Insights Competition and Markets Authority publishes response to Government consultation on “A new pro-competition regime for digital markets”

On 20 July 2021, the Government published its consultation on “A new pro-competitive regime for digital markets”. The consultation builds on the advice of the CMA’s Digital Markets Taskforce, as well as the recommendations of the Digital Competition Expert Panel. The consultation proposes the establishment in legislation of a Digital Markets Unit (DMU) to oversee the regime. The DMU was created in non-statutory form within the CMA in April 2021 and is assisting the Government with preparations for the new regime.

The CMA has now published its response to the consultation, saying that the proposal to provide the DMU, which is currently operating within the CMA in non-statutory “shadow” form, with the necessary powers to tackle problems in digital markets, as a major, positive step towards better protecting consumers and supporting businesses. This is consistent with legislative changes under discussion, or recently introduced, in other major economies, the CMA says.

In the CMA’s view, some powerful digital firms are showing signs of entrenched market power, which is leading to a worse deal for consumers and businesses across the UK. This significant market power is likely to result in reduced competition, and less innovation and growth in the UK economy. The CMA, and other leading international competition authorities, consider existing competition tools insufficient to address these challenges.

The CMA says the proposals outlined by the government will help tackle these issues by enabling the DMU to implement codes of conduct for digital firms which, if broken, can result in meaningful remedies and, if appropriate, big penalties.

The proposals would also give the DMU powers to intervene in the market to boost competition in the long run, as well as new powers to scrutinise and, if necessary, block mergers involving the most powerful digital firms.

The CMA says that it looks forward to working with the Government to progress the recommendations. To read the CMA’s press release in full and for a link to the CMA’s response, click here.