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UK Competition and Markets Authority refreshes digital markets strategy

Since the UK’s Competition and Markets Authority (CMA) published its Digital Markets Strategy in 2019 (see our alert on its 2019 priorities) it has completed many of the priority tasks it had assigned itself – including conducting amarket study on online platforms and digital advertising and leading a digital markets taskforce which recommended a new regulatory regime for digital firms with market power. In addition, much has changed on the political and regulatory front in digital markets, both domestically and internationally. All this has prompted the authority to publish a strategy “refresh” on 9 February 2021 setting out a revised set of priorities across its digital work.

So, what’s changed?

The CMA will focus on an “overarching ambition”: to build within the CMA a proactive new pro-competition regulator for digital markets – the Digital Markets Unit (DMU). With the Government’s blessing, from April 2021 the DMU will introduce, oversee and enforce a new code of conduct for digital platforms designated as having “strategic market status” (SMS) and will have powers to impose remedies to tackle the sources of market power (see our alert for more information). Its precise form, function and powers are not yet clear – the Government is expected to consult on that soon – but the CMA’s strategy reiterates its desire for the DMU to also perform a monitoring role in relation to competition in digital markets more widely. Crucially, prior to the introduction of the necessary legislation, the CMA plans for the DMU to lay the groundwork for the new regime by building up its knowledge and skills and by undertaking preparatory work.

To underpin this ambition, and to support its wider work in the digital sector, the CMA will prioritise seven areas:

  1. Establishing the DMU’s pro-competition regulatory framework and function. The CMA wants the DMU to hit the ground running. Working closely with the Government as it develops the legislation, it will look at the DMU’s funding, governance and decision-making structures, and how it will interact with existing CMA functions. It will also make sure the DMU is operationally prepared with necessary staffing, skills, capability and specialist IT support. As more clarity on the proposed legislative framework materialises, we can expect the CMA to consult on guidance to be ready for when the legislation comes into force. And it will already start to gather evidence using existing powers to prepare for, and start to give thought to, the potential SMS designation of firms and activities and the possible shape of corresponding codes of conduct.
  2. Using the CMA’s existing enforcement tools. Although frustrated by perceived limitations in its existing powers, the CMA will not shy from using them to tackle alleged problems in digital markets to “maximum effect”. This includes its consumer and competition enforcement toolkit, as well as its extensive powers to regulate markets where it identifies competition concerns (including, potentially, to require the break-up of existing businesses). The CMA is clear that it expects to be an “increasingly active enforcer” in digital markets, especially given that it will take on enforcement cases and mergers that would, pre-Brexit, have been reserved to the European Commission. Most recently on the antitrust front, the CMA opened an investigation into Google’s ‘Privacy Sandbox’ browser changes.
  3. The work of the CMA’s Data Technology and Analytics (DaTA) unit. This unit is now fully operational. It carries out research and policy work (most notably a recent paper identifying potential harms to competition and consumers from the use of algorithms) and also supports the CMA’s work on specific cases. The unit uses data engineering, machine learning and artificial intelligence techniques to understand the use of data and algorithms and has recently been expanded to include behavioural scientists and ‘data and technology insight’ specialists.
  4. Work with other UK regulators through the Digital Regulation Co-operation Forum (DRCF). The CMA already works closely with Ofcom and the Information Commissioner’s Office through the DRCF and we can expect the DRCF to publish “an ambitious workplan” shortly that is intended to deliver a step-change in cooperation across the UK regulators’ work on digital markets.
  5. International cooperation. The CMA is keen for regulators across the world to be joined up on the issues and solutions in digital market regulation. Speaking on the day of the CMA’s strategy refresh, Chief Executive Andrea Coscelli noted that international cooperation on digital markets “is not about having identical rules” but “about recognising and managing differences; and working in a spirit of constructive co-operation to meet a common objective”. The CMA plans to do this through membership of various international initiatives, including the Multilateral Mutual Assistance and Cooperation Framework, the Organisation for Economic Cooperation and Development (OECD), International Competition Network (ICN) and the International Consumer Protection and Enforcement Network (ICPEN) as well as its work through the UK’s Presidency of the G7 this year.
  6. Supporting the Government on reform proposals of existing tools. The CMA has previously proposed a number of reforms to its existing powers which will remain relevant to its work in digital markets. It has been working with Government on those proposals and says it will continue to do so and will consider whether further reforms are necessary to keep up with the evolution of digital markets.
  7. Updating existing CMA guidance. The CMA will soon publish revised guidance on the substantive assessment of mergers following its recent consultation and will more generally keep its guidance under regular review.

The revised strategy comes at a time when antitrust authorities across the world are, after some years of analysis and discussion, starting to put digital markets policy proposals into action. In the U.S. and Germany, as well as at EU level, proposals for significant reforms in this area have been recently tabled or adopted and many other authorities will no doubt follow suit (you will be able to read more about these in our forthcoming global antitrust enforcement report). Although most proposals (including those in the UK) are subject to further legislative development, it is clear that over the next few years the regulatory landscape for companies active in digital markets is set to change significantly.