The New UK Digital Markets Regime – Updated Commencement Timing and Other Recent Developments

On 9 September 2024, the UK Government announced that it expects the new UK digital markets regime under the Digital Markets, Competition and Consumers Act (DMCC Act) to commence in December 2024 or January 2025, and initial Strategic Market Status investigations under the regime to be launched by the Competition and Markets Authority (CMA) "shortly afterwards".  

While this is the one of the first official updates since Royal Assent and the CMA's publication of its draft guidance in May 2024, broader developments over the summer period also provide clues as to the CMA's latest thinking and preparations in relation to its new digital markets powers. Taken together, these paint a picture of continuity, coordination and case deliberations, even if the change in UK Government appears to have resulted in a slight delay to implementation timings. We set out below our key takeaways on what this means for the forthcoming regime.

Updated commencement timing

The DMCC Act received its long-awaited Royal Assent on 24 May 2024. Part 1 of the DMCC Act implements the UK's new digital markets regime, which will see digital firms with strategic market status (SMS) having their conduct regulated by the CMA and being subject to a new mandatory merger reporting requirement (see our previous blog post accessible here for a detailed overview of the new regime). From 24 May to 12 July, the CMA consulted on its draft guidance relating to the main components of the regime (see our blog post accessible here).

It was previously anticipated that the new regime would enter into force in October 2024. However, on 9 September 2024 a Parliamentary Statement from the new Labour Minister for Employment Rights, Competition and Markets, Justin Madders, set out that:

• The Government is "working closely with the CMA" to ensure that necessary secondary legislation, and the CMA's final guidance on its digital markets powers, are in place as soon as possible.
• The Government aims to commence the digital markets regime under the DMCC Act "in December 2024 or January 2025";
• The Government expects the CMA to launch the first SMS investigations under the regime "shortly afterwards"; and
• Secondary legislation will be laid before Parliament "in the Autumn" for scrutiny before it enters into force.

This statement clearly represents a delay compared with the previous target for the regime to enter into force in October 2024. It seems likely that the change in UK Government may have had an impact on timings – the Government's statement implies that draft implementing regulations and (necessary) Secretary of State approval for the CMA's final guidance are not yet in place, several months on from Royal Assent of the Act and the CMA's consultation on its draft guidance. It is also possible that the new Labour Government may have raised fresh questions on the CMA's interpretation of its powers – the ministerial statement refers to the need for secondary legislation and guidance to be "detailed, robust and clear to ensure the Act's changes are understood and can be complied with". The Government's statement also leaves open the possibility that the CMA's initial SMS investigations may not start immediately on "day one" following commencement (a possibility that was also implied in public statements by the CMA's Digital Markets Unit (DMU) over the summer period).

Other recent developments

While there have been no official CMA updates on the implementation of the new regime since the end of the consultation period on the CMA's draft guidance on 12 July, there have been a number of broader developments that provide clues as to the CMA's latest thinking and preparations around the regime. These paint a picture of continuity, coordination and case deliberations, and suggest that the CMA is preparing to press ahead with tackling its digital markets remit as soon as its powers come into force.

• Continuity in personnel and scaling up. The CMA has spoken previously about a phased recruitment plan to build up to a total of around 200 people at commencement. This recruitment drive appears to have continued over the summer, across the director, operational and support levels. The CMA also announced in July that it had appointed three new Senior Directors to the DMU, two of which have been existing Directors in the "shadow form" DMU (while the third Senior Director has been working at Ofcom in digital markets areas). 
  
  As well as representing a degree of continuity and providing evidence of the professional skillset of the unit's senior management (given that all three individuals come from economist backgrounds), these appointments also hinted at the DMU's evolving resource requirements (given that the CMA initially only recruited for two Senior Director roles).
   

• Coordination of analysis and possible interventions. In August, the CMA published a Remedies Working Paper in its existing mobile browsers and cloud gaming market investigation, which indicated that the CMA is giving "active consideration" to using its new digital markets powers to implement potential remedies considered in the market investigation. While provisional in nature, the paper also suggests that there is close ongoing coordination between the CMA's market investigation and DMU teams, as well as continuity in the CMA's analysis on possible mobile ecosystem interventions under the new regime (given that the CMA's remedy descriptions in the Working Paper overlap to an extent with early-stage CMA thinking in its Mobile Ecosystem Market Study, which considered possible steps under a future digital markets regime). 
  
  Meanwhile, the paper also highlights trade-offs between remedy requirements which are high level (and therefore potentially difficult to monitor and enforce) and those which are more prescriptive (and therefore may risk circumvention or becoming obsolete), which are challenges that the CMA is likely to face under the digital markets regime. Finally, it provides clear evidence of the CMA monitoring EU Digital Markets Act (DMA) developments to inform its own approach.

• Case deliberations. In the last few weeks, the CMA has also made announcements concerning its existing digital markets case portfolio of relevance to the digital markets regime. In particular, the CMA announced in August that it was closing its existing Competition Act investigations into Google’s Play Store and Apple’s App Store on administrative priority grounds, in light of the upcoming regime (having decided not to accept commitments offered by Google). 
  
  ​​​​​​​These developments are notable, given that these cases have seen lengthy periods without public updates (likely reflecting previous uncertainty around the passage of the DMCC Act and the introduction of the new digital markets regime). They could suggest an early focus by the DMU on conduct requirements in this area.

Next steps

We do not anticipate further delays to the updated timetable for commencement of the digital markets regime now set out by Government, given the extensive preparations already undertaken by the CMA. The current revised timetable is likely to involve implementing regulations being in place by the end of 2024, ahead of commencement of the regime in December 2024 or January 2025 (given the commitment in the Government's statement that the commencement order will be made at least 28 days before the commencement date). We expect the final version of the CMA's guidance to be in place by the time the CMA starts its initial SMS investigations, although not necessarily on "day one" of the regime. Our expectation remains that the DMU may consider digital advertising and mobile ecosystems amongst its initial areas of focus (both having been the subject of previous CMA market studies), as previously indicated by the CMA in its provisional approach document.

Overall, we welcome the degree of transparency provided by the Government's statement, which recognises the importance of clarity on implementation timing for those affected by the new digital markets regime. It is to be hoped that the new Government has also been carefully scrutinising the draft regime guidance with fresh eyes, to ensure maximum transparency and proportionality in relation to the CMA's significant areas of discretion under its new powers.

Please contact one of our experts if you have any questions on the implications of the new UK digital markets regime.