CMA consults on its digital markets regime guidance under the new DMCC Act

On 24 May 2024, the CMA published for consultation its long-awaited draft guidance on its digital markets powers under the Digital Markets, Competition and Consumers Act (DMCC Act). This followed the DMCC Act receiving Royal Assent, also on 24 May 2024, with the legislation pushed through its final stage in Parliament under the "wash-up" procedure after a summer general election had been called by Prime Minister Rishi Sunak. See our separate blog post here for a summary of the (significant) changes that will be brought about by the DMCC Act.

The CMA's digital markets powers (contained in Part 1 of the Act), which will put in place a new UK regulatory regime for the most significant undertakings carrying out digital activities, have received particular attention. The CMA is now seeking the views of interested parties on two pieces of draft guidance: (a) the main digital markets regime guidance, and (b) guidance on the merger reporting requirement for firms with strategic market status (SMS). The consultation will run for seven weeks until 12 July 2024.  

The main draft guidance on digital markets explains how the CMA will approach its digital markets powers under Part 1 of the Act, and reflects the significant discretion afforded to the CMA in assessing and implementing interventions under the regime. The draft guidance document is split into chapters covering the following areas:

• Strategic Market Status – sets out the requirements for an undertaking to be designated as having SMS in respect of a digital activity, how the CMA will approach assessing the SMS conditions (substantial and entrenched market power and a position of strategic significance), and the SMS investigation procedure;
• Conduct Requirements – sets out the CMA's analytical framework and procedure in relation to imposing conduct requirements (including varying and revoking conduct requirements);
• Pro-competition interventions (PCIs) – describes the approach to assessing whether there is an adverse effect on competition, identifying appropriate pro-competition interventions, procedure in relation to PCI investigations and pro-competition orders, and PCI commitments;
• Investigatory powers – sets out the investigatory powers available to the CMA in carrying out its digital markets functions (including information notices, power of access, interviews, power to enter premises, and skilled person reports), and the CMA's approach to information handling and providing investigative assistance to overseas regulators;
• Monitoring – describes the CMA's approach to monitoring compliance with requirements under the regime, effectiveness of its interventions, and whether to change or revoke requirements imposed on firms or make new interventions (with the CMA describing monitoring as a "key part" of its role in overseeing the regime);
• Enforcement – sets out the CMA's approach to formal investigations and enforcement of substantive breaches under the regime, including powers specific to enforcement of conduct requirements (interim enforcement orders, the countervailing benefits exemption, conduct investigation commitments, enforcement orders and the final offer mechanism);
• Penalties – explains the CMA's approach to imposing penalties for breaches of substantive requirements (while noting that the CMA's policy in relation to administrative breaches under the regime will be set out in an updated version of the CMA's existing guidance on administrative penalties);
• Administration – sets out the CMA's approach in relation to other miscellaneous matters (extension periods, consultation and publication, transparency, the duty of expedition, decision-making, coordination with relevant regulators, the CMA's power to require SMS firms to pay a levy, and extra-territorial application of the regime).

The merger reporting guidance covers areas such as when to submit a report, the content of a report (including the SMS merger reporting notice), and potential outcomes of the reporting process.

Following the consultation process, the CMA will consider responses received and reflect on whether to make any changes to the draft guidance. The guidance will then need to be approved by the Secretary of State before it is published and takes effect in final form. While the expectation remains that the digital markets powers will commence in October 2024 (which will require implementing regulations under the DMCC Act), it remains to be seen what impact the upcoming election may have on the timing of the final guidance and opening of the first SMS investigations (ie whether or not these are in place on "day one" of the regime).

Consultation on the draft guidance represents an important step for the CMA in preparation for commencement of its digital markets powers. The guidance will play an important role in the exercise of the CMA's powers and setting out internal processes. Stakeholders and interested parties would be well advised to engage with the CMA in the consultation process and make their views known as we move a step closer to implementation of the new digital markets regime.