Full steam ahead for the UK Digital Markets Unit

UK politics has been in a parlous state. Today the UK’s Chancellor of the Exchequer attempted to stabilize the country’s finances by announcing some eye-watering tax rises and spending cuts in the Autumn Statement. However, of more relevance to readers of this blog, he also made a significant announcement about the legislation required to implement the Digital Markets Unit (“DMU”) regime in the UK.

Digital Markets Unit

In May 2022, the Government’s position was that it would legislate “as soon as parliamentary time allows” and it would publish a draft Bill during the current session of Parliament, i.e. before May 2023, with the implication that it might be formally debated in Parliament in the following session of Parliament. It was a vague promise and, in any case, that was two prime ministers ago. We did not know the current administration’s stance until today.

Today’s Autumn Statement has revealed that the full Bill will be brought before Parliament during this current session, therefore skipping the “pre-legislative scrutiny” stage altogether.

The Chancellor said:

Competition is fundamental for growth and productivity. The government will bring forward the Digital Markets, Competition and Consumer Bill in the third Parliamentary session to provide the Competition and Markets Authority with new powers to promote and tackle anti-competitive practice in digital markets. Opening these markets to greater competition will encourage new challenger firms, spur innovation, and provide consumers with higher quality products and greater choice.”

In more good news for the Competition and Markets Authority (“CMA”), he also confirmed that the legislation will include the additional competition law and consumer law enforcement powers that the CMA has been asking for:

Bringing forward the Digital Markets, Competition and Consumer Bill – The government is bringing forward the Digital Markets, Competition and Consumer Bill to provide new powers to the ‘Digital Markets Unit’ (DMU) in the CMA to foster more competitive digital markets; make changes to the competition framework that will include streamlined decision making and updating merger and fine thresholds; and protect consumers in fast-moving markets by tackling ‘subscription traps’ and fake reviews online.

This announcement probably brings forward the implementation of the new regime by at least a year, even on an optimistic interpretation of the previous position. More crucially, it shows that the Government is throwing its weight behind the Bill as a key pillar of its growth strategy.

Online safety

The DMU bill is not the only major piece of proposed tech regulation in the UK. Separately, the Online Safety Bill will impose an extensive system of content regulation to be overseen by the telecoms regulator, Ofcom.

This bill was ahead of the DMU bill because it has already received some detailed parliamentary debate. However, the new administration under Prime Minister Rishi Sunak has paused its progress while it considers how to deal with “legal but harmful” content without undermining free speech. It seems likely to carry on its progress through Parliament, perhaps with some revisions.

Innovation and growth

After a decade of poor economic performance, the issue of innovation and growth is now central to British politics. I believe that the proposed rules to be overseen by the DMU will further that aim. This is a regime that proponents of free markets and a small state should welcome with open arms. Indeed, as even Hayek said in his famous Road to Serfdom, first published in 1944:

to create conditions in which competition will be as effective as possible, to prevent fraud and deception, to break up monopolies – these tasks provide a wide and unquestioned field for state activity.

All advanced economies are grappling with the issues raised by the tech giants. There are various legislative proposals currently being debated in the US, and the EU has already passed its Digital Markets Act. If the UK acts in line with the timings announced today, it now has the opportunity to resume its place in helping to lead the debate internationally.

To keep to these timings, the lawyers at the Department for Digital, Culture, Media and Sport will be working some long hours over the next couple of months. The CMA will also need to ramp up its preparations, for example by launching its market study into e-commerce and consulting on draft codes of conduct for the gatekeeper firms.

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