The Government have issued new proposals for a new pro-competition regime for digital markets that will support the UK’s growing tech sector and protect consumers.
Digital firms with deep-rooted market power will be subject to a mandatory code to drive up competition. The watchdog will be able to suspend, block and reverse decisions by tech giants as well as being able to issue fines of up to 10% turnover for the most serious breaches. The aim is to level the playing field by boosting the UK startup scene.
Tech firms that hold substantial and entrenched market power will be given ‘Strategic Market Status’ (SMS) by the Digital Markets Unit (DMU). This will require them to follow new rules of acceptable behaviour with competitors and customers.
The DMU was launched in non-statutory form within the Competition and Markets Authority (CMA) in April. It will work alongside firms to inject stronger competition into the digital tech sector resulting in more innovation and fairer terms for UK businesses, including startups, news publishers and advertisers.
The DMU could also be given powers to suspend, block and reverse code-breaching behaviour by tech giants – for instance, unfair changes in their algorithms or T&Cs – and order them to take specific actions to comply with the code. The proposed new powers aim to help British startups compete more fairly against tech giants that have powerful positions in the market.
The consultation comes after the Government set out its plan earlier this month to make Britain a global leader in innovation-focused digital regulation.
The consultation seeks views on the objectives and powers of the DMU and will consider whether the DMU will be able to impose a set of measures to tackle the root causes of competition issues in digital markets. This could see the DMU implementing measures to support interoperability – making it easier for digital platforms and services to be compatible with each other and for customers to switch between them. For example, it could require platforms to allow the public to share contacts from one platform to another.
It also details a new mandatory code of conduct, which will set out what is expected of firms for fair trading, open choices and trust and transparency. This could include tech platforms not pushing their customers into using default or mandatory associated services, or ensuring third party companies that depend on them aren’t blocked from doing business with competitors.
The Government will also consider whether to give the CMA greater powers to scrutinise and intervene in harmful mergers involving firms with ‘Strategic Market Status’, for example by requiring these big tech firms to report on their takeovers.
Following the consultation, the Government aims to legislate to give the DMU its new powers as soon as parliamentary time allows.