The Competition and Markets Authority (CMA) have set out its initial plans for the new digital markets competition regime, which will provide opportunities for enhanced innovation, investment and growth across the British tech sector.
The Digital Markets, Competition and Consumers Act received Royal Assent in May 2024, with the new digital markets and competition regime coming into force on 1st January 2025. Under this regime, the CMA can designate firms with “Strategic Market Status” (SMS) in relation to a particular digital activity. Once designated, the CMA can then impose conduct requirements or introduce pro-competition intuitions to ensure positive outcomes for UK consumers and businesses.
The CMA have outlined planned activity for the next six months, which includes the launch of SMS designation investigations for two areas of digital activity in January, with more announcements to follow later this month.
The CMA anticipates a pause before commencing their next investigation into a third area of digital activity, which is likely to take place at the end of the first six months of the new regime, allowing the CMA time to manage its resources efficiently and effectively.
Moreover, the CMA aims to give further clarification on how individual designations can improve outcomes for businesses and consumers as its launches its investigations. The new regime could, for example, prevent large firms from referencing their own services or using their access to customer data to an unfair advantage, make it easier for people to switch digital service providers without losing access to data or content, and stimulate more investment and innovation within the digital sphere.
Sarah Cardell, chief executive of the CMA, said: “The new digital markets competition regime provides a unique opportunity to harness the benefits of investment and innovation from the largest digital firms whilst ensuring a level playing-field for the many start-ups and scale-ups across the UK tech sector. It will ensure that the multitude of UK businesses and consumers who depend on these large firms for critical products and services benefit from more innovation, more choice and more competitive prices.
“We are committed to ensuring that this regime delivers for the UK – driving benefits for UK consumers and businesses while stimulating investment, innovation and growth across the UK tech sector. The regime has been carefully designed to ensure that the UK keeps pace with future developments and maximises its international attractiveness to innovators and investors in these dynamic markets.
“We are committed to implementing the regime in a way that is predictable and proportionate, moving at pace whilst respecting fair process. Today’s announcement that we intend to launch SMS investigations in relation to 3 distinct digital activities in the first 6 months starts to provide that predictability. The process for designing any interventions will also be participative and transparent, with the aim of keeping innovation-led markets open and bringing firms on the journey with us.”
