The long-awaited Digital Markets, Competition and Consumers Bill (Bill) has now been laid before Parliament. This new legislation, when enacted, represents the most significant reform of competition and consumer protection law in the UK in recent years. It will implement policy proposals which have been in the making for several years. The changes to the law will impact a wide range of businesses.
The Bill principally covers three areas: reform of consumer protection law; new tools to regulate digital markets; and wider reforms of competition law and merger control.
The Bill is extensive, consisting of nearly 400 pages. Accompanying Explanatory Notes come in at almost 230 pages.
See our other updates on consumer protection and digital markets on our website.
Competition law and merger control
The Bill makes a number of substantive changes to the general framework of competition law, including through extensive amendment of the Competition Act 1998 – the UK’s primary competition law legislation. Key changes include the following:
Duty of expedition
The Bill modifies the Enterprise and Regulatory Reform Act to introduce a new ‘duty of expedition’ on the CMA. The new duty specifically requires the CMA to “have regard to the need for making a decision, or taking action, as soon as reasonably practicable” in respect of certain defined functions. This duty of expedition also applies to other sectoral regulators who have concurrent competition law powers, such as Ofgem (energy), Ofwat (water) and Ofcom (telecoms).
Anti-competitive agreements – jurisdiction
The Bill widens the CMA’s jurisdiction to take action against anti-competitive agreement. The requirement for an agreement to be ‘implemented’ in the UK is removed, and instead replaced with a wider test of whether the relevant agreement affects (or is intended to affect) trade in the UK, irrespective of where it is implemented. This would extend the scope of the CMA’s jurisdiction.
Enhanced investigatory powers
The Bill enhances the CMA’s general investigatory and enforcement powers, including: New enhanced duties to preserve evidence under CMA investigations (or likely investigations); Additional powers to seize evidence from domestic premises; Ability for Courts to award exemplary damages in competition claims; and enhancements to the CMA’s ability to access electronic information where that is stored ‘off premises’.
Other interesting changes include extensions of the extra-territorial reach of information notices issued by the CMA, with the Bill setting out the circumstances where there will be a ‘UK connection’ and hence where the CMA can assert jurisdiction in requiring information. This would potentially address a difficulty the CMA has faced in exercising its functions on an extra-territorial basis, most recently seen through the CMA’s defeat in the Competition Appeal Tribunal in the BMW case.
Mergers
The Bill increases the merger control turnover threshold for target companies from £70m per annum to £100m. A new ‘safe harbour’ for mergers involving small companies (with turnover less than £10m) is also introduced – even if they would otherwise satisfy the existing ‘share of supply’ test of more than 25% market share.
UK merger control has traditionally focussed on the target rather than the acquirer. Here the Bill introduces a new acquirer-focussed threshold test designed to deal with so called ‘killer acquisitions’. Mergers where the parties hold 33% share of supply of goods or services in the UK, or in a substantial part of the UK, and the where the merging parties’ turnover is in excess of £350m will be caught. In practice, we can surely expect the CMA to take a potentially expansive view on ‘share of supply’, as it has done under the existing share of supply test.
The Bill also introduces an ability for merging parties to request the CMA ‘fast tracks’ mergers to a detailed Phase 2 investigation (i.e. skipping Phase 1), which could help streamline merger clearance processes in more complex or potentially contentious cases.
Next steps
As the Bill has just been laid in Parliament, it will now need to go through the Parliamentary process. This could result in amendments to its provisions as it makes its way through the House of Commons and House of Lords, before the final version completes the legislative process and receives Royal Assent.
Article Series
- First update - Consumer Protection
- Second update - Digital markets
- Third update - Competition law and merger control