Long-awaited legislation for UK digital markets regime and competition law reform to enter into force January 2025

After a longer than expected genesis, the digital regulatory regime and competition reforms provided for in the Digital Markets, Competition and Consumers (“DMCC”) Act, which became law in May 2024 ahead of the July general election, will come into force on 1 January 2025. The DMCC Act was published on 3 June 2024 and can be viewed here.

The Secretary of State has now given formal approval for CMA guidance to support the implementation of the regime, published on 19 December 2024 and available here.

Key reforms Introduced by the DMCC Act implementing legislation

As we have covered in our previous updates (available here), the DMCC Act introduces a brand new digital regulatory regime, the UK’s equivalent of the EU Digital Markets Act, as well as a range of competition law and merger control reforms. As set out below, some of those reforms have already come into force.

The remaining competition reforms and provisions for the digital regulatory regime will come into force on 1 January 2025, following the making of The Digital Markets, Competition and Consumers Act 2024 (Commencement No. 1 and Savings and Transitional Provisions) Regulations 2024. Regulations setting out the requirements for calculating turnover for the purpose of penalties under the DMCC Act were also made on 29 November 2024.

The key changes introduced by the DMCC Act and their expected entry into force are as follows:

What has changed since the bill was first introduced to Parliament?

Since its introduction as a parliamentary Bill, a few significant amendments were made before the final DMCC Act.

Digital Regulatory Regime

Standard of Review

One area of the DMCC Bill that saw significant lobbying was the proposed standard of review for appeals under the new digital markets regulatory regime.

The initial proposal was for all reviews to be subject to the judicial review (“JR”) standard of appeal, a relatively high threshold. However, that standard was altered by the Government to appeal on the merits (a lower threshold) for appeals against penalties imposed under the regime. The JR standard was retained for other appeals under the digital markets regulatory regime.

Conduct Requirements and Consumer Benefit

The final DMCC Act includes a requirement, not contained in the initial DMCC Bill, that the CMA, when using its new digital markets regulatory powers, have regard to the benefits for consumers the CMA considers likely to result from the Conduct Requirement(s) it intends to impose.

The introduction of this requirement may be a response to lobbying arguing that the regime needed to be focused on outcomes for consumers and, as initially proposed, risked actually harming consumers by preventing conduct by designated firms which might improve consumer experiences.

Final Offer Mechanism and collective submissions

Provision has been added to the DMCC Act to allow third parties to coordinate their submissions in relation to proposed final offer payment terms, provided the CMA invites them to do so. This may help to ensure that any exercise of this power is administratively efficient, as the CMA will have to consider fewer submissions.

CMA’s duty to consult on guidance

Perhaps to address concerns voiced that the new regime gives the CMA considerable power and discretion, the DMCC Act contains an obligation on the CMA to obtain the Secretary of State’s approval before it publishes any guidance, including any revised or replacement guidance relevant to the digital markets regulatory regime. The Secretary of State will have 30 working days to provide the CMA with either approval of the guidance, or reasons for why it is not approved.

A provision has also been added to specify that any duty to consult under the DMCC Act may be satisfied by consultation that took place wholly or partly before the passing of the Act. This provision will address any complaints about the delay in the passing of the DMCC Act, and allow the CMA to rely on the substantial work the Digital Markets Unit has carried out in preparation for the entry into force of the new powers before the date the DMCC Act entered into law.

Restriction on disclosure orders

An additional provision has been included in the DMCC Act which prevents a court or the Competition Appeal Tribunal (“CAT”) from making a disclosure order requiring the CMA to disclose any information where the court or CAT is satisfied that another person would be reasonably able to provide the information. This provision will prevent litigants from seeking to obtain information related to a designated undertaking from the CMA rather than the designated undertaking, and thus save the CMA from any associated costs related to such disclosure orders.

Levy payment

Designated undertakings will be required to pay a levy, which will provide for the costs of implementing the digital markets regulatory regime, subject to levy rules published by the CMA. The Bill was amended to specify that the CMA may include provisions in those rules which allow it to charge interest on late payments of the levy. This adds to the already strong enforcement powers the CMA will have to back up the digital markets regulatory regime.

Merger Control and Competition Law

Newspaper Media Merger Regime

The DMCC Bill was also amended to include a merger control regime screening for acquisitions of newspaper publications by foreign states. The regime requires the Secretary of State to issue a foreign state intervention notice where it has reasonable grounds to believe that a merger involving a UK newspaper has given or will give a foreign state (or associated person) influence or control over the newspaper.

The CMA is then required to investigate and report to the Secretary of State whether the merger would result in such control or influence being obtained. If it will, the Secretary of State must issue an order to block or unwind the merger.

The regime is aimed at protecting media plurality and addressing concerns that foreign ownership or control of UK newspapers could pose a threat to the UK’s democracy. In particular, the inclusion in the DMCC Act was a reaction to the proposed acquisition of the Telegraph Media Group by RedBird IMI, an entity funded in part by Abu Dhabi.

Motor fuel scrutiny

The CMA is obtaining powers which will enable it to scrutinise motor fuel prices in the UK, with the aim of ensuring fairer fuel pricing, and transparency for consumers. These powers were not included in the initial Bill, but were added to the DMCC Act during its passage through Parliament. The powers enable the CMA to scrutinise developments in the space in response to reported concerns about delays in fuel prices coming down after wholesale costs fall, but rising quickly when wholesale costs increase.

The ability of the CMA to request information from undertakings involved in motor fuel distribution, supply, or retail is backed up by enforcement powers including penalties for failure to comply with information notices, and a criminal offence of destroying or falsifying information.

Market investigation references

An amendment gives the CMA the ability to make a market investigation reference even after it has published a market study notice and decided not to make such reference, provided that (i) the reference is made two years or more after the publication of the market study report in relation to the market study notice, or (ii) there has been a material change in circumstances since the preparation of the report.

This amendment follows the CAT’s March 2023 quashing of the CMA’s decision to launch a cloud gaming and mobile browsers market investigation. While the CAT’s judgment was overturned by the Court of Appeal which confirmed that the CMA could make the market investigation reference, the case is pending before the Supreme Court. This amendment will give the CMA more flexibility in future.

Extra-jurisdictional reach of information notices

The DMCC Bill included provision for the CMA’s competition enforcement powers (specifically information requests) to apply to information held overseas. In addition to this, the DMCC Act provides that the CMA’s enforcement powers in relation to the digital markets regulatory regime, such as powers of access, regime have similarly been specifically rendered extra-jurisdictional in their reach, with the addition of provision that the CMA’s powers of access are exercisable, in relation to information and services, whether those are stored or provided in the UK, or outside of the UK.

These provisions follow a CAT decision, in response to cases brought by VW and BMW, that the CMA’s powers to request information in competition enforcement cases are limited to within the territorial jurisdiction of the UK. The CAT’s decision was overturned by the Court of Appeal, a judgment which is itself now pending before the Supreme Court. The inclusion of these provisions may mean any success by VW and BMW in the Supreme Court would be of limited future impact.

Provision of investigative assistance to overseas regulators

The DMCC Bill’s proposals around the CMA providing investigative assistance to overseas regulators with similar functions to the CMA have been streamlined to allow the CMA to provide such assistance without the consent of the Secretary of State where qualifying cooperation arrangements (such as treaties) are in place, such as those envisioned by a UK-EU Competition Cooperation Agreement expected to be ratified in 2025. 

Implications for businesses and next steps

In terms of the digital regulatory regime, with the CMA having indicated that it intends to run SMS Investigations while simultaneously preparing Conduct Requirements for the firms the CMA expects to designate, we may see the CMA move quickly in the New Year. Potentially affected businesses should be prepared to engage with requests for information and consultations from January 2025, and develop a strategy for such engagement.

As to competition law reforms, businesses should ensure that their compliance policies and training remain up to date. In particular, reforms to the CMA’s investigation powers may require updates to document retention policies and plans for unannounced inspections of “dawn raids”.

If considering a merger or acquisition, businesses should check whether their assessment of potential filing requirements remains applicable in light of the updated UK jurisdictional thresholds.

Please reach out to a member of the team if you have any questions on the above.