COMPETITION AND MARKETS AUTHORITY – DIGITAL MARKETS, COMPETITION AND CONSUMERS ACT 2024 CAME INTO FORCE.

04/02/2025

 

The UK's Digital Markets, Competition and Consumers (DMCC) Act 2024 establishes a new regulatory framework aimed at promoting competition and innovation in digital markets, while safeguarding consumers and businesses from unfair practices by dominant technology firms. This regime is overseen by the Competition and Markets Authority (CMA) and came into effect in January 2025. 

On 14 January 2025, the CMA launched the first investigation under the regime, focused on Google’s activities in search and search advertising. 

On 22 January 2024, the CMA announced that it would also investigate Apple and Google’s position regarding their ‘mobile ecosystems’, which includes operating systems, app stores and browsers that operate on mobile devices. 

The core principle of the regime is proportionality, ensuring it targets only the largest companies. If specific criteria are satisfied, these companies may be granted Strategic Market Status (SMS) for a particular digital sector. 

Key Components of the Digital Markets Competition Regime: 

1. Strategic Market Status (SMS): 

• Designation Criteria: A firm is designated with SMS if it has substantial and entrenched market power and holds a position of strategic significance in a digital activity linked to the UK. Additionally, the firm must have a global turnover exceeding £25 billion or a UK turnover exceeding £1 billion.  
• Designation Process: The CMA conducts investigations to determine SMS designation, which includes consultation phases and a review of the firm's market position. SMS designation is a structured process that includes an evidence-based assessment of an undertaking’s market power over a five-year projection period. The CMA engages with stakeholders, collects data, and follows a statutory nine-month investigation period, with a potential three-month extension.

2. Conduct Requirements: 

• The CMA can impose specific conduct requirements on SMS-designated firms to ensure fair competition. These requirements outline expected behaviors and practices in relation to the firm's digital activities. 
• Conduct requirements are categorized into three key areas: Fair Dealing (ensuring reasonable terms for users), Open Choices (allowing competition and ease of switching for users), and Trust & Transparency (ensuring users are well-informed about their interactions with SMS firms).

• The CMA is responsible for monitoring compliance, conducting investigations into potential breaches, and enforcing conduct requirements through orders or accepting commitments from firms. 

3. Pro-Competition Interventions: 

• The regime allows the CMA to implement interventions aimed at addressing adverse effects on competition within digital markets. This includes measures to promote innovation, enhance consumer choice, and prevent anti-competitive practices. 
• PCI'lar, davranışsal çözümler (örneğin, birlikte çalışabilirliği zorunlu kılmak), yapısal çözümler (örneğin, elden çıkarmaları zorunlu kılmak) veya tam uygulama öncesinde müdahalelerin etkinliğini değerlendirmek için teknik testler ve denemeler dahil olmak üzere çeşitli şekillerde olabilir.

4. Merger Reporting Requirements: 

• Firms with SMS are required to report mergers and acquisitions to the CMA if the transaction value is at least £25 million and has a UK connection. This ensures that potential impacts on competition are assessed proactively. 

Benefits of the Regime: 

• For Consumers and Businesses: 

• Enhanced access to innovative digital products and services. 

• Increased choice and competitive pricing. 

• Protection from exploitative or unfair practices by dominant firms. 

• For the UK Economy: 

• Encouragement of investment and innovation from both large firms and new entrants. 

• Creation of a level playing field for start-ups and scale-ups, fostering economic growth across the tech sector. 

Implementation and Enforcement: 

The CMA is tasked with administering the regime, which includes conducting investigations, imposing conduct requirements, and implementing pro-competition interventions. The authority also engages in consultations and publishes guidance to ensure transparency and clarity in its regulatory approach. 

The CMA can impose significant penalties, including fines up to 10% of a firm's global turnover. Additionally, individual executives may be held personally liable, and the CMA has the power to revoke or modify conduct requirements based on effectiveness reviews.

In January 2025, the CMA launched its first investigations under the new regime, focusing on Google's activities in search and search advertising, as well as the mobile ecosystems of both Apple and Google.  

Final Offer Mechanism: 

If a firm repeatedly fails to comply with payment-related conduct requirements, the CMA may enforce the Final Offer Mechanism wherein both parties submit binding payment terms, and the CMA selects one as the final ruling.

Overall, the DMCC Act 2024 represents a significant step in the UK's efforts to regulate digital markets, aiming to foster a competitive environment that benefits consumers, businesses, and the broader economy. 

 

NAZALI TAX & LEGAL

info@nazali.com

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