The Digital Markets, Competition and Consumers (DMCC) Bill responds to concerns about the role of big tech companies in the UK’s media landscape. In 2021, the government consulted on a new pro-competition regime for digital markets. The Bill received its first reading in the House of Commons on 25 April 2023 and it is expected to become law in the coming months.

The Bill largely leads on from 2019’s Furman review, which proposed establishing a digital markets unit to enforce competition. This review took place alongside the Cairncross review into the future of UK journalism. This review called for new codes of conduct to rebalance the relationship between publishers and online platforms.

The DMCC Bill creates a new digital markets regime. The Competition and Markets Authority (CMA) will enforce this through its Digital Markets Unit. It obliges the CMA to consult with other bodies – like the Financial Conduct Authority, Ofcom, the Information Commissioner’s Office, Bank of England, and the Prudential Regulation Authority – when exercising its digital markets functions.

Who do the new rules apply to?

The new rules only bind firms the CMA designates as having “Strategic Market Status” in respect of digital activity, and each qualifying firm will have bespoke requirements enforced by the CMA.  

The CMA will determine that a firm has Strategic Market Status if it:

• Has substantial and entrenched market power and a position of strategic significance.
• An annual group turnover exceeding £1 billion in the UK or £25 billion worldwide.
• Has digital activity linked to the UK.

It may take up to a year for the CMA to give a firm Strategic Market Status and it remains five years.

Existing rules will still apply to firms with Strategic Market Status, alongside the new digital markets regime, and these companies will have to appoint an officer to oversee compliance.

What are conduct requirements under the Bill?

When creating tailored conduct requirements for businesses with Strategic Market Status, the CMA must consider three principals:

• Fair dealing: to ensure users are treated fairly and can interact with the Strategic Market Status businesses on reasonable terms.
• Open choices: to ensure users can choose freely between the Strategic Market Status businesses services as well as those of other firms.
• Trust and transparency: to ensure users are able to make informed decisions about their interactions.

The DMCC Bill lists appropriate conduct requirements. Examples include: trading on fair and reasonable terms, implementing effective complaint-handling, not applying discriminatory terms, and not engaging in self-preferencing.

How will the Bill be enforced?

The CMA must consult publicly before finalising conduct requirements and must review these requirements continually once implemented. If the CMA has reasonable grounds to suspect a breach of requirements, it has six months to complete an investigation and act. The CMA must close the investigation if the relevant firm is able to prove “countervailing benefits” of its actions.

The CMA can also investigate potential competition issues in digital markets among businesses with Strategic Market Status, even when they are not suspected of breaching requirements. In these cases, the CMA could then choose to impose pro-competition interventions on these firms. It must issue the pro-competition intervention within nine months of launching its investigation. Remedies are similar to those already available to the CMA, including the power to implement ownership separation. Under penalty of a fine, businesses with Strategic Market Status will also have to notify the CMA when acquiring a significant share in a UK-connected firm.

As well as scope for private action, the CMA can take court action or issue an enforcement order against uncompliant firms (fines of up to 10% global annual turnover could be issued).

What next?

Parliament is expected to pass DMCC Bill by the time of the next summer recess, it should therefore come into force later in 2024. It will take time to create rules for businesses with Strategic Market Status, which means the bill is likely to come fully into force by the end of 2025. It is also likely that the CMA will also consult publicly on supporting guidelines once the DMCC Bill is passed.

What is the PPA’s stance?

The PPA is working with other trade bodies to ensure this Bill is successful in its journey through Parliament and is not compromised in a way that would negatively impact PPA members. When the government consulted on the proposals in the DMCC Bill, we called on the CMA to start using many of the powers the Bill proposes for the DMU.

If you have any questions about this, please contact Eilidh.wilson@ppa.co.uk