Fireworks or a slow burn: How actively will the Competition and Markets Authority enforce new consumer laws?

On 6 April, the Digital Markets, Competition and Consumers Act (DMCCA) will place new responsibilities on businesses to protect consumers from drip-pricing and fake reviews. At the same time, the Competition and Markets Authority (CMA) is gaining new enforcement powers for consumer law, allowing it to investigate and impose fines on traders directly, rather than going through the courts and impose more substantial fines of £300,000 or 10% of global turnover.

These developments have been widely reported (for example here and here). What we know less about is how and when the CMA will use its new enforcement powers. This article offers two competing answers to that important question.

Fireworks?

The CMA’s director for consumer law, Jason Freeman, recently published an article on discussing the new CMA enforcement regime, which concluded that “The risks for businesses of failing to comply with consumer law are increasing very significantly, so don’t get caught out!”

When a regulator is granted new powers, we should expect it to put those powers to use. The CMA has indicated it will be looking to signal its intent by taking direct enforcement action against a high profile business.

Slow burn?

Words in the statute book do not always result in a substantial real-world impact. What are the chances that the CMA focuses its limited resources to enforce the new consumer laws on my business? And hasn’t the Government recently asked the CMA to focus its attention on helping the Government’s growth mission, rather than taking punitive enforcement action?

Our comment

Our expectation is that the consumer provisions in the DMCCA will be enforced, but enforcement will be nuanced and impacted by the Government’s overall steer to the CMA that it should be a proportionate regulator. The CMA has itself said that this means renewed focus on the 4Ps (pace, predictability, proportionality and process) in its investigations. In practice we anticipate this will mean:

• Proportionality: Leaner, more focused investigations into the aspects of consumer law that cause the most harm to consumers.
  
  
• Pace: In theory, faster investigations will result in faster enforcement.
  
  
• Predictability: Enforcement in relation to known issues.
  
  
• Proportionality: Ideally, even if the CMA does use its new fining power, it will fully apply the mitigation factors so that the fine reflects the harm to consumers and the culpability of the business.

So, in summary, neither exactly firework nor slow burn, but some aspects of both.

Further information

In a speech at techUK’s policy conference earlier today, CMA chief executive Sarah Cardell promised that at the beginning of April, it would publish: 

• A final version of the unfair commercial practices guidance (currently still only available in draft).
  
  
• “An approach document which will include more detail on our enforcement priorities for the first 12 months.”

While this timing is not ideal – given that the new consumer laws on drip-pricing and fake reviews may already be in effect – Cardell did offer some words of comfort to by promising that: 

• “Our early enforcement action following commencement is likely to focus on more egregious breaches.”
  
  
• “We will support the vast majority of well-intentioned businesses who want to do the right thing but may be unclear on exactly what is needed to ensure compliance, especially in areas where the law has been updated or there is less clear-cut precedent.”
  
  
• [On fake reviews] “for the first 3 months of the new regime we will focus on supporting businesses with their compliance efforts rather than enforcement.”

Further guidance has also been promised in relation to the price display obligations designed to combat the dark pattern of drip pricing.

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