One year after it was first presented to parliament, the long-awaited Digital Markets, Competition and Consumers Act (DMCCA) received royal assent on 24 May 2024, marking a shift in digital, competition and consumer protection regulation in the UK. The DMCCA grants the Competition and Markets Authority (CMA) expanded powers to regulate the digital sector, scrutinise a broad range of mergers and acquisitions across digital and other markets, enforce consumer protection law, and strengthen competition oversight.

A new regime to regulate digital markets

The DMCCA establishes a new regulatory framework for digital markets, akin to the EU's Digital Markets Act (DMA) – which we have discussed in our updated guide – and to Section 19a of the German Competition Act. Companies must be designated by the CMA as having "strategic market status" to fall under its scope. Criteria include substantial and entrenched market power and strategic significance in UK digital activities. In scope are large multinationals with over GBP 25 billion in worldwide turnover or GBP one billion in UK turnover. So the usual GAFAM market players are caught. The CMA is likely to target search engines, app stores and online marketplaces, among others. Unlike the DMA's self-reporting requirement, the CMA will start investigations ex officio when designation is a reasonably likely outcome, a solution which mirrors the UK's voluntary merger notification approach. While both the UK and EU consider user metrics for designation, the UK does not specify a threshold number, unlike the DMA's 45 million monthly end users and 10,000 yearly active business users. This grants the CMA flexibility in targeting companies for regulation.

Designated companies under the DMCCA will face tailored conduct requirements akin to the DMA's obligations under Articles 5 and 6, focusing on unfair dealing, choice restrictions and transparency. While the Commission must apply the DMA's prescriptive rules, the CMA will have more flexibility to specify conduct requirements and also have the power to revoke, amend or impose new conduct requirements. Designated companies have to create new compliance procedures, appoint compliance monitoring officers, submit periodic compliance reports and publicise report summaries.

Breaching conduct requirements can lead to decisions imposing commitments on undertakings or to enforcement orders. While fines are not levied for conduct violations, breaching enforcement orders incurs penalties up to 10% of worldwide turnover. A countervailing benefits exemption – absent in the DMA – is available in the DMCCA. This allows companies to escape sanctions for conduct necessary and proportionate to generate user benefits that outweigh harms and do not eliminate competition.

The CMA gains a range of investigative powers similar to those it has in competition law, such as making requests for information, including information stored outside the UK, and carrying out dawn raids, in some cases without a warrant. Non-cooperation or providing false or misleading information can result in fines of up to 1% of worldwide turnover, with daily penalties possible. Senior managers and officers may also face fines or daily penalties.

New and revised thresholds for notifying concentrations

The DMCCA also revises existing merger notification thresholds and creates new thresholds.

In a departure from the UK's traditionally voluntary regime, designated digital companies must notify acquisitions with a UK nexus of 15%, 25% or 50% shareholdings and a total historical consideration above GBP 25 million. Transactions notified under this sectoral regime are subject to a five-day standstill obligation starting from the moment the CMA deems a notification complete.

Additional changes impact other sectors. The CMA continues to review transactions creating or enforcing a 25% share of the supply of goods or services in a relevant market within the UK, but only after a new de minimis check, excluding foreign-to-foreign transactions involving parties with UK turnovers below GBP 10 million. Media and waste sectors retain their existing GBP 70 million thresholds, while for all other sectors the threshold rises to GBP 100 million.

New powers allow the CMA to review "killer acquisitions" where one party exceeds a 33% share of supply and GBP 350 million in UK turnover, provided the other party has a UK nexus (for example, being incorporated, carrying out activities or supplying goods and services in the UK). This broad threshold can capture transactions where no conceivable competition risk exists, such as transactions between parties with no overlap in activities, but where significant "eco-system" or complimentary innovation concerns may arise. The CMA is likely to exercise discretion in choosing which cases to pursue.

New powers to enforce consumer protection rules

The DMCCA enhances the CMA's authority to enforce consumer protection laws without prior court approval, marking a significant departure from the previous regime. The CMA can now independently:

• determine breaches of consumer protection law and impose fines of up to 10% of a company's global turnover or GBP 300,000, whichever is higher
• penalise companies up to 1% of annual global turnover or GBP 30,000, whichever is higher, for conduct during investigations, with additional daily penalties up to 5% of global turnover or GBP 15,000 for non-compliance
• fine companies failing to comply with CMA orders or commitments up to 5% of global annual turnover or GBP 150,000, with daily penalties
• impose "enhanced consumer measures" on violators, mandating consumer compensation or restoration of consumer rights, such as contract termination.

The DMCCA largely retains existing consumer protection rules but introduces stricter enforcement and new provisions:

• Fake reviews, namely reviews that falsely claim to be based on a person's genuine experience, have increasingly been on the radar of competition authorities in Europe (see our previous article here). Companies risk fines for submitting or commissioning fake reviews, failing to disclose incentivised reviews, publishing reviews in a misleading way, or not taking reasonable and proportionate steps to prevent or remove fake reviews.
• Subscription contracts must offer transparency at sign-up, include cooling-off periods, and notify consumers before automatic renewals.
• Drip pricing, where consumers are lured in with low headline prices with additional fees revealed later, is an enforcement priority, with measures taken over the years against car rental intermediaries, online hotel booking platforms, airlines and retailers. The DMCCA clarifies that companies must disclose total costs upfront to avoid fines.
• Misleading sustainability claims, or greenwashing, has also been high on the enforcement agenda in the UK and EU. In 2023, the CMA announced it was investigating boiler company Worcester Bosch for marketing its products as "hydrogen-blend ready" and Unilever for making green claims about toiletries, cleaning products and other essential household items. In 2024, the CMA accepted commitments from fashion retailers, including Boohoo, ASOS and Asda, while the Commission accepted commitments from Zalando. The CMA will target greenwashing with its new enforcement powers, making adherence to the UK's Green Claims Code all the more important.
• Secondary ticketing rules prohibiting professional resellers from bulk-buying and marking up tickets remain in the Consumer Rights Act. Despite successful enforcement actions, notably against StubHub and Viagogo, the CMA had hoped for increased powers. More stringent rules on secondary ticketing were envisaged, but later dropped to facilitate the act's adoption before the dissolution of parliament for the UK general elections. The CMA will use its expanded powers under the DMCCA to enforce existing rules focused on disclosure of ticket value and restrictions on its use.

Implications and next steps

The DMCCA introduces a new digital markets regulation regime and sweeping reforms to substantive and procedural competition and consumer protection frameworks. Big Tech companies have a sprawling new regime to navigate and may expect lengthy interactions with the CMA. For companies engaged in M&A, new filing thresholds may bring increased scrutiny for killer acquisitions while allowing more flexibility for smaller and non-problematic transactions. The number of reviewable transactions depends on how broadly the CMA interprets the thresholds, how many companies it designates as having strategic market status, and those companies' appetite for M&A. For its part, the CMA estimates its workload will increase by a meagre five cases a year on average as a result of the new rules. For consumers and consumer-facing companies, the CMA's enhanced powers under the DMCCA represent a significant shift in consumer protection enforcement, enabling quicker interventions and stricter penalties for non-compliance.

The DMCCA is likely to enter into force later this year, with the timeline hinging on government resolutions following the UK's general elections.