Government Consults On New Competition Regime For Digital Markets

• Published date: 28 July 2021
• Subject Matter: orporate/Commercial Law, Anti-trust/Competition Law, M&A/Private Equity, Corporate and Company Law, Antitrust, EU Competition
• Law Firm: Walker Morris
• Author: Sally Mewies and Sarah Ward

On 20 July 2021, the UK Government published proposals for a new competition regime for digital markets "to make it fairer for smaller businesses, entrepreneurs, and the British public". These proposals include significant new powers for the Digital Markets Unit (DMU) which was recently established within the CMA and an enforceable code of conduct for firms with so-called Strategic Market Status (SMS). The Government is also considering new merger control rules for firms with SMS. The proposals are now open for public consultation until 1 October 2021.

Background

Large digital players have faced considerable scrutiny from competition authorities around the world in recent years, with Facebook, Amazon, Apple and Google all subject to multiple investigations. The market position of a small number of global firms is seen as creating unique issues in the sector, which many jurisdictions have sought to tackle by introducing or proposing new laws or regulatory frameworks.

In the UK, the Government established in 2018 a Digital Competition Expert Panel chaired by Professor Jason Furman to report on the state of competition in digital markets and make recommendations as to how competition policy reform could help unlock the opportunities of the digital economy. As reported previously (see here) the panel made various proposals in March 2019 and in March 2020, the Competition and Markets Authority (the CMA) was asked by the Government to lead a Digital Markets Taskforce, to provide advice to the Government on the design and implementation of a pro-competition regime for digital markets. The Digital Markets Taskforce, composed of officials from the CMA, the Office of Communications (Ofcom) and the Information Commissioner's Office (ICO), published its advice in December 2020. A "shadow" non-statutory DMU was established within the CMA in April 2021.

The proposals

The key elements of the Government's proposals are:

1. The creation of a statutory DMU within the CMA, with a legal duty to promote competition (including competitive outcomes) in digital markets for the benefit of consumers.
2. A new power for the DMU to designate firms with SMS. To be designated with SMS, the Government proposes that a firm must have substantial and entrenched market power in at least one activity, and this market power must provide the firm with a strategic position.
3. An enforceable code of conduct which would apply to firms with SMS and which would be overseen by the DMU. The code of conduct...