UK's digital consumer bill to tackle big tech firms
The government claims that the legislation will strengthen competition in digital markets.
The government is today introducing the Digital Markets, Competition and Consumers (DMCC) Bill, which seeks to curb the dominance of Big Tech in digital markets. The aim of the bill is to equip the UK competition watchdog with the teeth to enforce a new code of conduct on some of the worlds most powerful companies.
As part of the new legislation, the newly established Digital Markets Unit (DMU), a branch of the Competition and Markets Authority (CMA), will receive specific powers to identify large companies with substantial market influence. However. no companies have been yet been named, and will be chosen after a period of investigation lasting up to nine months.
In 2021, the CMA formed the DMU in a shadow capacity, in anticipation of being granted the legal powers to supervise digital markets.
The DMU will have the authority to designate the most substantial companies, with a turnover of either £25 billion worldwide or £1 billion in the UK, as having "strategic market status." Once identified, these firms must adhere to a particular code of conduct in the sectors they dominate.
The government has stated that the code's purpose is to prevent firms from distorting or undermining competition among their service users by misusing their market power and strategic position.
The legislation will equip the CMA with enhanced resources to investigate competition issues and swiftly take effective action, including where companies collude to increase prices at the expense of consumers. The CMA will have the authority to enforce consumer law directly.
The reforms will also increase the penalties for companies which violate consumer law, as both the CMA and courts will be authorised to impose fines of up to 10% of a company's global turnover.
Additionally, the new legislation will prohibit the practice of facilitating fake reviews or promoting consumer reviews without implementing reasonable measures to verify their authenticity. According to the consumer advocacy group Which?, Facebook groups that offer free items or compensation in return for fabricated reviews are still prevalent on various platforms such as Amazon, Google, and Trustpilot.
The legislation has also been drafted with the objective of customers being able to terminate subscriptions easily, inexpensively, and promptly, and companies being obligated to notify customers when a free trial or promotional offer is about to expire.
The DMCC bill is not expected to counter significant politcial resistance and is therefore likely to be written onto the statute book next year.
Commenting on the bill, Katrina Anderson, consumer protection and e-commerce compliance lawyer at Osborne Clarke, said: "The new legislation brings in significant new penalties for breach of consumer protection law. Specifically the CMA will be able to unilaterally fine firms up to 10% of global turnover. This should make compliance with consumer protection legislation a board level issue as these fines will be more significant than the equivalent sanctions for breach of data protection law."
"The government clearly intends to force platforms and websites to take more responsibility for ensuring that reviews are genuine. The practical implication is that any firm that displays reviews will need to undertake steps to ensure that they are not fake and infect from genuine consumers who have used or bought the product or service - otherwise this will amount to a criminal offence and the company be fined up to 10% of turnover by the CMA.
"The government is introducing a package of new obligations designed to prevent so-called 'subscription traps' and 'roach motels' where consumers get trapped into subscriptions they either did not intend to take out all would like to cancel but do not know how to. This includes reminders to consumers at key points such as when a subscription moves from a free trial to paid subscription and when it auto renews. Also platforms will need to make cancellation easier - which practice will likely mean consumers will have access to automated cancellation systems on platform rather than having to call or log onto a website."
Kevin Hollindrake, the business and trade minister said: "The new laws we're delivering will empower the CMA to directly enforce consumer law, strengthen competition in digital markets and ensure that people across the country keep hold of their hard-earned cash."