The Digital Markets, Competition, and Consumers (DMCC) Act, introduced in 2024, marks a significant shift in the regulatory landscape of the digital marketplace. This legislation grants the Competition and Markets Authority (CMA) an array of novel powers aimed at scrutinizing and managing firms with significant market status (SMS). This detailed examination of the CMA’s investigatory and monitoring capabilities under the DMCC Act highlights how these tools will be utilized to foster fair competition and safeguard consumer interests in the digital era.
The DMCC Act endows the CMA with extensive investigatory powers essential for enforcing the digital markets competition regime. These powers encompass demanding information, accessing premises, conducting interviews, and entering premises with or without a warrant. One of the CMA’s most formidable tools is the authority to request information, which includes not only traditional documents but also data, algorithms, forecasts, and other informational forms. For instance, the CMA can demand details on the evolution of algorithmic code, including version control records. Firms under the DMCC Act must ensure their internal processes are robust enough to handle such extensive information requests.
Additionally, the CMA can require companies to perform demonstrations or tests, alter their usual conduct with users, or generate specific information. This requirement, though potentially burdensome, aims to provide the CMA with a comprehensive understanding of the company’s operations and adherence to competition requirements. The draft guidance suggests that the CMA will weigh the value, feasibility, and proportionality of these tests before making such demands. Another notable power is the ability to mandate reports from skilled persons—external experts such as accountants, management consultants, or software engineers. The SMS firm typically appoints these skilled persons, subject to CMA approval, and must provide the necessary support.
An important aspect of the CMA’s investigatory authority is senior manager accountability. When issuing information requests, the CMA may require firms to designate a senior manager responsible for compliance. Should this individual fail to prevent non-compliance, both the manager and the firm could face penalties. The DMCC Act also outlines the CMA’s extra-territorial reach, allowing it to issue information notices to entities outside the UK if they meet specific criteria, such as being involved in a digital markets investigation or conducting business within the UK. However, powers such as access, interview, or entry are confined to UK entities. Notably, the CMA can exercise its powers against UK entities for information stored abroad, including data on remote servers.
Beyond investigatory responsibilities, the CMA is tasked with actively monitoring the digital markets competition regime. This involves overseeing SMS firms’ compliance with competition requirements, evaluating the effectiveness of these requirements, and determining whether to modify or revoke them. The CMA gathers information from diverse sources, including horizon scanning, market intelligence, third-party complaints, and whistleblowers. A critical component of this monitoring is the requirement for SMS firms to appoint a nominated officer responsible for ensuring compliance with conduct or pro-competition mandates. This officer, generally a senior manager, must ensure the firm adheres to the rules, cooperate with the CMA, and prepare necessary compliance reports.
The DMCC Act’s comprehensive guidance on investigatory and monitoring powers underscores the CMA’s dedication to effectively implementing the new digital markets competition regime. The inclusion of powers to demand tests, demonstrations, and skilled persons’ reports highlights the CMA’s intent to gain an in-depth understanding of digital market dynamics and address any competitive concerns. As the CMA embarks on its initial SMS investigations, the practical application of these powers will be closely observed, setting the foundation for a new regulatory environment within the digital economy. By leveraging these robust tools, the CMA aims to foster a competitive digital marketplace that prioritizes consumer protection and fair business practices.
