Syed Rahman summarises the Competition and Markets Authority guidance on the Digital Markets, Competition and Consumers Act 2024
The Competition and Markets Authority (CMA) guidance on the enforcement of the Digital Markets, Competition and Consumers Act 2024 was released a matter of days before the regime came into effect at the start of this month.
In the guidance, the CMA outlines how it will impose rules and obligations on large technology companies using its new powers in the Act. The Act enables enforcers to designate digital companies as having "strategic market status" and impose requirements on them to help promote competition.
The guidance states: "While the CMA will have regard to this guidance in undertaking its digital markets functions, it will apply this guidance flexibly and may depart from the approach described where there is an appropriate and reasonable justification for doing so."
"It is likely that as the CMA's experience of operating the new regime evolves, so too will its practice."
Rules
The arrival of the UK regime comes at a time when the European Commission is putting into practice its own comprehensive digital market regulations, which enable authorities to identify so-called gatekeeper platforms and impose rules governing their conduct.
The CMA guidance states that enforcers can designate a company to be subject to its new rules for a five-year period if that company meets a number of criteria. These criteria include having digital activity that is linked to the UK (such as by being carried out in the UK or by having a significant number of UK users) and global revenues of more than £25 billion in the past 12 months or UK revenues of £1 billion.
In order to be designated, a company must also have "substantial and entrenched" market power and "a position of strategic significance". To be considered of strategic significance, a company needs to meet one of a number of conditions.
These include:
- Being of significant size or scale.
- Having a large number of business users.
- Having the ability to extend its market power to other activities.
Requirements
Once a company has been designated, the CMA can impose conduct requirements designed to promote fair dealing, open choice and transparency. This could, according to the guidance, include measures barring certain types of conduct, such as the applying of discriminatory conditions or policies on certain users.
The CMA is also able to impose "pro-competition interventions" on companies designated under the new regime, in order to investigate, put right or prevent other types of competition problems. The guidance states that such interventions can take many forms, including requiring that a company make its service compatible with that provided by a competitor, the sale of part of a company or supplying a competitor with user data.
Designated companies are obliged to report any mergers to the CMA if they would result in a company having a value of more than £25 million and a connection to the UK. They will also have to submit periodic compliance reports to the CMA, although the CMA will carry out its own monitoring to assess compliance and the effectiveness of any requirements that have been imposed.
If enforcers find a breach of any requirements, they can (after an investigation and public comment period) seek penalties of up to 10% of a company's global revenues.
