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UK: CMAs new advice for implementation of pro- competition regime in digital markets

UK: CMAs new advice for implementation of pro- competition regime in digital markets

The Digital Markets Taskforce has issued an advice led by the Competition and Markets Authority for the implementation of a new pro-competition regime for digital markets. It aims to proactively ensure that businesses and consumers are treated in a fair manner further making sure that the activities of tech giants are regulated.

The basic aim is to regulate tech giants that have a strategic market status, which basically includes those companies that have a significant status in the market with the ability to effect market behavior. A Digital Markets Unit (DMU) is proposed to be set up to ensure that these tech giants comply with the provisions of the regulations.

The main objectives of the regulatory regime as proposed by the CMA are as follows;

  1. It aims to create a code of conduct that is binding in nature and tailored according to the firm’s behavior therefore allowing the DMU to govern the elements in the manner in which they do business. The DMU can also address any concerns regarding the firm’s activities and raise concerns regarding any potential penalties.
  2. The main aim of any economy is to boost competition in order to increase innovation in the market which will subsequently raise profitability. The advice proposes to use pro-competition intervention techniques that would tap into the potential of other smaller competitors in the market consequently boosting innovation.
  3. The advisory also consists of methods of in which these strategic market status firms can be closely scrutinized in terms of their transactions, it aims to enhance merger rules for this purpose. Notification to the CMA about a transaction shall become mandatory and a detailed investigation shall be carried out by the CMA with regards to the transaction, once the transaction is approved by the CMA, only then can it be concluded.
  4. All the steps that will be taken pursuant to the implementation of this advisory shall ensure growth of the tech sector through fair and innovative means.

This new regime shall be integrated into a wide framework of rules for digital markets, this includes regulations related to data protection, online content etc. The UK Government shall conduct a consultation of the proposals of the CMA by early 2021 and further pass legislations regarding the integration of the DMU in accordance with the statute. The CMA has further urged the government to expedite the process of implementing said legislation in order to create a pro-competition and pro-innovation regime for the benefit of all.  



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