Government’s consumer protection push criticised for moving too slowly
Despite making grand gestures about protecting consumer and business rights under the draft Digital Markets, Competition and Consumer bill, the government have come under fire from critics for acting too slowly.
Under plans announced in the Queen’s Speech this morning, the government said it would stamp out “subscription traps” and fake reviews, as well as provide a “best in class competition regime” for the UK.
Part and parcel of these ambitions is about empowering the Competition and Markets Authority (CMA) to decide when consumer law has been broken, and issue penalties for those breaches.
While there were some reports that the Digital Markets Unit (DMU), which sits within the CMA, was facing the axe, the unit will, under the new plans, be able to name give a small number of super powerful with ‘Strategic Market Status’.
This status will lead to firms facing legally enforceable rules and obligations to ensure they cannot abuse their dominant positions at the expense of consumers and other businesses.
The government said the move would “proactively address the root causes of competition issues in digital markets”, and would “impose interventions to inject competition into the market, including obligations on tech firms to report new mergers and give consumers more choice and control over their data.”
Commenting on these proposed changes, Which? Director of Policy and Advocacy Rocio Concha explained that whilst the ability to impose significant fines on firms should act as a deterrent for breaches of consumer law and prevent consumer rip-offs, she said it was vital that the Digital Markets Unit was given “appropriate powers to tackle the dominance of a handful of tech giants”.
Concha added that it was “disappointing” that the bill was only in draft form, and urged ministers to prioritise its progress, pointing to the government’s own research which estimates that consumer detriment costs £54bn a year.
Competition partner at law firm Addleshaw Goddard Rona Bar-Isaac echoed this disappointment, arguing that the government’s slow action would vex “consumer-facing companies, smaller tech companies and others awaiting greater protection through regulation of digital markets”.
She said the lag would also leave big tech in limbo, with details remaining unknown.
The news comes as Europe goes full steam ahead with the Digital Markets Act (DMA), which will ban Big Tech from acting as “gatekeepers” and enable the Commission to carry out market investigations and sanction non-compliant behaviour.
Signalling how this may be problematic for the UK, Bar-Isaac said: “Tech companies will, therefore, first have to focus on engagement and compliance with the EU regime and the UK’s Digital Markets Unit will lose its hard won first mover advantage as a regulator”.