Although further away from the pages of statute books than the efforts in the EU, a range of recent developments exemplify an increase in regulatory and enforcement scrutiny in the UK. Chief amongst these developments is the establishment in April 2021 of a new Digital Markets Unit (DMU) within the Competition and Markets Authority (CMA). The unit is due to “begin work to operationalize the future pro-competition regime for digital markets”. Designed as a “center of excellence” for digital cases, the DMU already has some 70 staff, many of whom are long-serving CMA enforcers and policy makers and are already involved on active antitrust and market study cases. The DMU is therefore already operational, even if the regulatory “regime” its mission statement references has yet to pass into law.
In May 2022, the Queen’s Speech announced that the government would publish a draft Digital Markets, Competition and Consumer Bill in the current Parliamentary session, but they did not include it in the 2022/2023 legislative program. It is not therefore expected to be enacted until the 2023/2024 Parliamentary session at the earliest.
The bill is expected to include a number of changes to UK competition and consumer law, as well as the proposed new digital regulatory regime. This regulatory regime is anticipated to enable the DMU to impose tailored Codes of Conduct on firms it has designated as having Strategic Market Status (SMS). Similar to the EU’s gatekeepers, SMS-designated firms are defined as those with substantial and entrenched market power in at least one digital activity. The proposed legislation is expected to enable the DMU to intervene in the prevention of so-called “killer acquisitions” and in acquisitions of even small stakes in relevant companies. Violations of the rules would be subject to significant penalties including fines of up to 10% of global annual turnover.
In the meantime, we expect the CMA will continue to draw on its existing competition-law toolbox, which it has so far not been shy to use in a range of cases that have captured attention through their novel theories and innovative resolutions. For instance, the CMA is currently re-examining Meta’s $315mn acquisition of Giphy following a successful appeal by Meta on procedural grounds. The CMA also has active antitrust cases against Apple, Meta, Google and Amazon and has carried out market studies into mobile ecosystems and music streaming services.
The Risks of Fragmentation
To some extent, the CMA’s approach to issues in digital cases is similar to that of the European Commission and the DMA. For example, both the Commission and CMA have ongoing antitrust investigations into similar issues, such as mobile phone app stores and concerns about the usage of third party data. As an example, a recent CMA press release announcing the opening of an antitrust investigation into Amazon Marketplace listed similar concerns about the usage of third-party data to those included in the DMA.
At the same time, the CMA clearly does not believe it should merely copy and paste EU regulatory frameworks. The CMA’s outgoing CEO Andrea Coscelli CBE, recently expressed frustration to the Financial Times that the UK was now “behind” the EU in terms of developing digital regulation. And while our experience on live cases shows the agencies are working closely together, there have also been instances of disagreement, such as when the CMA publicly criticized the behavioral Fitbit commitments the Commission accepted. There is therefore a prospect that the UK will seek to demarcate itself from the EU’s positions. Such an approach would have significant impacts for large digital platforms and their users, who may face different rules on each side of the channel.
The Risks of Fragmentation
To some extent, the CMA’s approach to issues in digital cases is similar to that of the European Commission and the DMA. For example, both the Commission and CMA have ongoing antitrust investigations into similar issues, such as mobile phone app stores and concerns about the usage of third party data. As an example, a recent CMA press release announcing the opening of an antitrust investigation into Amazon Marketplace listed similar concerns about the usage of third-party data to those included in the DMA.
At the same time, the CMA clearly does not believe it should merely copy and paste EU regulatory frameworks. The CMA’s outgoing CEO Andrea Coscelli CBE, recently expressed frustration to the Financial Times that the UK was now “behind” the EU in terms of developing digital regulation. And while our experience on live cases shows the agencies are working closely together, there have also been instances of disagreement, such as when the CMA publicly criticized the behavioral Fitbit commitments the Commission accepted. There is therefore a prospect that the UK will seek to demarcate itself from the EU’s positions. Such an approach would have significant impacts for large digital platforms and their users, who may face different rules on each side of the channel.
Nicholas Levy
London
T: +44 20 7614 2243
Brussels
T: +32 2 287 2311
nlevy@cgsh.com
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Jackie Holland
London
T: +44 20 7614 2233
Brussels
jaholland@cgsh.com
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Henry Mostyn
London
T: +44 20 7614 2241
hmostyn@cgsh.com
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