Table of Contents
In Short
- The DMCC Act introduces tougher regulations for digital markets, competition and consumer protection.
- Businesses with significant market power will face increased scrutiny and stricter codes of conduct.
- Non-compliance could result in hefty fines and even criminal charges for directors.
Tips for Businesses
To comply with the DMCC Act, review your subscription contracts to ensure clear cancellation options, be transparent about renewals and avoid fake reviews. If you hold significant market power, be prepared for increased scrutiny from the CMA. Regularly assess your consumer protection practices to avoid penalties.
The Digital Markets, Competition and Consumers Act 2024 (DMCC Act) will likely come into force in January 2025, introducing significant updates to UK laws on digital markets, competition and consumer protection. These changes will affect businesses across many industries, especially those involved in digital services. This article outlines the new Act, its implications and the anticipated timeline for its rollout.
Key Changes You Should Know About
Some key changes the Act introduces are:
- Increased Powers for the CMA: The DMCC Act grants the Competition and Markets Authority (CMA) more authority to investigate and penalise businesses that breach consumer law. This includes new enforcement tools and stricter penalties for non-compliance.
- Establishment of the Digital Markets Unit (DMU): The Act formalises the creation of the Digital Markets Unit within the CMA. This unit will oversee digital markets and enforce a new pro-competition regime, particularly targeting tech giants with substantial market power, known as firms with “Strategic Market Status” (SMS).
- Crackdown on Fake Reviews: The Act introduces stronger measures against fake reviews. Online platforms will be prohibited from commissioning these reviews and will be required to ensure that any reviews published are authentic.
- Subscription Contracts Simplified: The DMCC Act makes it easier for consumers to cancel subscription contracts. Companies must notify customers before renewals and ensure that cancellation options are clear and straightforward.
Strategic Market Status (SMS)
The DMCC Act introduces the concept of Strategic Market Status for tech companies with dominant positions in digital markets. These companies will face tailored codes of conduct and increased scrutiny to prevent market abuse and encourage competition. The goal is to ensure these powerful players treat consumers and businesses fairly.
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Enhanced Consumer Protection and Penalties
A major change under the DMCC Act is the CMA’s direct enforcement of consumer laws. Previously, the CMA could not impose penalties directly; courts were required to enforce any sanctions. Other government authorities have also been given enforcement powers under the Act.
Currently, the Consumer Rights Act’s ‘unfair contract terms’ regime does not impose any financial penalties on businesses for including unfair terms in consumer contracts. The DMCC Act will protect consumers by making it a criminal offence to engage in ‘unfair commercial practices,’ including:
- misleading actions or omissions;
- aggressive sales tactics; and
- failing to meet professional diligence standards.
Financial Penalties for Businesses
The DMCC Act empowers the CMA to impose penalties directly on businesses that breach consumer protection laws, including the DMCC Act. The fines can be significant, including the higher of:
- 10% of global annual turnover or £300,000 for consumer protection violations;
- 5% of turnover or £150,000 for administrative breaches, such as breaching CMA undertakings or directions; or
- 1% of turnover or £30,000 for investigatory breaches, such as providing false or misleading information.
Subscription Contracts
While businesses must already provide clear terms for subscription contracts, the DMCC Act will introduce stricter regulations. Companies must make subscription terms, renewal conditions and cancellation options clearer to consumers.
Implementation Timeline
The exact implementation dates for the DMCC Act are not yet confirmed, but the Department for Business and Trade has outlined its phased plans for enactment:
- January 2025: Part 1 (digital markets, with a focus on big tech), Part 2 (competition law reforms), and Part 5 (miscellaneous measures) are expected to begin.
- April 2025: New consumer enforcement rules and changes to unfair trading regulations are expected.
- Spring 2026: Reforms to subscription contracts and alternative dispute resolution will be introduced.
The CMA’s first Strategic Market Status investigations are expected to begin shortly after Part 1 is implemented. Secondary legislation for the CMA’s new direct enforcement powers will be introduced alongside the commencement of Part 3 in April 2025.
Key Takeaways
The Digital Markets, Competition and Consumers Act 2024 represents a significant shift in how the UK regulates digital markets and protects consumers. It aims to tackle the challenges posed by large tech companies and ensure that businesses act fairly in the digital economy while also promoting competition and innovation. As the new rules come into effect, businesses should review their practices to ensure compliance with the updated regulations.
If you need help complying with the DMCC Act, our experienced contract lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers who can answer your questions and draft and review your documents. Call us today at 0808 196 8584 or visit our membership page.
Frequently Asked Questions
The DMCC Act introduces stricter rules on digital markets, competition, and consumer protection. Key changes include more powers for the CMA to investigate and penalise businesses, especially in digital services. Businesses with market dominance may face increased scrutiny, and new requirements will apply to subscription contracts, consumer protections, and fake reviews. You will need to review your practices to ensure compliance.
Penalties for breaches of the DMCC Act can be significant. Fines may reach up to 10% of global turnover or £300,000 for consumer protection violations. There are also penalties for administrative and investigatory breaches. Serious violations could lead to criminal charges, including fines or up to two years in prison for directors.
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