Expert legal advice from the competition lawyers

Digital Markets Taskforce

First published by Author on December 01, 2021 in the following categories: Advertising Consumer Law Digital Industry Latest and tagged with | | | |

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Many businesses have made great leaps in their development due to technology, and the CMA’s (Competition and Markets Authority) Digital Markets Taskforce was created to investigate how competition could be regulated in a way befitting of the digital age. Asked by the government to carry out an advisory report, the CMA look to have made good on this goal, having published their findings and recommendations in December last year.

The revamped approach to digital firms will hopefully promote fair competition and reaffirm the rights of consumers, two of the key principles that must be there to ensure for fair competition. Both can be essential to ensuring a level playing field, and any failure in respect of these principles could constitute a breach of competition law. Breaches of competition law can often be very bad for the consumer, so the work of the CMA and other regulators is vital.

The work of the Digital Markets Taskforce

The Digital Markets Taskforce began as part of the CMA’s ongoing work for its overall Digital Markets Strategy, which has previously included a study into digital advertising in the UK. The Taskforce was first announced in April last year, and began gathering relevant market information soon after. This included issuing a questionnaire for businesses that sell products and services online, and opening a general call for information to stakeholders. The responses were taken into account as part of any final advice given by the CMA to the government.

The measures set out by the report

Aiming to guide the UK’s new pro-competition regime for digital markets, the Digital Markets Taskforce provided the government with three key recommendations. They proposed that these should be carried out by a new Digital Markets Unit (DMU), and were as follows:

1. The first recommendation involves the creation of a new code of conduct for each digital firm – enforced by the DMU which can influence firms’ behaviour and deal with any breaches of the code. The DMU could granted the authority to penalise breaches as it sees fit.

2. Secondly, pro-competition interventions could be permitted, allowing the DMU to promote innovation and competition, and also to deal with companies with significant market power.

3. Thirdly, merger rules could be enhanced to allow the CMA to closely monitor transactions between businesses. The CMA may then be able to block deals until they had been fully reviewed, and to require businesses to notify them of inter-firm transactions.

The measures are, therefore, both preventative and punitive in nature. They could allow the CMA – through the DMU – to impose rules upfront and then sanction any breaches of these rules. Now it remains for the government to evaluate the recommendations and consider how much will be brought into law.

A possible win for fair competition

The recommendations of the Digital Markets Taskforce promise a positive outlook for digital firms, particularly for smaller businesses who may be better protected from the potential threat of market dominance by tech giants. The status of digital markets as a constant source of innovation is important to maintain in order to ensure that businesses flourish and consumers reap the rewards.

We are strong advocates of fair competition, and this is another matter that we will continue to keep a close eye on. This is especially the case given that more and more business is being moved online nowadays.

IMPORTANT: advice on this page is intended to be up-to-date for the 'first published date'.

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