The UK Government Consults On The New Digital Competition Regime

Published date23 August 2021
Subject Matterorporate/Commercial Law, Anti-trust/Competition Law, M&A/Private Equity, Antitrust, EU Competition
Law FirmBird & Bird
AuthorMr Anthony Rosen

Further to the UK Government's plans, announced at the end of 2020, to set up a new digital competition regime (summarised in our earlier article "Big Tech" under pressure - new Rules for Digital Platforms in the EU and UK (twobirds.com) ), a consultation was published in July 2021 on the final design of the new "strategic market status" (SMS) pro-competition regime for digital markets and the establishment of the new Digital Markets Unit (DMU).

The Consultation builds on the draft proposals set out by the Digital Task Force at the end of last year and seeks view on the core components of the new digital regime, as follows:

  • The DMU - the DMU, which has been operating in shadow form since April 2021 within the UK's Competition and Markets Authority (CMA), will be given a formal legal basis and it will have responsibility for designating firms with SMS, overseeing an enforceable code of conduct and implementing the pro-competitive interventions. The Government has stated that the DMU's statutory duty should be to promote competition (which includes promoting competitive outcomes) in digital markets for the benefit of consumers. However, the Government is seeking views on whether there should be a supplementary duty to have regard to innovation. There are also proposals governing regulatory co-ordination and information sharing and co-operation with sectoral regulators, including Ofcom the Information Commissioner's Office and the Financial Conduct Authority and other aspects of the DMU (such as its funding).
  • The scope of the SMS regime and designation process - the new SMS regime will focus on firms designated as having SMS and the Government is consulting on the SMS criteria and test (substantial and entrenched market power in at least one activity and this market power must provide the firm with a strategic position). This would include consideration of whether the firm has achieved very significant size and scale in an activity; whether the firm is an important gateway to consumers whether the firm can use the activity to further entrench or protect its market power in that activity, or extend its market power into a range of other activities; or whether the firm can use the activity to determine the rules of the game. The Government is not presently minded to set quantitative thresholds for the designation assessment but will instead rely on both qualitative and quantitative criteria in the evidence-based assessment. It will also consider a firm's...

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