On 18 October 2023, the House of Lords Communications and Digital Select Committee published a letter to the Prime Minister. The letter raised issues about the recent Digital Markets, Competition and Consumers Bill (“Bill”).
This Bill has been introduced to provide additional provisions relating to the protection of consumer rights and regulate competition in digital markets. The date for the third reading is yet to be scheduled.
It focuses on providing:
- Consumer protection
- in digital markets by giving increased powers to
- The Competition and Markets Authority (CMA)
Consumer protection
- There are proposals for new and improved rights by helping consumers to deal with subscription traps. Businesses would be required to inform consumers when a free trial is ending and might auto-renew, allowing consumers to exit and cancel subscriptions.
- Companies would be prohibited from receiving fake online reviews by taking reasonable steps to confirm that they are genuine.
- The Bill also aims to provide increased protection for consumers who use prepayment schemes, for example, the Christmas savings club, which allows consumers to save a monthly amount throughout the year and pay it back to them in time for Christmas. These are not currently protected by the Financial Services Compensation Scheme (FSCS). The new rules will ensure that providers of savings clubs safeguard consumers’ money through insurance.
Digital markets
The Bill aims to increase competition in digital markets by giving global companies such as Amazon, Google, and Apple “strategic market status”, providing them with a range of requirements they must adhere to. This would only apply to a few companies that meet specific criteria, such as having substantial and entrenched market power and a global turnover above £25bn or a UK turnover above £1bn.
Requirements could include providing accurate, clear, and accessible information and ensuring that greater choice is offered to consumers. The Digital Markets Unit (DMU) could take action and, where the rules are breached, impose penalties of up to 10% of their global turnover.
Increased CMA powers
The enforcement powers of the CMA would be enhanced to include determining when consumer law has been broken without going to court and impose penalties for:
- breaching consumer protection laws: this could result in a fine of up to 10% of a business’ global annual turnover or up to £300,000 per individual;
- breaching undertakings given to the CMA: this could result in a fine of up to 5% of a business’ global annual turnover or £150,000 per individual. There are also additional penalties for ongoing non-compliance, and
- non-compliance with an information notice, concealing evidence or providing false information could result in a fine of up to 1% of a business’s annual global turnover or up to £30,000 for ongoing non-compliance.
The Bill is likely to receive further changes as it continues to pass through the legislative process.
For more information about this article or any other aspect of commercial law, get in touch with your Napthens Solicitors in Preston, Liverpool, and across the North West, today.
