ‘Strategic Market Status’ (or SMS) who provide digital content or services via the internet, and have global annual turnover of over £25billion or UK annual turnover of over £1billion.

The Bill proposes a broad remit for the CMA (through the Digital Markets Unit) to impose ‘conduct requirements’ and ‘pro-competition interventions’ on companies with SMS. Fair dealing, open choices and reasonable terms for consumers are the backbone of the Bill.

Specified restricted activities on SMS companies include:

  • using market position, and specifically access to data, to give a commercial advantage to their products over others.
  • requiring or incentivising consumers to purchase ‘follow-on’ products or digital services.
  • restricting interoperability between digital services/products offered by competitors.

Penalties for non-compliance with CMA competition and investigative requirements are set to be steep with fines on companies of up to 10% global company turnover and on individuals of up to £30,000 respectively.

The Bill – consumer rights

Aside from regulating SMS companies, the Bill proposes greater investigatory and enforcement powers to tackle breaches of consumer rights (some existing, some new).

‘Specified prohibitions’

The CMA will take the lead investigating ‘specified prohibitions’. These prohibitions are breaches of certain common laws, acts of parliament and retained EU law. They are too numerous to cover here but are essentially consumer protection laws.

As with the change in territorial approach for competition law infringements, these prohibitions under the Bill do not have to take place in the UK or affect UK consumers – there simply needs to be harm to the ‘collective interests of consumers’ and a ‘UK connection’ regarding the trader running the business.

Penalties for not complying with CMA enforcement orders are also significant with fines of up to £150,000 or up to 5% of turnover and are even higher if the CMA has to go to court in the face of continued breach with fines of up to £300,000 or up to 10% of turnover.

‘Unfair commercial practices’

A significant part of the Bill tackles ‘unfair commercial practices’. This long list of misdemeanours range from misleading information (such as deception and confusing marketing), omissions of key information, aggressive practices (such as harassment and undue influence) to failing to meet professional standards (such as ‘honest market practice’).

It also includes 31 ‘commercial practices which are in all circumstances considered unfair’. Many of these are common sense ‘unfair’ but there are a few unusual ones such as: presenting already existing consumer rights as a special feature of an offer, ‘persistent and unwanted solicitations’ or telling a consumer that if they do not buy the product, the trader’s livelihood will be at risk.

These practices are proposed as criminal offences in the Bill, carrying penalties of personal fines, up to two years’ imprisonment or both.

Other consumer protections

Other proposed compulsory protections include:

  • subscriptions: there must be a cooling off period before a subscription begins, adequate notification before renewal, and a specific cancellation protocol.
  • fake reviews: businesses must take reasonable steps to ensure that the reviews they host are genuine.
  • inertia selling: customers must not be asked to pay for, return, or safely store products which they have not bought.
  • insolvency protection and insurance for consumer credit in consumer saving schemes.

Again, breach of these protections could give rise to criminal penalties if the Bill goes through in its current form.

Traders and their ‘businesses’ in the conventional sense will clearly be impacted by the new ‘consumer protections’ (as well as by the other prohibitions mentioned above). However, other bodies such as not-for-profits and charities might need to assess their standard practices to ensure they too comply, particularly those who rely on subscription or annual membership models.

We will be watching the passage of the Bill with interest. If you have any questions, do get in touch with Lindsay Draffan or your usual Bates Wells’ contact.