British Parliament approves legislation to regulate strategic digital markets

British Parliament approves legislation to regulate strategic digital markets

On May 23rd, the so-called “Digital Markets, Competition and Consumer Bill” (DMCC), which aims to regulate digital markets, including social networks and search engines, received royal assent after being passed by the British Parliament, becoming an Act of Parliament (law). The law, which was first introduced in April 2023, presents a series of changes to competition law and consumer law in the UK, as well as new regulations for companies known as Big Techs, i.e. large multinationals in the technology sector.

In this way, the legislation aims to establish a preliminary regulatory framework for digital markets. The Digital Markets Unit (DMU) of the Competition and Markets Authority (CMA) – the country’s antitrust watchdog – will have the power to impose a regulatory regime on companies that have “strategic market status” (SMS), i.e. a technology company that has substantial and consolidated market power and a position of strategic importance. Thus, the law binds companies: (i) that have SMS; (ii) in relation to a digital activity; (iii) that have a nexus with the UK; and (iv) provided that certain turnover thresholds are met.

The Digital Markets Act introduces significant reforms to the UK’s consumer protection and competition regimes. Firstly, the framework brings the expansion of consumer protection enforcement powers by the CMA. Thus, it introduces an administrative enforcement model that allows the CMA to directly determine whether there has been a breach of consumer protection laws and directly impose fines of up to 10% of the global turnover of the offending company.

It is also important to emphasize another new obligation imposed by the law. According to the regulations, transactions involving any party with a market share of more than 33 per cent and a turnover of more than £350 million in the UK will be subject to review by the CMA, further extending its jurisdictional reach. Companies will also be subject to mandatory communications in relation to proposed mergers and acquisitions (M&A) where the value of the transaction exceeds £25 million. On this point, the law also allows the UK government to intervene when a foreign power seeks to gain control or influence over newspaper companies through an M&A transaction.

The legislation gives the CMA additional powers to collect evidence, impose higher fines for non-compliance with investigative measures and new penalties based on the criteria accepted or not by the body. Here, it should be noted that the CMA will publish regular reports examining the state and functioning of competition in the UK economy and will receive clearer and more frequent strategic guidance from the UK government on its economic priorities. Finally, the DMCC also makes changes that seek to support international co-operation and information sharing with other regulatory bodies outside the UK.

The legislation can be accessed via the link: Digital Markets, Competition and Consumers Bill

Note: For quick release, this English version is provided by automated translation without human review.