The United Kingdom has introduced comprehensive new regulations aimed at major digital firms through the Digital Markets, Competition and Consumers Act (DMCCA), marking one of the most significant updates to UK competition law in the digital age. The legislation establishes a framework for regulating companies with significant market power in the UK’s digital economy, building on existing European efforts to regulate major technology platforms.
Under the new rules, the Competition and Markets Authority (CMA) gains authority to designate firms with “Strategic Market Status” (SMS) if they have substantial market power in digital activities and meet specific turnover thresholds. Companies must have either global turnover exceeding £25 billion or UK turnover above £1 billion to qualify for SMS designation. The regulatory approach matches similar frameworks being implemented globally, including the EU’s Digital Markets Act, while incorporating provisions specific to the UK market.
“The new regime is specifically designed to keep pace with developments in fast-moving digital markets, complementing our existing competition and consumer protection powers,” said Sarah Cardell, CEO of the CMA. “The DMCC Bill will establish a very targeted approach to address the substantial and entrenched market power of a small number of firms.”
The Digital Markets Unit (DMU), operating within the CMA, will create tailored “conduct requirements” for each SMS-designated company. These requirements may include preventing self-preferencing of products, mandating competitor access to data, requiring interoperability, and ensuring transparency of algorithms. Companies must comply with these requirements preemptively, before any anti-competitive behavior occurs, representing a significant shift from reactive to proactive regulation.
The legislation enables the DMU to implement “pro-competition interventions” to address adverse effects on competition. These can include preventing exclusive deals and ensuring fair trading terms. Companies that breach conduct requirements face substantial penalties of up to 10 percent of global turnover, creating a powerful deterrent against non-compliance.
The DMCCA also introduces new litigation risks for digital firms. Once designated with SMS status, companies will owe a duty to any party affected by conduct requirement breaches. These rights can be enforced directly in courts, where CMA decisions will be binding, providing affected parties with clear paths to seek remedies.
The regulatory framework follows a similar approach to the European Union’s Digital Markets Act regarding designated “gatekeeper” organizations, while establishing distinct requirements for the UK market. The coordination with EU regulations, while maintaining independence, reflects the UK’s post-Brexit strategy to remain competitive in the global digital economy while protecting domestic market interests. The legislation aims to promote competition and innovation among UK technology companies while ensuring consumer access to advanced technologies and maintaining strong digital security standards.
Sources: TechRepublic, DLA Piper
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