New year, new competition rules for digital markets in the UK

The Digital Markets, Competition and Consumers Act 2024 (DMCCA) introduces landmark changes to the UK competition law landscape and the regulation of digital markets in the UK.

On 1 January 2025, the digital markets aspects of the DMCCA came into force. While the targets of the new digital markets competition regime are the biggest tech platforms, the wide-ranging nature of the regime means that it could impact on any business operating in the UK. It's therefore important that all businesses, regardless of their size, familiarise themselves with the key aspects of the regime. It should also be remembered that the new digital markets regime is intended to complement the tools available to the Competition and Markets Authority (CMA) under the existing UK competition regime which applies across all sectors of the economy.  

In this briefing, we outline the main features of the digital markets regime and discuss the fundamental ways in which it can impact on businesses operating in the UK, as well as those areas where there may be opportunities for third parties to engage proactively with the CMA.  

For information on the merger control aspects of DMCCA, which also came into force on 1 January 2025, please see our briefing on A new era for the UK’s merger control regime. 

Overview of the digital markets regime

Under the new digital markets regime, which will be overseen by the Digital Markets Unit (DMU) within the CMA, the DMU has the power to designate firms with “substantial and entrenched market power” and “a position of strategic significance” in relation to digital activities linked to the UK, as having Strategic Market Status (SMS). The CMA has indicated that it expects to initiate three to four SMS investigations in the first year of the regime, which are likely to start in early 2025, with an initial focus on mobile ecosystems, and search and digital advertising. It's expected that the designation of SMS firms will broadly align with the gatekeepers already designated under the EU Digital Markets Act (ie, Alphabet, Amazon, Apple, Booking, ByteDance, Meta and Microsoft).  

SMS firms will be required to comply with a range of additional regulatory obligations relating to how they conduct themselves in relation to specific digital activities for which they have been designated. 

In addition to mandatory merger reporting requirements (discussed in another of our briefings, here), SMS firms will be subject to bespoke Conduct Requirements (CRs), the focus of which will be on ensuring fair trading, open choices, and/or trust and transparency. Possible CRs include measures to prevent SMS firms from preferencing their own products and services over those of competitors and to require SMS firms to be more transparent with users, for example. The CMA will publicly consult on proposed CRs in due course.  

The DMU also has the power to make targeted Pro-Competition Interventions (PCIs) in relation to SMS firms. The purpose of PCIs is to remedy an adverse effect on competition in relation to a digital activity for which a firm has been designated. This may involve the imposition of binding Pro-Competition Orders (PCOs) on SMS firms, which could be behavioural or structural, and may be initially imposed on a “trial” basis. In addition, or in the alternative, the CMA/DMU may make a non-binding recommendation to another public authority on steps they should take. The CMA/DMU must publicly consult on proposed PCI decisions and PCOs. 

The DMU has a range of powers to enforce compliance with the new regime, including the imposition of substantial fines on SMS firms, other businesses and even individuals. 

How might the digital markets regime impact non-SMS firms?

There are three main ways in which the digital markets regime could impact on non-SMS firms:

• There will be proactive opportunities for third parties to engage with the CMA, for example in relation to SMS investigations. There may also be instances where a non-SMS firm receives a formal information request from the CMA
• When the duty to preserve information applies
• Where the imposition of CRs / PCOs requires non-SMS firms to amend the way they operate

Proactive and reactive engagement with the CMA

As noted above, the CMA must consult on proposed CRs, PCIs and PCOs and may also require information when exercising (or deciding to exercise) its other digital markets functions, such as during a SMS investigation.  

As part of these processes, the CMA will send out formal requests for information (known as information notices) not only to SMS firms themselves, but also to the users of relevant services and interested parties, which may include the SMS firm’s competitors, customers or suppliers. The CMA may impose a fine on any person who it considers has, without reasonable excuse, provided false or misleading information, or failed to comply with a formal information request. The CMA recognises that formal information requests will have an impact on the recipient, in particular smaller firms. The CMA has therefore indicated in its guidance that when it is practicable and appropriate to do so, the CMA may also send an information notice in draft for discussion with the recipient. This represents an important opportunity for recipients to comment on the scope and feasibility of responding to the information notice. Moreover, when a notice is in final form, the CMA’s expectation is that recipients will comply fully with its requirements. As such, any person who receives a notice (whether in draft or in final form) should immediately seek advice from a competition lawyer.  

Importantly, third parties may also have the opportunity to engage proactively with the CMA. For example, during an SMS investigation, the CMA will publish an invitation to comment early in the investigation, seeking views from any interested parties and inviting submissions of evidence. The CMA may also engage with interested parties during the investigation through surveys, calls, meetings and workshops; and the CMA will publish its proposed decision, in response to which interested parties will be invited to make representations. The CMA has indicated that it will follow a similar process, with similar opportunities for engagement, when conducting a PCI investigation. Although these types of interactions are not the subject of a formal information notice, it will still be important for interested parties to be mindful of their duty not to mislead the CMA and that their submissions may be published (subject to any claims for confidentiality).  

Duty to preserve information

The DMCCA imposes a duty on a person to preserve evidence which is relevant to an SMS investigation, a CR breach investigation or a PCI investigation. This duty applies even in relation to persons who are not connected with an SMS firm, where a person knows or suspects that such an investigation is being or is likely to be carried out. It's a very broad duty which will require, as a minimum, that a person suspends routine document destruction in respect of information and documents which they know or suspect are or would be relevant. Guidance published by the CMA also indicates that the CMA expects a person to take a broad view of relevant information for these purposes. Competition compliance policies should be updated accordingly and where a person believes that the duty could apply, they should immediately contact a competition lawyer for guidance. 

Reviewing and amending business practices

Where an SMS firm is required to change the way that it operates as a result of the imposition of CRs/PCOs, this could require businesses that deal with the SMS firm and/or use the relevant services to review and amend their own practices. A failure to do so could result in non-compliance by a non-SMS firm, with the risk of a fine. It's therefore important for businesses that deal with SMS firms and / or use their services to remain up to date on SMS designations and the DMU’s enforcement activity in relation to SMS firms. 

Key takeaways

The coming into force of the digital markets regime is not only of concern to the biggest tech platforms which may be designated as SMS firms. All businesses which operate in the UK should familiarize themselves with the regime and understand how it could indirectly impact them, and where there may be proactive opportunities to engage with the CMA and shape the outputs of the regime.  Competition compliance policies should be updated to reflect the duty to preserve information and appropriate procedures put in place to deal with responses to formal information requests from the CMA. More generally, it is important for non-SMS firms to remain updated on SMS designations and the obligations imposed on SMS firms, to ensure that their own practices remain compliant. 

Our competition team has in-depth knowledge of the digital markets regime and the DMCCA. We can assist, for instance, with undertaking gap analyses, reviewing and implementing compliance policies, delivering training to staff at all levels, supporting organisations with submissions and representations to the CMA, and responding to information requests.  

Our content explained