Despite being over 400 pages long, the Digital Markets, Competition and Consumers Act 2024 (the ‘DMCC Act’) completed its passage through the UK Parliament in a matter of days last summer, as part of the ‘wash up’ process before Parliament was dissolved in before the General Election campaign kicked off. While the impending election certainly helped speed its passage, the fact that there was significant political consensus on its objectives was also a factor. The lack of parliamentary fireworks over its passage belied the far-reaching changes brought about by the Act. While most legal commentary has focused on the Act’s implementation of a completely new UK regime for regulating large technology platforms with ‘strategic market status’, the Act also implemented important changes to UK merger control law, as well as making and a number of discrete procedural changes to the antitrust regime. All of these changes entered into force on 1 January 2025.
Roughly half of the Act’s 340 sections are dedicated to a further important reform, namely the introduction of a new regime for the direct enforcement of consumer protection law. Under the current regime, the CMA lacks the power to decide for itself whether a company has infringed consumer protection law or take action to remedy or punish an infringement but can merely bring enforcement proceedings before the court (albeit in most cases the CMA reaches a settlement before court action is required). If a court finds that an infringement has taken place, it can impose an order or accept undertakings to prevent further infringements but cannot impose penalties (although it can order certain types of redress).
In contrast, the new ‘direct enforcement’ regime, which will enter into force on 6 April 2025, will give the CMA the ability to decide that an infringement has taken place and the power to give directions and impose fines of up to 10% of an infringing company’s annual global revenues. The CMA will retain the ability to seek a court order, or to bring criminal prosecutions, in appropriate cases. The courts will also gain the power to impose monetary penalties for infringement. A decision to give directions or to impose a monetary penalty may be appealed to the High Court in England and Wales or Northern Ireland or to the Court of Session in Scotland. Unlike with the antitrust regime, which in other respects has a number of similarities to the new consumer regime, there is no general right to appeal a decision as to whether there has been an infringement.
The new regime will continue to be based on existing substantive law, as far as defining what constitutes an infringement is concerned. This is, in turn, based to a large extent on the EU consumer law acquis. The DMCC Act does create a number of new offences, however, including a prohibition of so-called drip-pricing (the practice of introducing additional fees at a late stage of the purchase process), prohibition of fake or misleading reviews and new rules governing certain types of savings schemes.
Recognising the far-reaching implications of the new consumer regime, the CMA consulted on three draft guidance papers (on the overall regime, procedure and unfair commercial practices) during 2024, as well as holding round table events with stakeholders. On 10 March, the CMA’s Chief Executive Sarah Cardell published a blog post confirming that final versions of these three guidance papers would be published before entry into force of the regime, together with a new ‘approach document’. According to the CEO, this latter document will set out how the CMA will implement the Government’s new Strategic Steer (which requires the CMA to focus more on the Government’s objective of improving UK economic growth) with respect to its consumer work, as well as the CMA’s new ‘4Ps’ principles, under which the CMA will focus on pace, predictability, proportionality and process across its activities.
Acknowledging feedback from stakeholders during the consultation process, the CEO’s blog explained that the final unfair commercial practices guidance will be “streamlined” to make it clearer and more accessible. This will be accompanied by enhanced business outreach and a series of “accessible and interactive business explainers”. The blog also announced that the CMA will now take a staged approach to its enforcement of the new rules on drip pricing. This aspect of the new regime has raised particular concerns, due to the law’s requirement that all unavoidable fees be included in the product price with equal prominence and the difficulty of applying this principle to situations where fees may be unavoidable but apply differently according to the quantity of goods bought (eg online groceries, cinema tickets) or other unpredictable factors (eg the number of people staying in a holiday let). The CMA has responded to these concerns by committing to focus initially on taking action against “genuinely unexpected and untrailed mandatory charges” that would contravene the existing law and to take enforcement action only against conduct that “clearly breaches the rules”. The CMA will follow up with a consultation on expanded guidance to cover less clear-cut cases in the summer. As far as the new rules on fake reviews are concerned, the CMA will focus on supporting business compliance for the first three months of the regime, rather than bringing enforcement action.
As the blog post makes clear, the CMA will not hold off enforcement altogether, however, with early action being promised in cases of “egregious breaches”. According to Sarah Cardell, these could include aggressive sales practices that prey on vulnerability, providing information that is objectively false, imposing “very obviously unbalanced and unfair” contract terms, behaviour where the CMA has already “put down a clear marker through its previous enforcement work” and situations where the law specifies that a practice is always unfair.
This hit list will give more than enough for the CMA to work with as the regime beds in. The CMA has waited a long time for its new powers and, while it will clearly tread carefully in an environment where the Government has made it clear that it wants to see a more business-friendly tone from the CMA (possibly even at the cost of consumers), it is likely to move fast to impose eye-catching fines. Consumer-facing businesses that are active in the UK therefore need to move quickly to review their current practices to ensure compliance.