The Digital Markets, Competition and Consumers (“DMCC”) Bill has finally completed its long journey through Parliament, over two years since the UK Government first announced plans to legislate in this area and over a year since the Bill was first published on 25 April 2023.  The Bill received Royal Assent on 24 May 2024 as part of the “wash-up” following the Government’s announcement of a general election on 4 July 2024.

The DMCC Act is expected to come into force later this year after the necessary secondary legislation is introduced and will finally bring to bear some of the most anticipated and transformational regulatory reforms of recent years.

Given the time that has passed since details of the DMCC Bill first became public, this update refreshes the main competition law implications for businesses and highlights a couple of key changes since the initial draft of the bill.

It is worth noting that the DMCC Act in addition makes significant amendments to the UK’s consumer law regime, including giving the Competition and Markets Authority (“CMA”) power to directly investigate breaches, enforce consumer protection rules and impose significant fines.  In the coming days we will publish a separate update focusing specifically on the consumer law aspects of the DMCC Act.

Key competition law implications of the DMCC Act

• Digital Markets: A new regime for digital markets empowers the CMA, through a new dedicated unit (the Digital Markets Unit or “DMU”), to impose tailored codes of conduct on firms found to have “strategic market status” or “SMS” (essentially, entrenched market power and a position of strategic significance in respect of a digital activity, combined with minimum turnover thresholds). The CMA will also be able to make ‘pro-competition interventions’ against SMS firms following an investigation, intended to remedy, mitigate or prevent identified adverse effects on competition. To complement these features, SMS firms will also be subject to a mandatory and suspensory merger control regime which will require them to report the acquisition of certain stakes in UK targets where the consideration is at least £25 million.
• Market Studies / Investigations: The regime becomes more flexible and is given more teeth.  The CMA will now be able to require trial implementation before remedies are accepted/imposed, vary remedies for up to 10 years from the date of the market investigation report and directly enforce market investigation remedies and directions by imposing fines.  The DMCC Act also makes the process overall more flexible, for example by making it possible to accept binding commitments at any stage during a market study / investigation.  
• Merger Control: The UK’s jurisdictional thresholds are amended to require a target to have generated £100 million in revenues in the preceding financial year (up from £70 million) and to add a safe harbour for transactions where both parties’ UK turnover is below £10 million. A significant new set of thresholds has also been introduced, designed to catch so called ‘killer acquisitions’.  This will capture transactions where at least one party (e.g. potentially just the acquirer) has a 33% UK share of supply in any market and UK turnover exceeding £350 million.  These changes are accompanied by significant procedural reforms, including a new fast-track mechanism to Phase 2 which does not require the parties to concede a substantial lessening of competition, and the ability to agree extensions by mutual consent with the CMA (e.g. to discuss remedies).
• Antitrust Investigations: A reinvigorated antitrust enforcement regime includes enhanced evidence gathering powers (e.g., a duty on third parties to preserve evidence where they know or suspect that a CMA investigation is under way or likely, the option to conduct remote interviews, or “seize and sift” evidence from domestic premises) and higher (turnover-based) penalties for failure to cooperate with investigations or to comply with remedies such as orders, undertakings or commitments.  These changes are combined with an expansion of the scope of the prohibition on anticompetitive agreements (the Chapter I prohibition) to capture agreements implemented outside of the UK, where these are likely to have an immediate, substantial and foreseeable effect on trade within the UK (this is supported by a power to compel the production of documents/information held outside the UK).  Notably, this change does not affect the Chapter II prohibition on the abuse of a dominant position which still requires dominance to be found in a market within the UK.

Some key changes since the initial draft

The DMCC Act was the subject of extensive back and forth between the two Houses of Parliament.  However, the changes to the substance of the competition law parts of the legislation have been relatively limited.  The digital markets section of the bill in particular made its way through the Parliamentary process mostly unscathed.  The following were the main exceptions:

• Appeal Standard: The general position under the DMCC Act is that decisions by the DMU will be subject to appeal based on the judicial review standard.  The only exception, introduced later by the Government, is that appeals of penalty decisions will be on a full merits basis. 

• Countervailing benefits exemption: The DMCC Act includes an exemption intended to ensure that conduct which produces net consumer benefits and which satisfies specific conditions will not breach conduct requirements. There was significant debate over whether conduct should be indispensable to benefit from this exemption (as was the original position).  Ultimately, firms will have to show that the benefits “could not be realised without the conduct” – arguably a lower threshold than indispensability.

• Conduct Requirements Standard: The original DMCC Bill provided that the CMA could only impose conduct requirements if it considered that it would be “appropriate” for the purposes of specified objectives.  This was later changed to “proportionate”, which could require a balancing exercise of uncertain scope. The Government has committed to issue guidance on this point. 

As for key competition law changes that were abandoned or not progressed, the significant amendments to the UK’s collective actions regime that generated extensive debate did not go through. Specifically, an amendment to expand the UK’s collective actions regime to cover consumer law breaches (as currently exists for competition law breaches) did not make it into the final Act.  Similarly, the Litigation Funding Agreements (Enforceability) Bill, which was introduced in March in place of a separate amendment to the DMCC intended to make funding for class actions more easily available following the Supreme Court’s PACCAR judgment, was abandoned during the Parliamentary "wash-up" (for more details on this, please see here).

Next steps

It is anticipated that the DMCC Act will come into force before the end of the year (the CMA has announced that it expects this in around October 2024), although the precise timing is unclear as this depends on secondary legislation and the priorities of the new Government following the election.

Finally, it is notable that the CMA reacted very quickly to the passing of the DMCC Act in publishing extensive draft guidance for consultation on how it will perform its functions and exercise its powers under the new digital markets competition regime.  Further consultations on other aspects of the DMCC Act can also be expected over the coming months.

Authored by Stelios Charitopoulos, John Embleton, and Rhona Baillie.