Realising the benefits of competitive markets: strengthening the Competition Appeal Tribunal
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Realising the benefits of competitive markets: strengthening the Competition Appeal Tribunal
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A shot in the arm for digital regulations and competition powers – the DMCCA receives Royal Assent
We are pleased to share with you our briefing on the changes introduced by the Digital Markets, Competition and Consumers Act ("DMCCA") to the UK competition landscape, which received Royal Assent on 24 May 2024.
Headline changes include:
- The most powerful digital firms which provide their products and/or services in the UK can now be designated as having strategic market status ("SMS"), if they are found to have: (i) substantial and entrenched market power; (ii) a position of strategic significance, in a particular digital market; and (iii) meet certain turnover-based thresholds. The Digital Markets Unit ("DMU"), a new specialist division within the Competition & Markets Authority ("CMA"), will be responsible for issuing SMS designations.
- In effect, firms that receive an SMS designation may need to comply with bespoke conduct requirements ("CRs") imposed by the DMU, and additionally, the DMU is empowered to make pro-competitive interventions ("PCIs") to impose any structural or behavioural remedies that it deems appropriate to address any threats to effective competition that a particular SMS firm may pose. To monitor the risk of further consolidation through acquisitions, SMS firms will be subject to mandatory merger reporting obligations.
- Outside digital markets and SMS firms, the DMCCA also introduces significant reforms to the UK's existing merger control regime. Most significantly, a new threshold has been introduced such that a transaction can be reviewed by the CMA if any merging party has a pre-existing share of supply of 33% or more in any relevant UK market and UK turnover in excess of £350 million, This new threshold is aimed at capturing so-called "killer acquisitions". Procedural changes – including a new fast-track Phase 2 reference procedure and a new de minimis exception for Phase 2 referrals – have also been introduced.
- The DMCCA also amends the CMA's antitrust enforcement powers. The extraterritorial reach of the CMA's jurisdiction has been expanded such that any infringements of the Chapter I prohibition on anti-competitive agreements are in scope even if these are implemented outside the UK, provided that they have direct, substantial and foreseeable effects in the UK. Moreover, the CMA has gained more stringent information gathering powers in the context of its market studies and market investigations and dawn raids of private homes.
Most of the changes introduced by the DMCCA will not take effect until later in the year, likely in the autumn. In the meantime, the CMA intends to issue more detailed guidance documents and supplementary rules as to how the new rules and regimes under the DMCCA will work in practice. it will be very important for firms familiarise themselves with these legislative changes and make any necessary amendments to their business practices to avoid falling foul of the new rules.
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