- New powers proposed for Watchdog to suspend, block, and overturn decisions made by tech giants, and impose fines of up to 10% of sales for serious violations
- Watchdog promotes the UK startup scene by creating a level playing field
Proposals have been made for a new competitive system for digital markets that will support the UK’s growing technology sector and protect consumers.
The Digital Markets Unit (DMU) will be given the authority to designate technology companies with significant and firm market power with the “Strategic Market Status” (SMS). This will require them to follow new rules of acceptable behavior towards competitors and customers, which will benefit the public and drive growth and innovation across the economy.
The DMU, which was introduced in a non-statutory form within the Competition and Markets Authority (CMA) in April, will work with companies to bring more competition to the digital technology sector, resulting in more innovation and fairer conditions for UK businesses to including startups and news publishers, leads and advertisers. It will bring better choice and control for consumers, and make it easier for people to relocate their business elsewhere.
The proposed new powers are designed to help UK startups and scale-ups compete more fairly against tech giants who have a strong position in the marketplace.
The consultation gathers views on the goals and powers of the DMU and details a new binding code of conduct that sets out what is expected of companies in relation to fair trade, open choice, and trust and transparency. This could include technology platforms that do not force their customers to use standard or mandatory associated services, or ensure that third-party companies that depend on them are not prevented from doing business with competitors.
The code is underpinned by solid investigative and enforcement powers. This can include fines up to a maximum of 10 percent of a company’s sales for the most serious violations.
The DMU could also be empowered by technology giants to suspend, block, and reverse code-breaking behavior – such as unfair changes to their algorithms or terms and conditions – and instruct them to take certain actions to comply with the code.
The consultation will not only address the bad behavior of these companies, but will also consider whether the DMU will be able to take a number of measures to address the root causes of competition problems in digital markets.
This could lead the DMU to implement interoperability support measures that make it easier for digital platforms and services to be compatible with one another and for customers to switch between them. For example, it might require platforms to allow the public to share contacts from one platform to another.
Digital Secretary Oliver Dowden said:
The UK tech scene is thriving, but we need to make sure that UK companies have a level playing field with tech giants and that the public gets the best services at fair prices.
So we’re going to give our new Digital Markets Unit the powers it needs to drive competition and drive growth and innovation, with stiff fines to make sure the biggest tech companies stick to the rules.
Economy Minister Kwasi Kwarteng said:
Technology has changed our lives for the better, whether it’s helping us stay in touch with loved ones, share content, or access the latest news.
Nobody wants to see an unassailable monopoly, and our common sense reforms will help protect consumers, support groundbreaking new ideas, and level the playing field for businesses.
Andrea Cocelli, Chief Executive at CMA, said:
We welcome the government’s proposals for the Digital Markets Unit, building on the recommendations of our Digital Markets Taskforce from last year. These proposals recognize the importance of promoting competition in digital markets and the need for new tools to do this most effectively.
Today’s consultation marks an important milestone in building a world-leading, pro-competitive system to drive technological innovation and protect consumers in the digital age. The Digital Markets Unit will continue to assist the government in introducing this new regime before it receives its new legal powers. “
The government will also consider giving the CMA greater powers to examine and intervene in harmful mergers with companies with “strategic market status”, for example by requiring these large technology companies to report on their acquisitions.
The consultation comes after the government outlined its plan earlier this month to make the UK a world leader in innovation-driven digital regulation.
Following the consultation, the government intends to give the DMU new powers as soon as parliamentary time allows.
Rocio Concha, which one? Policy and Advocacy Director said:
Reforming the competition system will help build a fairer and more competitive technology sector that works better for consumers and gives them more control and choice – including the way their data is collected and used.
It will be critical that the government provide the new digital markets division with the tools it needs, including solid oversight and strong enforcement powers, to penalize companies that act anti-competitive.
Which? looks forward to working with government and industry leaders to ensure that consumers truly benefit from the digital products and services that are part of their daily lives today.
Gerard Grech, CEO of Tech Nation, said:>> Fair competition allows markets to function successfully and enables companies to scale and grow dynamically. Tech Nation is accelerating the growth of UK tech scale ups and we therefore welcome this consultation which future proofs markets as inclusive and competitive.
Notes to the editors: Contact the DCMS press office on 020 7211 2210.