The DMCC Act - where are we now?

The Digital Markets, Competition and Consumers (DMCC) Act ("the Act") received Royal Assent on 24 May 2024 with most of the substantive provisions expected to come into force in autumn this year. This is the most significant reform to UK competition and consumer protection law in decades. The CMA is consulting on associated guidance until 11 July.

The UK becomes the fourth jurisdiction to pass digital regulatory legislation which targets so called "tech giants", joining the EU, Germany, and Japan. Several other countries are also looking into introducing similar legislation.

The Act is expansive and can be broken down into 4 main areas of reform:

1. Regulation of digital markets, and in particular the establishment of a new digital market regime in which businesses designated as having "Strategic Market Status" ("SMS") will be subject to special rules on their conduct, approach to competition, and acquisitions.
2. Modifications merger control thresholds, which will remove some mergers from the scope of UK merger control entirely but make it easier for the CMA to intervene in others.
3. Expanded powers for regulators to investigate breaches of competition law.
4. Reform of the UK Consumer Protection regime.

The Act aims to update the UK's longstanding competition and consumer protection rules and bring about a shift in regulations to promote free and vigorous competition both online and in the high street and to empower enforcement officials such as the Competition Market Authority ("CMA") to tackle unfair practices. Our 4-part series on the DMCC Bill and the implications for businesses can be found here:

• Part One – Changes to regulation of digital markets
• Part Two – Changes to UK Merger Control
• Part Three - Investigating and enforcing competition law breaches
• Part Four - The Impact on UK Consumer Protection Law

Where are we now?

The Act in its final form largely reflects the DMCC Bill that we previously blogged on. However, there are a few differences worth noting:

1. Decisions of the CMA's Digital Markets Unit's (DMU) on penalties will now be subject to review on their merits and not only on judicial review grounds (which will remains the case for other decisions).
2. The "countervailing benefits exemption" – that provides that conduct by businesses with "Strategic Market Status", which would otherwise be prohibited, will be permissible where the overarching benefit of the conduct outweighs the harm of the breach – is now subject to the condition that those benefits "could not be realised without the conduct".
3. Conduct requirements imposed by the CMA must now satisfy a "proportionality" test.

What happens next?

Since the Act received Royal Assent, the CMA has announced a consultation on its draft guidance on the new digital markets regime. This seeks to provide the procedural framework for how the DMU, the new digital enforcement branch of the Competition and Markets Authority, will approach enforcement.

Those looking to make submissions to the consultation must do so before 12 July 2024.

Most of the substantive provisions of the Act are expected to come into force in autumn 2024, alongside the associated guidance, following which the DMU will make its first designations of businesses it considers to be captured by the new SMS, though this may be delayed by the 2024 general election.

The designation process for SMS businesses can take several months, and so big changes within the digital markets are therefore not expected until 2025. However, both the "big tech" firms that are likely to be designated as having strategic market status, and those smaller firms that interact with them or are affected by their activities, should be prepared to start engaging with the DMU as soon as the new regime commences in order to shape its decisions.

Outside the digital markets space, businesses generally should be prepared for the new Act:

• Businesses that are planning mergers and acquisitions, or that advise on mergers and acquisitions, should be prepared for the new merger control thresholds.
• Consumer facing businesses should be prepared for the new consumer protection rules.
• All businesses should revise their competition compliance policies and their dawn raid preparations to take account of the CMA's new powers.

For more information on the DMCC Act or competition law generally, please contact Charles Livingstone, Jamie Dunne or your usual Brodies contact.