A bolstering of the consumer protection regime and some sharper teeth for the CMA – a first look at the new UK Digital Markets, Competition and Consumers Bill

It's been a little over a year in the making, and it's been one of the most hotly anticipated legislative updates since it was first announced in April 2022, but the first draft of the UK's catchily titled Digital Markets, Competition and Consumers Bill, is finally here. 

The Bill marks the beginning of a new era of enhanced consumer protection, with a regulator that is set to cast off any previous reputation it may have picked up for having a bark that was worse than its bite. Here, we take a first look at the draft Bill and consider its likely impacts on consumer brands and retailers.

The bigger picture

As well as signalling changes to the consumer protection landscape (explored further below), the Bill contains important new provisions relating to digital markets and competition law. It gives the CMA powers to regulate, investigate and impose conduct requirements on digital businesses with strategic market status (think: Big Tech), with fines for non-compliance of up to 10% of global annual turnover (see our update on this here). And it reforms the UK competition law regime more widely (also see our update on that here).

The Bill is born into a world where the EU has already set in motion a major, modernising uplift to the consumer, digital and competition landscape, with the Omnibus Directive (enhancing consumer protection for the digital world), and the Digital Markets Act and Digital Services Act (aimed at creating fair and open markets and better user safety and content moderation, respectively). From a UK perspective, it will join the ranks of legislation such as the Online Safety Bill (which has recently been saved from lapsing from the parliamentary legislative agenda), that work towards curating a legislative backdrop fit for the modern day and the increasingly digital and online lives we lead.

So what does the Bill mean for UK consumer law?

Direct enforcement powers for the CMA. Under the Bill, the CMA will be able to directly enforce consumer protection law avoiding the need to go through the court system. Such powers may prove to be a meaningful deterrent for businesses who repeatedly breach consumer protection law but have to date, managed to avoid sanctions because of the timeframes and process involved in the CMA taking court action.  It should also help to "level the playing field", a bonus for law-abiding businesses that may previously have had to watch their less well-behaved competitors enjoy an extended competitive advantage whilst enforcement action proceedings trundled slowly through their process.

Power for the CMA to issue fines. The Government has itself acknowledged that the UK is the only G7 country not to have any civil penalties for common consumer protection breaches. To address this, the Bill grants the CMA the ability to make determinations on whether breaches of consumer law have occurred, and to impose monetary penalties directly (similar to the ICO in their enforcement of data protection legislation). There are several tiers of possible fines, but for the most serious breaches, the CMA may impose penalties of up to £300,000 or 10% of global annual turnover (if higher). The CMA will also be able issue fines for breaches of undertakings, non-compliance with notices given by a consumer protection officer and breaches of an administrative direction given by the CMA.   

The CPRs v2.0.  The Bill revokes and then restates, with some tweaks, the provisions of the Consumer Protection from Unfair Trading Regulations 2008 (CPRs).  In terms of call outs, there is a newly created "omission of material information from an invitation to purchase" offence which joins the list of offences that we have been used to since the CPRs came into force in 2008 (misleading acts, misleading omissions, aggressive practices, blacklisted practices and practices contravening the requirements of professional diligence).  The "blacklist" of practices which are in all circumstances considered unfair remains intact, and appears at Schedule 18 to the Bill (with a couple of tweaks to the ordering and certain instances where practices have been reframed to be clearer and/or broader). 

What about fake reviews? We were also expecting to see provisions in the Bill adding certain fake review activities to the famous blacklist.  These have been noticeably absent from the first draft of the Bill, but this doesn't mean they won't be coming.  The Bill enables the list of blacklisted practices to be updated speedily by Parliament through secondary legislation, in order to reflect new business practices and emerging consumer harms. The government has also confirmed that, during the passage of the Bill through parliament, it plans to consult on adding the following 'fake review' practices to the blacklist: (a) commissioning or incentivising any person to write and/or submit a fake consumer review of goods or services; (b) hosting consumer reviews without taking reasonable and proportionate steps to check they are genuine; and (c) offering or advertising to submit, commission or facilitate fake reviews.

Subscription traps. As expected, the Bill will also give new rights to consumers entering into subscription contracts.  Businesses will now need to provide certain pre-contract information prominently and clearly.  They will also need to allow both an initial 14-day cooling off period and further 14-day renewal cooling off periods whenever a subscription is renewed (during which time subscribers may cancel).  The protections are further reinforced by requirements to remind consumers when any free or discounted trial period is ending, and/or where the subscription is about to renew, and to make it easy for subscribers to exit their subscriptions (i.e. via a single communication).

Insolvency protection for consumer saving schemes. The Bill sets out requirements on traders operating certain consumer saving schemes (such as Christmas saving clubs, which are not, by their nature, FCA-regulated or protected by the Financial Services Compensation Scheme) to make insurance and trust arrangements to protect consumer pre-payments in the event of the trader becoming insolvent.

Alternative Dispute Resolution (ADR). Finally, the Bill will help to empower consumers to be able to resolve disputes directly with businesses by the introduction of ADR provisions.  These include a duty on businesses to notify consumers about any ADR arrangements applicable to the business where a consumer is dissatisfied with the outcome of any complaint, and imposes obligations on ADR providers (including a prohibition on acting as an ADR provider without accreditation, unless exempt, and a prohibition on charging fees to consumers).

Conclusions… This is just the beginning

The Bill itself runs to almost 400 pages and covers a plethora of new and updated law and consequential legislative amendments on its core topics: digital markets, competition law and consumer protection.  We will be keeping a close eye on the Bill’s progress through parliament and will publish further, more detailed commentary on specific areas of the Bill as it makes its journey towards Royal Assent and coming into force.