Draft Digital Markets, Competition and Consumer Bill

Draft Digital Markets, Competition and Consumer Bill

“Draft legislation to promote competition, strengthen consumer rights and protect households and businesses will be published. Measures will also be published to create new competition rules for digital markets and the largest digital firms.”

The purpose of the draft Bill is to:

● Protect consumers’ hard-earned cash from scams and rip-offs and boost consumers’ rights.

● Reform the UK’s competition regime, putting the power in the hands of consumers and strengthening public and business confidence in the power of free markets to deliver prosperity.

● Create a best in class competition regime, to make markets for consumer goods and services more competitive and dynamic, to ensure that consumers get the best deals.

● Boost competition by introducing a new regime to address the far-reaching market power of a small number of very powerful tech firms.

The main benefits of the draft Bill would be:

● Preventing fake reviews so consumers have information they can trust.

● Enabling the Competition and Markets Authority to take swift and decisive action on behalf of consumers and to boost competition, ensuring we have an economy where firms compete to give consumers the best deals.

● Providing more choice and better quality services for consumers and businesses. This will lower prices for everyday goods and services that rely on online advertising.

● Creating opportunities for UK tech companies to flourish and offer new products and services, which will drive innovation and a more dynamic digital economy.

● Ensuring that businesses across the economy that rely on very powerful tech firms, including the news publishing sector, are treated fairly and can succeed without having to comply with unfair terms.

The main elements of the draft Bill are:

● Tackling subscription traps by requiring businesses to provide clearer information to consumers and to send reminders before a contract auto-renews.

● Updating consumer law to prohibit commissioning fake reviews, offering to provide fake reviews, or hosting consumer reviews without taking reasonable steps to ensure reviews are genuine.

● Strengthening protections for consumers using Christmas savings clubs and other similar schemes, which are not currently regulated.

● Updating and simplifying regulations for package travel, so more businesses comply with the law, non-flight packages are better protected, and the quality of information and guidance is improved.

● Giving the Competition and Markets Authority the ability to decide for itself when consumer law has been broken, and to issue monetary penalties for those breaches.

● Improving the quality and oversight of services offering dispute resolution, so consumers have more and better alternatives to going to court.

● Empowering the Digital Markets Unit to designate a small number of firms who are very powerful in particular digital activities, such as social media and online search, with Strategic Market Status. This status will lead to these firms facing legally enforceable rules and obligations to ensure they cannot abuse their dominant positions at the expense of consumers and other businesses.

● Giving the Digital Markets Unit powers to proactively address the root causes of competition issues in digital markets. It will impose interventions to inject competition into the market, including obligations on tech firms to report new mergers and give consumers more choice and control over their data.

Territorial extent and application

● The consumer policy provisions will extend and apply across Great Britain.

Competition and digital market measures will extend and apply across the UK.

Key facts

● Government research estimates that consumers hold £1.8 billion worth of unwanted subscriptions and that UK consumers lose a further £23 billion annually from problems with purchases and the value of their time in trying to resolve the problem.

● Research from 2015 estimated £23 billion of purchases a year are influenced by online reviews. Some estimates show that up to 50 per cent of reviews on

popular e-commerce websites are not genuine and that fake reviews make consumers more than twice as likely to choose poor-quality products.

● The Competition and Markets Authority’s first State of UK Competition report found that competition across the economy may have declined in the previous 20 years.

● The Competition and Markets Authority has provided £2.6 billion of net benefit to consumers annually on average over the past three years. The Authority’s annual impact assessment 2020-21 estimated that in each year from 2018-19 to 2020-21 the following consumer savings were delivered:

o £110 million from competition enforcement;

o £445 million from merger control;

o £1.88 billion from market studies and investigations; and

o £130 million from consumer protection.

● Weak competition in the UK’s digital advertising market is leading to higher prices for consumers. The Competition and Markets Authority estimates that consumers lose £2.4 billion per year from Facebook and Google’s high advertising prices alone.

● The independent Cairncross Review in 2019 identified an imbalance of bargaining power between news publishers and digital platforms. The

Competition and Markets Authority found publishers see Google and Facebook as ‘must have’ partners as they provide almost 40 per cent of large publishers’ traffic.