New UK bill cracks down on unfair practices in digital markets

By Austyn King | Published: 25-Apr-2023

The Digital Markets, Competition and Consumers Bill will enable the UK’s Competition and Markets Authority to take swifter action against practices that may harm consumers or prevent competition

The UK government has proposed a new bill aiming to protect consumers and businesses from unfair practices and promote competition in digital markets.

The Digital Markets, Competition and Consumers Bill will enable the watchdog the Competition and Markets Authority (CMA) to decide when consumer law has been broken, instead of having to take cases to court.

Businesses using unlawful practices, or taking advantage of their market position, will face punishments quicker from the CMA as a result. 

Fake reviews, subscription traps, or pressure selling to push consumers into parting with their money have been highlighted as unfair tactics. 

Businesses that break the regulations could be fined up to 10% of their global turnover.

The bill will also introduce new rules to prevent online businesses with strategic market status (SMS) from abusing their size and power to limit competition or access to consumers.

This applies to businesses with “substantial and entrenched” market power in at least one digital activity, according to the UK government’s website, with a global turnover of more than £25bn or £1bn in the UK.

Finally, the proposed changes will allow the CMA to take faster action against business mergers that may be anti-competitive and harmful to UK consumers and businesses.

The watchdog blocked a proposed merger between supermarket giants Sainsburys and Asda in 2019.

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“Proposals to give the CMA stronger enforcement powers when firms break consumer law – including the ability to directly impose fines for the first time – are crucial to ensure we can continue cracking down on rip-offs and underhand deals, helping to deter firms from taking advantage of people,” said Sarah Cardell, Chief Executive of the CMA. 

“This has the potential to be a watershed moment in the way we protect consumers in the UK and the way we ensure digital markets work for the UK economy, supporting economic growth, investment and innovation.

“This bill is a legal framework fit for the digital age. It will establish a tailored, evidenced-based and proportionate approach to regulating the largest and most powerful digital firms to ensure effective competition that benefits everyone.”

How will the bill affect cosmetics brands?

The proposed bill will facilitate the CMA’s efforts to protect consumers and businesses from potentially harmful activity, such as its recent investigations into several businesses in the beauty industry.

Fragrance giants Firmenich, Givaudan, IFF and Symrise were recently investigated by the CMA along with several other antitrust agencies on suspicion of price collusion.

Amazon has also been probed by the authority under Chapter II of the Competition Act 1998, following suspicion that it was giving an unfair advantage to its own business compared to third-party sellers on its UK marketplace.

The bill is set to be introduced to the UK House of Commons by Kevin Hollinrake MP, Minister for Enterprise, Markets and Small Business at the Department of Business and Trade.

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